In April I wrote a post about our loans – Debt: The Good, The Bad and The Ugly. I looked at our three loans (a mortgage, a home equity loan and a commercial loan) and concluded that it made sense to use part of the proceeds of the sale of my company to pay off our home equity loan (which we had taken out to buy a boat) while retaining the other two loans.
The reasoning behind that decision was that the home equity loan had a higher rate of interest (which was not tax-deductible) and had been taken out to acquire a depreciating asset, while the repayments represented a fair chunk of our annual expenses (just under 12%). Given the fact that some turbulence was expected in the markets at the time (I am talking about you, BREXIT!) and the positive impact that paying off the loan would have on our savings rate, it was clear that this loan had to go.