Which is better?

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07/23/2008

Which is better?

To pay off ALL debt and have the 15+ % to purchase the B&B we want, (lets just say we were able to get a loan with that much down), (this is the way I'm leaning)

or 

DON'T pay off ALL debt and continue to carry 'some' and have the 25+% needed down to purchase the inn

future thinking and kicking around ideas

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06/24/2008

Talk to a financial advisor, find a good one and the advise they give will be worth the money. 

gillumhouse's picture
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05/22/2008

If we had not been debt-free when we opened, I do not know if we could have made it. IF you work on getting ALL debts paid off AND put some in savings, you will be better off. The tax deduction you will get from having loans will NOT equal what you be paying out in interest. Remember the tax deduction is only a percentage of what you paid out, not a dollar for dollar. IF you want it badly enough, for the next 4 years you will not eat out, you will not buy anything NOT necessary  to exist and eat as cheaply as possible. IF you do that, you will probably be able to be debt-free and have savings. Selling your house will also give you money toward your B & B purchase - so add that to the mix for when you are ready.

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Joined:
10/07/2008

That % could make or break the deal on a bank loan. So I guess the bank is the one to answer the question better. 

The saying cash poor comes to mind. And the other saying "don't put all your eggs in one basket" also comes to mind. Gee I am full of saying today... cool

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Madeleine's picture
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09/29/2011

Think cash flow. Which scenario gives you cash flow?

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Arks's picture
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05/22/2010

I don't know much about it, but it seems like it would be better to owe more on which ever loan has the lower interest rate.

If the old loan is at lower interest than the new one will be, keep the old loan and put as much as you can on the new loan to avoid paying as much at higher interest.

And vice versa.

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OnTheShore's picture
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08/28/2011

Another factor to consider in deciding which debts to pay off first would be can you take a tax deduction for any of the debt interest (i.e. home mortgage interest payments; and assuming your overall deductions rise above the standard deduction)? This is also assuming that your marginal tax rate is higher than the interest rate on the debt, so that the savings in taxes would be greater than the cost of the interest...

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Joey Camb's picture
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04/02/2010

in the UK it is better to have a bit as it shows your credit history of being able to make payments ie pay some of to show you can - I would however advise making sure everything is paid dead on time or early to show you are organised financially.

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TheBeachHouse's picture
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06/24/2013

.

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