Business & Investing
Sponsored by

What to do with bonus?

4,631 Views | 40 Replies | Last: 9 days ago by GrimesCoAg95
ag0207
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
4:01p, 8/26/26
AG
I'm in my mid 40's and retirement accounts are on point. I am scheduled to get a good bonus and was debating on what to do with the cash.

Option 1) Add to my brokerage account and keep padding my retirement or

Option 2) we have a ranch property that we financed and have been paying down the loan. It is currently around 200k with 8.65% interest rate (yes, I know, land loan interest rates suck). Should I take the cash and put it towards this?

I am leaning toward option 2. Thoughts or other recommendations?
Reply Quote
AggieP18
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
4:04p, 8/26/26
If you can beat the average market return on your invested money some would say invest it, but it sure is nice to be debt free.
Reply Quote
3
Chipotlemonger
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
4:07p, 8/26/26
AG
At 8.65% I would personally go after that with any bonus surplus. Rather than looking at it as paying off debt, look at it as locking in a 8.65% return when you pay off principal there. A high yield account won't be getting you as much, and the brokerage funding has more risk.
Reply Quote
57
Gnome Sayin
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
4:31p, 8/26/26
Make it 2, Utah
Reply Quote
5
FTAco07
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
8:59p, 8/26/26
AG
Option 2 gives you a risk free 8.65% return. That's easily the best choice unless you think you'll need the extra liquidity in the near term.
Reply Quote
10
ATM9000
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
9:27p, 8/26/26
AG
If you feel good about your liquidity and retirement is all funded then #2 seems a no brainer to me.
Reply Quote
JSKolache
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
11:10p, 8/26/26
AG
Boat.
Reply Quote
25
I bleed maroon
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
1:16a, 8/27/26
AG
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.
Reply Quote
7
OldArmyCT
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
4:06a, 8/27/26
AG
Eliminating debt frees up investable cash. It also helps you sleep at night.
Reply Quote
2
barnag
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
7:27a, 8/27/26
put in a brand new pool.
- Clark Griswold
Reply Quote
10
ag0207
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to I bleed maroon • 7:43a, 8/27/26
AG
Currently the breakdown in payment is 55% principal to 45% interest. I was leaning heavily to paying down the loan.

We have a few other loans but they are small and much better interest rates compared to this. I will likely be 100% debt free by the time I am 50 and then all extra cash will go into retirement funds.

barnag I already have a pool and JSKolache I do not want a boat (:
Reply Quote
Corps_Ag12
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
9:02a, 8/27/26
AG
Dave Ramsey would tell you to pay down high interest debt first.
Reply Quote
1
Carnwellag2
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to I bleed maroon • 9:03a, 8/27/26
I bleed maroon said:
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.

Any lump sum payment goes straight to principal - and it saves to 8.65% in interest payments. there really is no difference whether you are on year 2 or year 27.
Reply Quote
14
I Am A Critic
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Carnwellag2 • 10:45a, 8/27/26
Username checks out.
Reply Quote
1 edit
I bleed maroon
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Carnwellag2 • 11:41a, 8/27/26
AG
Carnwellag2 said:
I bleed maroon said:
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.

Any lump sum payment goes straight to principal - and it saves to 8.65% in interest payments. there really is no difference whether you are on year 2 or year 27.

True, in that you have definitely paid 8.65% interest on the whole amount over the life of the loan, but the ratio is wildly different, due to the higher portion of principal to interest in a normal loan amortization table (which is a sunk cost, at that point). So, if you have three years of P&I payments left totaling $50,000, and you can prepay the entire loan for $48,500, is that a good idea? Or invest the $50k, and hopefully make $4-5k per year in returns?

To each his own. I'd invest it, myself, if this describes the situation.
Reply Quote
1
ag0207
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to I bleed maroon • 12:17p, 8/27/26
AG
I bleed maroon said:
Carnwellag2 said:
I bleed maroon said:
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.

Any lump sum payment goes straight to principal - and it saves to 8.65% in interest payments. there really is no difference whether you are on year 2 or year 27.

