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Old 04-27-2016, 02:16 PM
 
1,738 posts, read 624,385 times
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Well, in my experience, a heloc seems to be very easy to get and pay off over the years (very low interest) if you have a home and some minimally reasonable ongoing income (in my case, annuities), so I do not keep a lot of cash (I never drew money from a heloc, but did have a worrisome life event a few years ago, so I applied for a heloc from Bank of America. It was approved in two days, but I ended up not needing it/not using it). Also, I actually live in a condo, so the condo association will pay for the new roof or HVAC if needed, and impose an assessment for the roof or hvac on condo owners. The association maintains a 2M HELOC in which any unit owner can automatically participate if he/she/they cannot pay lump special assessments for things like a new roof or hvac.
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Old 04-27-2016, 02:53 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,956,950 times
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Quote:
Originally Posted by elnrgby View Post
Well, in my experience, a heloc seems to be very easy to get and pay off over the years (very low interest) if you have a home and some minimally reasonable ongoing income (in my case, annuities), so I do not keep a lot of cash (I never drew money from a heloc, but did have a worrisome life event a few years ago, so I applied for a heloc from Bank of America. It was approved in two days, but I ended up not needing it/not using it). Also, I actually live in a condo, so the condo association will pay for the new roof or HVAC if needed, and impose an assessment for the roof or hvac on condo owners. The association maintains a 2M HELOC in which any unit owner can automatically participate if he/she/they cannot pay lump special assessments for things like a new roof or hvac.
I guess that's another thing - condo assessments. We had about $15k in condo assessments after Hurricane Andrew. Total association assessment of about $10 million (large condo). BTW - what happens to your condo HELOC if the condo burns down (we had one a few miles from us burn to the ground a few months back)/is destroyed in another fashion and you need to pay an assessment for an insurance deductible or something else. Can you get a HELOC on destroyed property?

Our second largest expense after Andrew was living in a hotel for 6 weeks after the storm when our condo was uninhabitable. Can't recall exactly how much that cost. But it was a Residence Inn in Boca Raton - so I suspect it was about $100/night - total of about $5000. Glad I didn't have to worry about taking out a bank loan then (local bank blew down!).

Couldn't even have meaningful contacts with our insurance company until a couple of weeks after the storm (and we had to hassle about getting reimbursed for both our assessments and our relocation expenses - although we eventually got what we were entitled to).

Overall - I never ever want to be in a position where I can't pay for something out of pocket now - and worry about seeking reimbursement from anyone who may owe me the money later on. That's one thing money is for - peace of mind. I know that some people - who are living paycheck to paycheck - have to do it. But to make myself cash/emergency fund poor just to eke out that last dollar in income - well it isn't worth it to me.

BTW - I don't know if he remembers - but I actually got the advice to keep this much money on hand from mathjak. Years ago. I had been used to only keeping 6 months worth of annual expenses (if that) in cash for these things. But - as my husband and I got older (my husband is 70+) - and especially after the 2008-09 financial crisis - I thought it was appropriate to keep a larger cash cushion. Because you never know.

Finally - since you can get 1% on cash pretty easily these days - and not a huge amount more from fixed income/annuities these days - the "cash penalty" really isn't super large. Robyn
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Old 04-27-2016, 03:40 PM
 
1,738 posts, read 624,385 times
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My condo building had a huge fire 6 years ago, and we were displaced from homes for 18 months. The building was not destroyed, but there was about 12M damage, most of it covered by insurance. I lived in my second condo in a different city for 18 months, and paid my lump assessment related to the fire ($11k), but people who could not pay their assessments were able to use the condo association heloc.
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Old 04-27-2016, 04:06 PM
 
Location: NC Piedmont
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BTW, the roof wasn't a "what if?" - I really did have mine done a year or so ago and I really didn't have much choice. When it comes time to sell, I definitely need paint and carpets and if I don't do omething in the kitchen it will likely sell slower and at a lower price. The AC is on right now and upstairs it is a few degrees warmer than the thermostat setting. Hmmm...
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Old 04-27-2016, 04:14 PM
 
