Author Topic: Paying off cars/student loan to free up income for large student loan  (Read 953 times)

kmmb65

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I'm trying to formulate a plan of attack to pay off my wife's large student loan balance. If we used savings to pay off our cars and my small student loan, it would free up income to put towards her student loan principal on a monthly basis. Is this a viable strategy? Any articles, sites etc on this for further reading? Thanks in advance.

khangaroo

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Re: Paying off cars/student loan to free up income for large student loan
« Reply #1 on: February 21, 2017, 03:32:52 PM »
If you want detailed help, I would suggest reading this post: http://forum.mrmoneymustache.com/case-studies/how-to-write-a-'case-study'-topic/ and then putting that information into the Case Studies forum so that fellow MMM'ers can help you.

The information you posted is very vague therefore you are going to get very vague answers.

If you haven't already, I would suggest reading Dave Ramsey's The Total Money Makeover - it's completely changed my life. Caveat: I suggest that as a first step to almost everyone.

kmmb65

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Re: Paying off cars/student loan to free up income for large student loan
« Reply #2 on: February 21, 2017, 04:39:23 PM »
Thanks! I'll check out that case study section and the book. Picked up Your Money or Your Life today, that'll be my next one.

NoStacheOhio

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Re: Paying off cars/student loan to free up income for large student loan
« Reply #3 on: February 22, 2017, 01:00:55 PM »
A lot of posters will harp on paying lower interest debt as "mathematically incorrect," and it technically is, but doing straight interest-rate based paydown doesn't take into account cashflow. If using your savings to knock out the smaller loans doesn't put you in a bind when the inevitable unplanned expense rolls your way, then it may make sense. With higher incomes, it's less of a consideration, but on a more modest income, monthly cashflow is important.

+1 to the case study

Slow&Steady

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Re: Paying off cars/student loan to free up income for large student loan
« Reply #4 on: February 22, 2017, 02:11:13 PM »
I recent started using undebt.it and have found it really useful, and it is free.  After you put in your dedicated monthly payments and all your debt information, there is an additional payments (debt snowflake) section that I believe you can put the amount in your savings that you want to put towards debt and it will recalculate your debt free date.  It also shows you several different strategies and how much you will pay with each one.