True, in that you have definitely paid 8.65% interest on the whole amount over the life of the loan, but the ratio is wildly different, due to the higher portion of principal to interest in a normal loan amortization table (which is a sunk cost, at that point). So, if you have three years of P&I payments left totaling $50,000, and you can prepay the entire loan for $48,500, is that a good idea? Or invest the $50k, and hopefully make $4-5k per year in returns?

To each his own. I'd invest it, myself, if this describes the situation.

Based upon an early payoff calculator that I ran I would save 68k in interest paying off now vs paying the scheduled/normal payments. That is over the course of the next 6.5 years (or about 10k/year). That does sound enticing and then my normal monthly payments would then be freed up to go towards investing.
Reply Quote
6
YouBet
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
12:20p, 8/27/26
AG
Glad to no longer have a pool and a boat.

Pay off the ranch loan. With that interest rate, this is an easy decision for me. Being debt free is a wonderful thing; especially clearing the books of an 8.65% mortgage.
Reply Quote
I bleed maroon
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to ag0207 • 12:36p, 8/27/26
AG
ag0207 said:
I bleed maroon said:
Carnwellag2 said:
I bleed maroon said:
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.

Any lump sum payment goes straight to principal - and it saves to 8.65% in interest payments. there really is no difference whether you are on year 2 or year 27.

True, in that you have definitely paid 8.65% interest on the whole amount over the life of the loan, but the ratio is wildly different, due to the higher portion of principal to interest in a normal loan amortization table (which is a sunk cost, at that point). So, if you have three years of P&I payments left totaling $50,000, and you can prepay the entire loan for $48,500, is that a good idea? Or invest the $50k, and hopefully make $4-5k per year in returns?

To each his own. I'd invest it, myself, if this describes the situation.

Based upon an early payoff calculator that I ran I would save 68k in interest paying off now vs paying the scheduled/normal payments. That is over the course of the next 6.5 years (or about 10k/year). That does sound enticing and then my normal monthly payments would then be freed up to go towards investing.

Sounds like my "slam dunk" scenario. Do it! Congrats!
Reply Quote
ATM9000
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to I bleed maroon • 12:56p, 8/27/26
AG
I bleed maroon said:
Carnwellag2 said:
I bleed maroon said:
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.

Any lump sum payment goes straight to principal - and it saves to 8.65% in interest payments. there really is no difference whether you are on year 2 or year 27.

True, in that you have definitely paid 8.65% interest on the whole amount over the life of the loan, but the ratio is wildly different, due to the higher portion of principal to interest in a normal loan amortization table (which is a sunk cost, at that point). So, if you have three years of P&I payments left totaling $50,000, and you can prepay the entire loan for $48,500, is that a good idea? Or invest the $50k, and hopefully make $4-5k per year in returns?

To each his own. I'd invest it, myself, if this describes the situation.


That's an incomplete look at the picture because you can still invest the excess cash you will have on hand monthly foregoing the mortgage payment in the markets and make a return on that money over the period of time. Ie you are ignoring an important and significant value driver in your analysis.
Reply Quote
2
I bleed maroon
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to ATM9000 • 3:48p, 8/27/26
AG
ATM9000 said:
I bleed maroon said:
Carnwellag2 said:
I bleed maroon said:
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.

Any lump sum payment goes straight to principal - and it saves to 8.65% in interest payments. there really is no difference whether you are on year 2 or year 27.

True, in that you have definitely paid 8.65% interest on the whole amount over the life of the loan, but the ratio is wildly different, due to the higher portion of principal to interest in a normal loan amortization table (which is a sunk cost, at that point). So, if you have three years of P&I payments left totaling $50,000, and you can prepay the entire loan for $48,500, is that a good idea? Or invest the $50k, and hopefully make $4-5k per year in returns?

To each his own. I'd invest it, myself, if this describes the situation.


That's an incomplete look at the picture because you can still invest the excess cash you will have on hand monthly foregoing the mortgage payment in the markets and make a return on that money over the period of time. Ie you are ignoring an important and significant value driver in your analysis.

