Author Topic: Debt Situation - What to pay off first?  (Read 3688 times)

dess1313

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Re: Debt Situation - What to pay off first?
« Reply #50 on: June 02, 2017, 11:19:10 AM »
Sometimes cash flow and behavioral considerations trump interest rate considerations.  In the OP's shoes, I would pay off all the student loans and consumer debt and exercise the necessary discipline not to create any more debt for awhile.  Once I had developed the mindset of avoiding consumer debt and had extra cash that I controlled, I would focus on getting rid of the PMI as quickly as possible.

I am Canadian and do not know your system enough to give advice on tax advantage systems hence why I left those out of my comments. 

As another reader said part of this is cash flow part behavior.  Some people are quite aggressive, some are quite conservative.  Sometimes freeing up a little cashflow can make a ton of improvement wether it goes to debt or savings/investing in tax beneficial accounts.  It sounds like a solid starting plan you have kwarden13.  Good luck putting it in play
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boarder42

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Re: Debt Situation - What to pay off first?
« Reply #51 on: June 03, 2017, 02:17:14 PM »
If you're planning on 4% swr. It is very easy to mathmatically determine the best option to eliminate debt and invest to come out ahead in the long run. It's not aggressive vs conservative it is math.
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Another Reader

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Re: Debt Situation - What to pay off first?
« Reply #52 on: June 03, 2017, 07:41:01 PM »
If you're planning on 4% swr. It is very easy to mathmatically determine the best option to eliminate debt and invest to come out ahead in the long run. It's not aggressive vs conservative it is math.

What constitutes optimized to you may not constitute optimized to someone else.  There is more to the process of becoming FI than the single mathematically fastest path.

talltexan

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Re: Debt Situation - What to pay off first?
« Reply #53 on: June 06, 2017, 07:45:12 AM »
If you're determined to maintain the loan balance and invest in the 401(k), at least be brave about it and put 100% of those 401(k) contributions into the Total stock market fund (or equivalent).

Don't screw around with some half-ass target date fund that has bonds. Because if you're buying bonds, you might as well be paying off the debt.

kwarden13

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Re: Debt Situation - What to pay off first?
« Reply #54 on: July 10, 2017, 07:44:35 PM »
Posting an update....So I get $58,635 this Friday the 14th from my house closing!! Wooohoooo!!!

I am already maxing out my 401k without using this money. So my thought is to:

1) Figure out more about opening a Roth IRA or backdoor IRA (I gross $125k annually)
2) Pay off my student loans of $45,103
3) Pay off $6,532 of credit cards
4) Save $5k in case of taxes --- rented out house for 2.5 years
5) Save $2k as buffer in joint checking - just got my fiance to agree to open a joint checking so will be using this as a buffer in the account.

So excited to be almost debt free and start upping my savings outside of my 401k!

ysette9

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Re: Debt Situation - What to pay off first?
« Reply #55 on: July 10, 2017, 09:01:00 PM »
Oh wow, you sold the house! Somehow I didn't see that one coming. Exciting that you have all this cash now to pay off debt and bump up your investments. I don't remember the order of interest rates on your debt, but generally the best thing to do is pay it off highest interest rate to lowest.
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kwarden13

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Re: Debt Situation - What to pay off first?
« Reply #56 on: July 14, 2017, 11:05:24 AM »
Just now, I paid off $45k in student loans. $8k of cc debt, transferred $7k into savings for taxes and emergency fund! I will admit it was hard to hand over $45k for student loans but so glad it is done. One step closer to debt free!

Heroes821

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Re: Debt Situation - What to pay off first?
« Reply #57 on: July 14, 2017, 11:57:50 AM »
That is F'in amazing man! Awesome work.

Jaayse

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Re: Debt Situation - What to pay off first?
« Reply #58 on: July 16, 2017, 05:37:17 PM »
That's awesome!
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