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  • Need help with some math

    Ok - the basics.

    Common-law couple.

    Two people have a joint LOC. Person A takes out $10,000, on agreement by both parties that that money is solely for the use of person A and that person A will solely repay/be responsible for that amount.

    Person A and Person B take out $15,000 from the same LOC. They agree that they are each responsible for half of paying off that $15,000.

    They agree that because person A is solely responsible for the first $10,000 that they will pay the insurance and interest on that $10,000 themselves, splitting the interest and insurance on the $15,000 between them.

    Each month 100% of the interest and insurance is taken from a joint account that they each pay 50% into.

    I know how to figure out who owes what amount in terms of their percentage of interest and insurance. But for the life of me can't figure out where Person A puts their share of the interest and insurance. Is it 100% back into the joint account? half into the joint and half to person B? or all to person B?

    Please help with explanations - happy to answers questions if I've not explained this well.

    Thanks so much!

  • #2
    How much could the life insurance possibly be on the LOC $2?

    The interest on $10k on an unsecured is at most 8% that's is $66/month.

    Don't kill yourself trying figure out where every dollar goes. You will want to close your joint LOC and bank accounts in the end anyways.

    Let a few thousand go one way or another...if you're doing it yourself...take it from me if you get into a battle because you can't agree on a few bucks it ends up costing you lots.

    My legal bill is $17000 and we are no where at the end.

    I'd happily pay your loc interest and life insurance in exchange for my legal fees

    Comment


    • #3
      The split and responsibility of who pays for what has been AGREED to by both parties. - so its not an issue of fighting it out. Its just an issue of where the money goes - To the joint account, half to to joint and half to person B, or all to person B.

      The example given is just that - an example.

      Comment


      • #4
        Was any of the $10K LOC paid off when you borrowed the additional $15K?

        Let's say it was $9K remaining.

        Let's also assume you both are paying off the entire balances over the same period (i.e. the 10K isn't being paid off first, or on an earlier-starting timeframe). That is simplest. (otherwise one person would start paying less as the balance neared 15K)

        Then wouldn't it just be split proportionally as: 9000+7500 vs 7500? (i.e. 31.25:68.75).

        So for each $50 you both put into the joint account, Person A would add another roughly $60 to make it match that %split.
        Last edited by dinkyface; 10-13-2014, 01:36 PM.

        Comment


        • #5
          Could person A pay person B the insurance and interest costs for the $10 000 withdrawal plus half the insurance and interest costs for the $15 000 withdrawal, and then have B pay the bank?

          In other words, A would pay B 70% of the total borrowing costs for the LoC, because A's debt is $10K plus ($15K/2), or $17.5K, and $17.5K is 70% of the total amount borrowed on the LoC (I am assuming that none of the principal has been paid back - if it has, your calculations might get more complicated as it might not be clear which withdrawal - $10K or $15K - the repayments should be credited to).

          Then person B would be responsible for replenishing the account from which the borrowing costs are being withdrawn by the bank, using the money given by A, as well as B's own money for the remaining 30% of the borrowing costs.

          I'm assuming that B wants to separate finances from A and not have joint accounts or funds any more, so would prefer to receive the money from A and pay the bank directly, rather than share an account into which A transfers money?

          Comment


          • #6
            I'm not quite clear on how the OP WANTS to handle this. I see 2 options, both continuing with the joint acct:
            1) continue to contribute equal amounts to the joint account, and person A pays B some extra to make the % right.
            Or
            2) contribute the desired % to the joint acct (PLUS 50%? share of other bills are being paid from this account)

            Comment


            • #7
              Originally posted by dinkyface View Post
              Was any of the $10K LOC paid off when you borrowed the additional $15K?

              Let's say it was $9K remaining.

              Let's also assume you both are paying off the entire balances over the same period (i.e. the 10K isn't being paid off first, or on an earlier-starting timeframe). That is simplest. (otherwise one person would start paying less as the balance neared 15K)

              Then wouldn't it just be split proportionally as: 9000+7500 vs 7500? (i.e. 31.25:68.75).