Not ignoring it in the least. It's neither important or significant. I'm talking cash-on-cash return. Reinvesting $1500 a month INCREMENTALLY for 3 years to save a total of $1500 of interest over 3 years in my example vs. investing $50,000 at time zero produces a FAR better return for investing the lump sum in most conditions.

This is neither here nor there, as the poster said they're early enough in the amortization schedule to make paying off the loan an easy call. Good enough for you?
Reply Quote
1
ATM9000
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to I bleed maroon • 4:14p, 8/27/26
AG
I bleed maroon said:
ATM9000 said:
I bleed maroon said:
Carnwellag2 said:
I bleed maroon said:
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.

Any lump sum payment goes straight to principal - and it saves to 8.65% in interest payments. there really is no difference whether you are on year 2 or year 27.

True, in that you have definitely paid 8.65% interest on the whole amount over the life of the loan, but the ratio is wildly different, due to the higher portion of principal to interest in a normal loan amortization table (which is a sunk cost, at that point). So, if you have three years of P&I payments left totaling $50,000, and you can prepay the entire loan for $48,500, is that a good idea? Or invest the $50k, and hopefully make $4-5k per year in returns?

To each his own. I'd invest it, myself, if this describes the situation.


That's an incomplete look at the picture because you can still invest the excess cash you will have on hand monthly foregoing the mortgage payment in the markets and make a return on that money over the period of time. Ie you are ignoring an important and significant value driver in your analysis.

Not ignoring it in the least. It's neither important or significant. I'm talking cash-on-cash return. Reinvesting $1500 a month INCREMENTALLY for 3 years to save a total of $1500 of interest over 3 years in my example vs. investing $50,000 at time zero produces a FAR better return for investing the lump sum in most conditions.

This is neither here nor there, as the poster said they're early enough in the amortization schedule to make paying off the loan an easy call. Good enough for you?


Kinda. Your theoretical hinges on mortgage rate though and has nothing to do with amortization table.
Reply Quote
b0ridi
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to I bleed maroon • 4:16p, 8/27/26
OldArmyCT said:
Eliminating debt frees up investable cash. It also helps you sleep at night.


Using all your cash to pay off a loan frees up cash? Brilliant.

I bleed maroon said:
Carnwellag2 said:
I bleed maroon said:
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.

Any lump sum payment goes straight to principal - and it saves to 8.65% in interest payments. there really is no difference whether you are on year 2 or year 27.

True, in that you have definitely paid 8.65% interest on the whole amount over the life of the loan, but the ratio is wildly different, due to the higher portion of principal to interest in a normal loan amortization table (which is a sunk cost, at that point). So, if you have three years of P&I payments left totaling $50,000, and you can prepay the entire loan for $48,500, is that a good idea? Or invest the $50k, and hopefully make $4-5k per year in returns?

To each his own. I'd invest it, myself, if this describes the situation.


Ratio of what? An amortization table is a sunk cost? If he has 3 years and $50,000 of total payments left on an 8.65% loan, the prepay amount (remaining principal) would be way lower than $48,500.

I bleed maroon said:

Not ignoring it in the least. It's neither important or significant. I'm talking cash-on-cash return. Reinvesting $1500 a month INCREMENTALLY for 3 years to save a total of $1500 of interest over 3 years in my example vs. investing $50,000 at time zero produces a FAR better return for investing the lump sum in most conditions.

This is neither here nor there, as the poster said they're early enough in the amortization schedule to make paying off the loan an easy call. Good enough for you?


Gobbledygook.


OP: Any dollar you keep invested could be used to pay down the loan principal and avoid 8.65 cents interest on that dollar each year. If you are confident your investments can beat 8.65%, don't pay down the loan. If you can't confidently beat 8.65%, pay down the loan. A lot of clueless comments in this thread.
Reply Quote
8
1 edit
YouBet
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to b0ridi • 6:24p, 8/27/26
AG
b0ridi said:
OldArmyCT said:
Eliminating debt frees up investable cash. It also helps you sleep at night.


Using all your cash to pay off a loan frees up cash? Brilliant.

I bleed maroon said:
Carnwellag2 said:
I bleed maroon said:
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.

