Happy New Year!
I thought I'd start this year with an interesting post. I always said that it was better to take a loan vs using your cash. The fear of debt is ridiculous and will financially cripple you. I've got the data to back it up.
Google Sheet: To loan or not to loan
We are going to build on my previous post: Everything you're told about money is wrong - Buying a house
Assuming you've put 3.5% down and in 15 years, you've decided to do $200,000 in renovations.
Scenario 1 (8% Rate of Return)
If you took the $200,000 out instead of leaving it in your investment, you would have LOST $587,438.72.
If the money was left in the account, you would have $664,135.35 vs $76,696.63 if you took $200,000 out 15 years in.
If the money was left in the account, you would have $664,135.35 vs $76,696.63 if you took $200,000 out 15 years in.
Is it worth it to pay the $103,788.46 in interest for the renovation to have an additional $587,438.72?
Scenario 2 (10% Rate of Return)
If you took the $200,000 out instead of leaving it in your investment, you would have LOST $759,499.66.
If the money was left in the account, you would have $1,151,660.55 vs $392,160.89 if you took $200,000 out 15 years in.
If the money was left in the account, you would have $1,151,660.55 vs $392,160.89 if you took $200,000 out 15 years in.
Is it worth it to pay the $103,788.46 in interest for the renovation to have an additional $759,499.66?
Scenario 3 (12% Rate of Return)
If you took the $200,000 out instead of leaving it in your investment, you would have LOST $977,422.46.
If the money was left in the account, you would have $1,977,354.86 vs $999,932.40 if you took $200,000 out 15 years in.
If the money was left in the account, you would have $1,977,354.86 vs $999,932.40 if you took $200,000 out 15 years in.
Is it worth it to pay the $103,788.46 in interest for the renovation to have an additional $977,422.46?
Conclusion
Is it worth paying the interest? You tell me.
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