Invest 529 or Payoff Home Equity Line?
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Anonymous
| I have about $20k in vested RSU’s I’m planning to cash out, and we are deciding whether to put it towards a 529 or paying down a home equity line. Our HHI is about $390 cash and we bought our house last May. At the time we were only able to put 10% down as we were in the process of selling a place elsewhere and had some equity tied up (relocated to DC) and had also just paid for a wedding, so took out home equity line to finance the other 10%. We have since although we should have qu have about $65k left on a home equity line we took out to buy a house last year with a monthly payment right now of about $350..we also recently opened a 529 for first kiddo |
Anonymous
| I would definitely pay off the home equity line. How old is your kid? Since you said you recently opened it, I assume your DC is still young. I've always been told to "pay yourself first"- in other words make sure your savings and retirement is in good shape and then allocate funds for college. |
Anonymous
Aw man I am failing this morning typing from my phone. I had added some other pertinent info but deleted by mistake. Kiddo is under a year so we have plenty of time but wanted to take advantage of compounding..also deleted from my post by accident that we do max out 401k and all other bills with a comfortable amount leftover each month. We are in pretty good shape from a retirement perspective hopefully, we have about $275k in traditional retirement Roth/401k) plus maybe $100k more in company investment fund / stock options which are technically liquid. We are in our early 30s. |
Anonymous
| Depending on the company, I'd keep the RSU's but know when they come due that you have to pay taxes on them. You make plenty to pay off and if you aren't having much left over you way overspent. |
Anonymous
| Heloc because you can't deduct the interest going forward. |
Anonymous
Employers automatically deduct the taxes out of your RSU's once they vest - unless OP has it set up differently. So if OP has $20K before vesting, assume that 40% of that will go to pay taxes leaving OP with $12K. |
Anonymous
Depends on the employer. We are having some vest and co-workers said that you need to deposit money into some account or you will get hit hard come tax time. But, you are right, that $20K is not $20K after taxes. I'd hold onto it. |
Anonymous
good point. Is the tax law that existing mortgages interest deduction can continue up to the $1m threshold, but all heloc deductions are gone? |
Anonymous
| OP here- it’s a solid stock but I would like to diversify (separately leaving options intact). In the past have sold off RSU’s and invested in vanguard mutual fund. And yes my employer automatically withholds shares at time of vesting, so when the shares vested I got 55% or so of the initial grant, so $20k is the post tax amount. |
Anonymous
| Pay off debt before investing for college. |
Anonymous
| Pay debt first. |
Anonymous
but you can deduct on 2017 taxes, right? |