Any lump sum payment goes straight to principal - and it saves to 8.65% in interest payments. there really is no difference whether you are on year 2 or year 27.

True, in that you have definitely paid 8.65% interest on the whole amount over the life of the loan, but the ratio is wildly different, due to the higher portion of principal to interest in a normal loan amortization table (which is a sunk cost, at that point). So, if you have three years of P&I payments left totaling $50,000, and you can prepay the entire loan for $48,500, is that a good idea? Or invest the $50k, and hopefully make $4-5k per year in returns?

To each his own. I'd invest it, myself, if this describes the situation.


Ratio of what? An amortization table is a sunk cost? If he has 3 years and $50,000 of total payments left on an 8.65% loan, the prepay amount (remaining principal) would be way lower than $48,500.

I bleed maroon said:

Not ignoring it in the least. It's neither important or significant. I'm talking cash-on-cash return. Reinvesting $1500 a month INCREMENTALLY for 3 years to save a total of $1500 of interest over 3 years in my example vs. investing $50,000 at time zero produces a FAR better return for investing the lump sum in most conditions.

This is neither here nor there, as the poster said they're early enough in the amortization schedule to make paying off the loan an easy call. Good enough for you?


Gobbledygook.


OP: Any dollar you keep invested could be used to pay down the loan principal and avoid 8.65 cents interest on that dollar each year. If you are confident your investments can beat 8.65%, don't pay down the loan. If you can't confidently beat 8.65%, pay down the loan. A lot of clueless comments in this thread.


You are such an unnecessary ahole on here.

He has a guaranteed savings of $68k which then frees up cash flow to immediately invest going forward.

Or, he can make a bet and possibly be wrong and not beat 8.65%. That's a relatively high hurdle to clear. This isn't a sub 3 mortgage.

This is a no brainer.
Reply Quote
7
ATM9000
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to YouBet • 6:50p, 8/27/26
AG
YouBet said:
b0ridi said:
OldArmyCT said:
Eliminating debt frees up investable cash. It also helps you sleep at night.


Using all your cash to pay off a loan frees up cash? Brilliant.

I bleed maroon said:
Carnwellag2 said:
I bleed maroon said:
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.

Any lump sum payment goes straight to principal - and it saves to 8.65% in interest payments. there really is no difference whether you are on year 2 or year 27.

True, in that you have definitely paid 8.65% interest on the whole amount over the life of the loan, but the ratio is wildly different, due to the higher portion of principal to interest in a normal loan amortization table (which is a sunk cost, at that point). So, if you have three years of P&I payments left totaling $50,000, and you can prepay the entire loan for $48,500, is that a good idea? Or invest the $50k, and hopefully make $4-5k per year in returns?

To each his own. I'd invest it, myself, if this describes the situation.


Ratio of what? An amortization table is a sunk cost? If he has 3 years and $50,000 of total payments left on an 8.65% loan, the prepay amount (remaining principal) would be way lower than $48,500.

I bleed maroon said:

Not ignoring it in the least. It's neither important or significant. I'm talking cash-on-cash return. Reinvesting $1500 a month INCREMENTALLY for 3 years to save a total of $1500 of interest over 3 years in my example vs. investing $50,000 at time zero produces a FAR better return for investing the lump sum in most conditions.

This is neither here nor there, as the poster said they're early enough in the amortization schedule to make paying off the loan an easy call. Good enough for you?


Gobbledygook.


OP: Any dollar you keep invested could be used to pay down the loan principal and avoid 8.65 cents interest on that dollar each year. If you are confident your investments can beat 8.65%, don't pay down the loan. If you can't confidently beat 8.65%, pay down the loan. A lot of clueless comments in this thread.


You are such an unnecessary ahole on here.

He has a guaranteed savings of $68k which then frees up cash flow to immediately invest going forward.

Or, he can make a bet and possibly be wrong and not beat 8.65%. That's a relatively high hurdle to clear. This isn't a sub 3 mortgage.

This is a no brainer.


it is as simple as can you beat 8.65% over 3 years or not.

