Surplus of money an interesting dilemma

Chickens come first, then a financial planner

September 02, 2001|By Liz Pulliam Weston | Liz Pulliam Weston,LOS ANGELES TIMES

My husband and I borrowed $550,000 to build four poultry houses last year. We now have a surplus of money that I don't know how to handle. I work outside the home and provide us with insurance, but would like to retire at 55 when I can receive my benefits. I'm 48 now. My question is: Do we pay down on the principal loan, which has a 6.25 percent interest rate now, or should we invest in stocks? I am investing in a 401(k) and my husband has an IRA. How do I use the $10,000 or more a year we are saving? I also put $100 a week into a savings account. We are able to live off my salary.

Thank you for providing my first poultry-related question.

Of course, your question is really about debt and retirement, which are far more universal concerns. But feathers and chicken feed obviously got you where you are today, which is in a very good place - having more money than you know what to do with.

You need someone to review your entire financial situation to see whether you're on track with your retirement investments. That will dictate whether your surplus should go into retirement funds and, if so, how that money should be invested.

Because you're operating a business and have special tax issues to consider, you might look for a certified public accountant who has specialized training in personal finance.

Your comment that your interest rate "is 6.25 percent now" seems to indicate that you have a variable-rate loan, which could increase over time.

You might have a good incentive to either refinance to a fixed rate or pay off the loan quicker than you'd planned. But again, your best bet is to consult a qualified financial planner who can review your situation and give you personalized advice.

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