I Borrowed $400,000 Against My Stocks

Brought to you by the EveryDollar App. Start budgeting for free today. I have about $408,000 in debt on an S-block. So the interest payment a month is only like $1,600, just pure interest. And so I just, I'm wondering like how, how I should, I have some cash in a T-bill and I'm just kind of wondering like should I take some of that cash and like knock this, knock some of it out or just kind of whittle away at it, you know? What was the purpose of the loan? Why did you take it? I bought a rental house. So I did a few things with it, actually. I bought a rental house, which is producing some income. I paid off my wife's car and my truck with the S-block because the interest rates on, you know, on the loan that I got for the vehicles was crazy. And so this interest rate was much better. So what's the stock worth? I have about $550,000 in stock. Why don't you just sell a bunch of it and pay the loan off? Well, see, I got an inheritance this year of about $1.4 million in stocks. So why are you sitting on a $400,000 loan paying some goober $1,600? Sell enough of it and get rid of the loan. Well, see, I sold a lot of it. I bought my house. I moved. I paid my house off. When I moved, I owned the house that I moved from. So that's a rental house. And then I got the S-block, I bought another rental house. Yes, sir. So you have two rental houses that are paid for and a house that you're living in that's paid for and you got $550,000 in stock and you got a $400,000 loan. Do I have it right? Yes, sir. And I got a T-bill. I got about $180,000 in a T-bill. Sell the T-bill and sell enough stock to pay off the loan. What's wrong with that? Say that again? Why not just sell enough stuff to pay off the loan? Well, I've already sold a ton of stock already this year. But why do you want to keep it? You made that decision when you paid off your car and you used all this money. You already made the decision to give up the stock. You just borrowed against it instead of actually doing the deal. Right. So tell us what you think you want to do since we gave you our opinion. What's your opinion? Well, I want to pay about maybe half of it off and then get the payment down to where my income can cover. Why do you want to keep the loan? Well, my financial advisor was telling me that he thinks it's dumb to sell stock to pay off the cars because stocks are appreciated. I think your financial advisor is a moron. Yeah. I mean, I've tried to talk to him and say, hey, I want to pay. I don't need to talk him into anything. He works for me. I got two words for him. You're fired. Yeah. What's your income? When you take in all the rents and what you earn from your job, what's your income every month and every year? So I have an LLC that owns the rental properties and that brings in about $8,800 a month. And then I pay myself about $5,000 a month. And that's all? Because I don't have any personal debt. I paid off all my debts that I owed when I got this money. How old are you? 40. What's your career? Right now, I'm really just living off the rental income because it's a lot and it covers my bills. The bottom line is this, boss. I would not have done anything that you have done. And so if I did wake up in your shoes today, I would fire my financial advisor and get someone that has a brain and doesn't tell you to borrow money to pay off a debt. That's not paying off a debt. It's moving the debt. You moved the debt and this idiot called that sophisticated. It's not sophisticated. You just moved it. It's all you did. You moved your car debt over onto your stock in an S block. It's all you did. So what I do sell the T-bills and I'd sell enough of the stock to pay off the debt. And I'd fire my financial advisor and be 100% debt free. No interest to anyone. And that's what I would do. I don't think you're going to do that, though. So I'm not real sure why you called. I think he's afraid. I think he likes seeing that chunk of money sitting there. And some part of him doesn't think he'd be able to invest his way back to what he had before, which he truly could over time. And you're 40. Get a job. Yeah, that's what I'm saying. If you get a job, you can do it. Go earn $150,000 a year and chunk some money away and make a bigger pile of money than the one you inherited. And so you got three pieces of paid for real estate. Two of them are generating $60,000 a year, which is OK. And you got a little bit of stock left after my plan. And so that money can stay invested in good growth stock mutual funds. And I'm going to liquidate the individual stocks. I'm not letting a stupid financial planner play with them. And I'm going to put them in basic growth stock mutual funds and let it double about every seven years. And it will, if you freaking leave it alone and then just let that ride and then go make a living for yourself. And, you know, you do not have enough net worth to retire at 40. You didn't get that much money. And I don't think, but I don't think you're going to do any of this. Yeah, it's crazy. So, all right. So here's the thing. Your financial advisor, your lawyer, your CPA, your doctor, your whatever professional works for you, they don't tell you what to do. You're a grown up boys and girls. And so I've occasionally had attorneys that got confused and thought they were going to tell me what to do and they got fired. And so my financial advisor tells me what to do, tells me you have a wrong relationship with your financial advisor. Your real estate agent tells you what you're going to do. No, it's my freaking money. I tell you what to do. I ask you for advice and to teach me something. I didn't know present to me ideas I hadn't thought of for me to consider what I'm going to do with my money. This is how you approach dealing with a financial advisor. When your financial advisor tells you what to do, all of a sudden you start worrying about their conflict of interest. Like he doesn't want you to sell a stock because he wants to get paid to manage it. Hello. Instead of you paying off your stupid car payment, create your free every dollar budget today, the simplest way to budget for your life.