Amortization schedule is irrelevant to it. Then the guy goes and hedges by throwing some nonsense scenario out where the only way for it to be possible ion a 2% mortgage rate as a way to talk about 'the ratio'. That argument is a textbook gobbledygook argument. And it should be called out as such. It's just complicating a relatively simple finance question.
Reply Quote
3
1 edit
YouBet
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to ATM9000 • 7:59p, 8/27/26
AG
ATM9000 said:
YouBet said:
b0ridi said:
OldArmyCT said:
Eliminating debt frees up investable cash. It also helps you sleep at night.


Using all your cash to pay off a loan frees up cash? Brilliant.

I bleed maroon said:
Carnwellag2 said:
I bleed maroon said:
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.

Any lump sum payment goes straight to principal - and it saves to 8.65% in interest payments. there really is no difference whether you are on year 2 or year 27.

True, in that you have definitely paid 8.65% interest on the whole amount over the life of the loan, but the ratio is wildly different, due to the higher portion of principal to interest in a normal loan amortization table (which is a sunk cost, at that point). So, if you have three years of P&I payments left totaling $50,000, and you can prepay the entire loan for $48,500, is that a good idea? Or invest the $50k, and hopefully make $4-5k per year in returns?

To each his own. I'd invest it, myself, if this describes the situation.


Ratio of what? An amortization table is a sunk cost? If he has 3 years and $50,000 of total payments left on an 8.65% loan, the prepay amount (remaining principal) would be way lower than $48,500.

I bleed maroon said:

Not ignoring it in the least. It's neither important or significant. I'm talking cash-on-cash return. Reinvesting $1500 a month INCREMENTALLY for 3 years to save a total of $1500 of interest over 3 years in my example vs. investing $50,000 at time zero produces a FAR better return for investing the lump sum in most conditions.

This is neither here nor there, as the poster said they're early enough in the amortization schedule to make paying off the loan an easy call. Good enough for you?


Gobbledygook.


OP: Any dollar you keep invested could be used to pay down the loan principal and avoid 8.65 cents interest on that dollar each year. If you are confident your investments can beat 8.65%, don't pay down the loan. If you can't confidently beat 8.65%, pay down the loan. A lot of clueless comments in this thread.


You are such an unnecessary ahole on here.

He has a guaranteed savings of $68k which then frees up cash flow to immediately invest going forward.

Or, he can make a bet and possibly be wrong and not beat 8.65%. That's a relatively high hurdle to clear. This isn't a sub 3 mortgage.

This is a no brainer.


it is as simple as can you beat 8.65% over 3 years or not.

Amortization schedule is irrelevant to it. Then the guy goes and hedges by throwing some nonsense scenario out where the only way for it to be possible ion a 2% mortgage rate as a way to talk about 'the ratio'. That argument is a textbook gobbledygook argument. And it should be called out as such. It's just complicating a relatively simple finance question.


I know. I'm just pointing out that poster is unnecessarily a-holish on here every time he posts. Like out of his way combative.

Anyway, this is an easy decision with the data we have. $68k in hand vs hoping you will beat an 8.65% return assuming he is disciplined enough to even try to beat it. (That's not a knock against the OP; that's a general commentary on most people not fulfilling the other side of the equation in these tradeoff discussions.)
Reply Quote
1
ToddyHill
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
8:18p, 8/27/26
AG
I would pay down the loan.

I know it may not make economic sense, but there's no price when it comes to peace of mind (which I share from my own experience).

Good luck!

Reply Quote
4
VaterAg
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to b0ridi • 10:05p, 8/27/26
b0ridi said:
OldArmyCT said:
Eliminating debt frees up investable cash. It also helps you sleep at night.


Using all your cash to pay off a loan frees up cash? Brilliant.

I bleed maroon said:
Carnwellag2 said:
I bleed maroon said:
Option 2 seems like the best choice, but I'd like to know where you are on the mortgage amortization curve? If you're 2 years into a 30 year note, option 2 is a slam dunk, but if you're 15 years into a 20 year term, most of your payments are principal, and that option doesn't save as much as you might think. In that case, I'd consider investing it instead.