              So for each $50 you both put into the joint account, Person A would add another roughly $60 to make it match that %split.
              No one is paying anything at the moment with the exception of the interest and insurance that is being taken out of the joint account.

              So percentage wise both are in agreement that person A is responsible for $17,500 (70%) of the LOC and person B is responsible for $7,500 (30%) and percentage wise responsible for the insurance and interest on their amount.

              Comment


              • #8
                Originally posted by stripes View Post
                Then person B would be responsible for replenishing the account from which the borrowing costs are being withdrawn by the bank, using the money given by A, as well as B's own money for the remaining 30% of the borrowing costs.

                I'm assuming that B wants to separate finances from A and not have joint accounts or funds any more, so would prefer to receive the money from A and pay the bank directly, rather than share an account into which A transfers money?
                The bank has already been paid, person A is a tad lazy and clearly in this case not motivated to make this "right" for person B. While willing to pay person B the money they're owed they're not willing to do any work to ensure its done...

                You are correct that person B wants to separate finances. but also to not lose any money by carrying person A financially.

                Comment


                • #9
                  Originally posted by dinkyface View Post
                  I'm not quite clear on how the OP WANTS to handle this. I see 2 options, both continuing with the joint acct:
                  1) continue to contribute equal amounts to the joint account, and person A pays B some extra to make the % right.
                  Or
                  2) contribute the desired % to the joint acct (PLUS 50%? share of other bills are being paid from this account)
                  I would like to know where person A pays their share of the interest and insurance. We've got the numbers, we know down to the penny what is person A's share and what is person B's share. Person A has agreed to and is willing to make this right.

                  The issue person B can't figure out is where person A pays the money to - your option A would assume that person A would pay person B the 20% (the difference from 50% that was already paid to the bank and the 70% person A owed).

                  I'm not sure I understand your option B.

                  Comment


                  • #10
                    For option 2) assuming a 1:2 split for the LOC interest/insurance.

                    Let's say the bank is taking $99 monthly for the LOCs combined. To cover this, person A would deposit $66 and person B would deposit $33 monthly. That's all. Why does that not solve your problem?

                    The above works if you are depositing money to cover an UPCOMING bank charge. But if you are adjusting for a past bank charge that you have already covered in full, 50-50, then use option 1) i.e. person A must pay the adjustment amount directly to person B (not to the bank - they already took their money, and not to the joint account).

                    Perhaps difficulty arises from the following ...?

                    Are there other bills coming from the joint account? Are they split 50-50? Do you deposit money to cover them when needed or do you just have a regular monthly deposit set up?

                    Do you have to sort out some adjustment for the past months where you have been splitting the LOC interest/insurance 50-50?

                    Is the bank also taking some repayment or principal monthly from the joint account, and you're having trouble separating this from the interest/insurance portion?
                    Last edited by dinkyface; 10-14-2014, 08:57 AM.

                    Comment


                    • #11
                      One way for Person A to give $ to Person B is by putting it into the joint account **BUT** only as a credit towards Person B's future contributions into the joint account.

                      e.g. Person A wants to give Person B $100 so Person A puts an extra $100 into the joint account. Then a bill arrives (to be paid out of the joint account) for which Person B's share is $150. Person B will only have to deposit $150-$100 =$50 into the joint account. Person A also deposits their share as usual.

                      But this is messy, and adds extra accounting to keep track. Probably easier for Person A just to give the money directly to Person B.

                      Keep the bank out of it ... they already got their money out of the joint account.

                      Comment


                      • #12
                        Originally posted by dinkyface View Post

                        But this is messy, and adds extra accounting to keep track. Probably easier for Person A just to give the money directly to Person B.
                        So if I read this right - your saying that since the bank pulled the money from the joint account (which was contributed to 50/50 by both), and yes person A&B are going back over the last few months to figure out the amounts and where person A should pay - is that for retro payments to make things "right" person A would pay person B the amount they've agreed to. (Rather then the option of putting that money into the joint account).

                        I think I've got this - thanks so much!

                        Comment

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