30,183 posts, read 47,410,509 times
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Quote:
Originally Posted by elnrgby View Post
Well, in my experience, a heloc seems to be very easy to get and pay off over the years (very low interest) if you have a home and some minimally reasonable ongoing income (in my case, annuities), so I do not keep a lot of cash (I never drew money from a heloc, but did have a worrisome life event a few years ago, so I applied for a heloc from Bank of America. It was approved in two days, but I ended up not needing it/not using it). Also, I actually live in a condo, so the condo association will pay for the new roof or HVAC if needed, and impose an assessment for the roof or hvac on condo owners. The association maintains a 2M HELOC in which any unit owner can automatically participate if he/she/they cannot pay lump special assessments for things like a new roof or hvac.
Our SIL owned condo before he married our daughter and they lived there before bought house--rent it now.
He pays fairly large (to me) COA fees monthly toward unit normal maintenance like roof replacement and the insurance and since it is in FL for hurricane insurance...having roof replaced which was needed after he bought didn't require an extra assessment but the condo units had to replace original plumbing for all units in large project. That area has acidic water and over time copper pipes developed pin-hole leaks...That did require special assessment and people with 2 bath units had higher portion...

One of the top items anyone considering buying a condo in FL when the bust happened and people were trying to take advantage of buying opportunities was told to do was to make rigorous assessment of the COA's financial situation...make sure the COA's funds for most part were not underwater along with the owners' 1--because you couldn't get a mortgage in those buildings and 2--it was sign that oversight was lacking many times...the Board was taking advantage of its positions maybe and not raising fees when necessary or spending money not really necessary...Our SIL bought in older complex with majority of original owners who owned units so foreclosures were rare...some but not like newer units w/lot of speculators during the boom...
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Old 04-27-2016, 04:43 PM
 
Location: Near a river
16,042 posts, read 19,004,474 times
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Quote:
Originally Posted by PhxBarb View Post
I just gave $100000 to my NY Life financial advisor for an annuity that will give me $900 a month for 10 years. I am happy with this because it will replace the annuity I inherited from my Mom which is ending in June. Takes alot of guts to take all that cash out and give it to someone else !!! Have another plan in place when the 10 years are up, if I am still here.
Why give over $100K for $900/mo for 10 yrs when you could have self-funded for that same period with that same amount in an investment vehicle? All you gain with the annuity is $8K over 10 yrs.
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Old 04-27-2016, 04:46 PM
 
Location: Near a river
16,042 posts, read 19,004,474 times
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Quote:
Originally Posted by RiverBird View Post
Why give over $100K for $900/mo for 10 yrs when you could have self-funded for that same period with that same amount in an investment vehicle? All you gain with the annuity is $8K over 10 yrs.
OK, MJ addressed that Q in #21
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Old 04-27-2016, 04:49 PM
 
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At Robyn55 - re difference between 1% interest from bank account vs. annuity:
(1) deferred annuities have much higher interest rates than 1%, depending for how long you defer taking the annuity payments,
(2) deferred life annuities (ie, the ones that pay a certain amount of $ for life) can end up having astronomic interest rates, averaging higher than 100% per year over the course of your life if you get these annuities early and end up living very long (as it may happen to me because my family has routinely lived into their 90s over at least 3 prior generations), and
(3) even with the least favorable immediate time-limited annuities, if you use that annuity as your spending account from which you spend 10% of the initial principal every year, you will get twice as much in interest from that annuity than from a 1% interest bank account that you use in the same way, ie, as your spending account. In other words, if you are drawing, say, $30k per year from your spending account for 10 years based on a $270k principal, you will get 6 months' worth of free money from a 1% bank account, but one year of free money from a 1% annuity over the course of 10 years. Again, this would be the least favorable type of annuity (which I obtained only after I already had enough deferred annuities for real retirement at 60; the question was whether I wanted to invest into something I didn't need and continue to kill myself working, or put money into an immediate fixed 10 year annuity as a spending account for 10 years, and semi-retire at 50. I decided I'd prefer to have 6 months off work per year in my 50s than to chase investments with highest potential returns as well as highest risks).
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Old 04-27-2016, 05:04 PM
 
Location: Near a river
16,042 posts, read 19,004,474 times
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Quote:
Originally Posted by johngolf View Post
So basically you are giving them $100,000 now and over the next 10 years will get back $108,000 at the rate of $10,800 per year. Is this correct?
Minus fees (what would they be?)
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Old 04-27-2016, 05:12 PM
 
Location: Columbia SC
9,013 posts, read 7,774,270 times
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Would the person who likes doing spreadsheets compute the following:

1. One puts $1K in a 1% per year CD.
2. They then draw $900 per month for 10 years.
3. What will be left of the $100K (account balance) in 10 years?

Also please work out 2% and 3% per year.

Thanks
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