Any lump sum payment goes straight to principal - and it saves to 8.65% in interest payments. there really is no difference whether you are on year 2 or year 27.

True, in that you have definitely paid 8.65% interest on the whole amount over the life of the loan, but the ratio is wildly different, due to the higher portion of principal to interest in a normal loan amortization table (which is a sunk cost, at that point). So, if you have three years of P&I payments left totaling $50,000, and you can prepay the entire loan for $48,500, is that a good idea? Or invest the $50k, and hopefully make $4-5k per year in returns?

To each his own. I'd invest it, myself, if this describes the situation.


Ratio of what? An amortization table is a sunk cost? If he has 3 years and $50,000 of total payments left on an 8.65% loan, the prepay amount (remaining principal) would be way lower than $48,500.

I bleed maroon said:

Not ignoring it in the least. It's neither important or significant. I'm talking cash-on-cash return. Reinvesting $1500 a month INCREMENTALLY for 3 years to save a total of $1500 of interest over 3 years in my example vs. investing $50,000 at time zero produces a FAR better return for investing the lump sum in most conditions.

This is neither here nor there, as the poster said they're early enough in the amortization schedule to make paying off the loan an easy call. Good enough for you?


Gobbledygook.


OP: Any dollar you keep invested could be used to pay down the loan principal and avoid 8.65 cents interest on that dollar each year. If you are confident your investments can beat 8.65%, don't pay down the loan. If you can't confidently beat 8.65%, pay down the loan. A lot of clueless comments in this thread.


But his investments don't have to beat 8.65% to break even. They have to beat 8.65% after taxes! More ammo to pay down the loan, in my opinion.

And yup, amortization tables really do not factor into this decision. The key detail is that his bonus is less than the outstanding balance on the loan. It's really as simple as that.
Reply Quote
2
I bleed maroon
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
2:00a, 8/28/26
AG
Good grief! We're all agreed that this OP paying off his loan is a great financial alternative.

The only situation I was describing was if one is in the last few months of a long-term loan amortization, saving a few cents on interest on each of the last few months of payments wouldn't be worth paying off.
Reply Quote
ATM9000
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to I bleed maroon • 5:55a, 8/28/26
AG
I bleed maroon said:
Good grief! We're all agreed that this OP paying off his loan is a great financial alternative.

The only situation I was describing was if one is in the last few months of a long-term loan amortization, saving a few cents on interest on each of the last few months of payments wouldn't be worth paying off.


We all know. And you are still wrong. But that's still an interest rate question and not to do with where you are in amortizing a loan.
Reply Quote
2
AgOutsideAustin
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
5:58a, 8/28/26
AG
This thread delivers !! Geez
Reply Quote
2
Dr. Doctor
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
6:14a, 8/28/26
AG
You should take the bonus and invest half of it in low risk mutual funds and then take the other half over to my friend Asadulah who works in securities...

~egon
Reply Quote
3
VaterAg
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to I bleed maroon • 7:41a, 8/28/26
I bleed maroon said:

The only situation I was describing was if one is in the last few months of a long-term loan amortization, saving a few cents on interest on each of the last few months of payments wouldn't be worth paying off.


You're tripling down on incorrect info. The last few months of payments would not amount to a "few cents of interest". The interest would still be 8.65% annualized of whatever the outstanding loan balance is, regardless of how many months of payments remain.

Reply Quote
1
1 edit
YouBet
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
9:19a, 8/28/26
AG
I hate you all.
Reply Quote
1
b0ridi
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to ATM9000 • 9:23a, 8/28/26
replied to wrong post
Reply Quote
1 edit
b0ridi
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to YouBet • 9:24a, 8/28/26
Only time I can see that I've replied to you on B&I was when you claimed the ACA subsidies expired. They didn't expire and are worth a lot of money if you manipulate your MAGI correctly. Sorry for calling out bad information.
Reply Quote
Page 1 of 2 ▼
 
×
subscribe Verify your student status
See Subscription Benefits
Trial only available to users who have never subscribed or participated in a previous trial.