Author Topic: What would you do in my shoes?  (Read 1588 times)

GW

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What would you do in my shoes?
« on: May 09, 2019, 07:22:16 PM »
Quick breakdown

Student loans
A: $5,453.60 @ 6.80%
B: $4,208.07 @ 6.80%
C: $2,245.63 @ 6.00%
Total Loan Debt - $11,907.30

Savings Acct Balance
Current - $7,500
Plus and additional $4,000 - Insurance totaled out our paid for vehicle (bummed)
Total - $11,500

I want to pay off the student loan's and get to debt free with a few mouse clicks and start from zero. We'd be DEBT FREE :) This would be temporary as I have a raise hitting this month and side gig is going to land me $1K this month.

SO isn't completely comfortable doing that as we have family trips/obligations planned and likes having the savings safety net for peace of mind. SO suggestion is pay off largest loan and save money to pay cash for another used vehicle. We've been using 1 vehicle for the last month and it's not as bad as we thought it would be.

Thoughts?



pvnotp

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Re: What would you do in my shoes?
« Reply #1 on: May 09, 2019, 07:28:40 PM »
Which will give you greater peace of mind: having an emergency fund or being debt-free?

Personally, I think your SO is correct about just paying off the largest loan right now.  Have a little more patience.  Between the raise and the side-gig, you can be debt-free soon and without giving up your safety net.  However, since you've been doing alright with one vehicle,  why not just stick with that until the loans are all paid?

Laura33

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Re: What would you do in my shoes?
« Reply #2 on: May 10, 2019, 10:35:30 AM »
You always need an emergency fund.  What happens if you pay off all the loans?  A, you still need a car -- so now you're replacing one type of debt with another.  And B, if something hits, how do you pay for it?  You put it on a credit card -- in which case you've just swapped a 6% loan for a 15-20% loan.

I applaud you for wanting to get those loans paid off -- that is so much better than what many people do with any extra cash!  But you need to look at the bigger picture.  What are the rates on auto loans?  If they're cheaper than the student loans for a @$4K used car, then by all means, swap higher-rate debt for lower-rate debt.  But whatever you do, save yourself enough cash to cover your anticipated upcoming "extras" and things like a blown tire or an ER visit, so you don't end up diving back into even worse debt.  So pay off one of the loans, maybe two if you can get a better rate on the car loan.  And then use your hatred of the remaining debt as motivation to really tighten the belt and cut expenses and work your ass off on your side gig to get the rest paid off ASAP.

MonkeyJenga

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Re: What would you do in my shoes?
« Reply #3 on: May 10, 2019, 10:48:22 AM »
How long can you go with one car, and how much can you add to savings each month? I would try sticking it out until you've paid off the loans. Pay off one of the higher interest loans now, keep the rest of your emergency fund, and pay off the rest of the loans using cashflow. Then reevaluate if you need a second car and go from there.

Good luck, and sorry about the car!

the_fixer

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Re: What would you do in my shoes?
« Reply #4 on: May 11, 2019, 07:19:16 AM »
If it were my money / situation I would take all but $2000 and pay off 2 of the loans (6.8%) in this case.

Then since it sounds like the 1 car thing is working ok I would stick with one car and rent a car for a day or two when needed while paying off the last loan.

Once that loan was paid off I would start putting additional money into an emergency fund and saving for a 2nd car.

If I no longer desired a 2nd card I would then shift that money to the e-fund and start investing.

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« Last Edit: May 11, 2019, 08:49:25 AM by the_fixer »

chasesfish

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Re: What would you do in my shoes?
« Reply #5 on: May 11, 2019, 07:40:21 AM »
The first $100,000 I had saved outside of retirement accounts was the most freeing feeling I've ever had.  I wouldn't give it up for anything.

I would not prepay the debt

Villanelle

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Re: What would you do in my shoes?
« Reply #6 on: May 11, 2019, 07:46:01 AM »
I would cut the crap out of my expenses and find a side gig, were I in yours shoes. 


MDM

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Re: What would you do in my shoes?
« Reply #7 on: May 11, 2019, 06:20:57 PM »
Where do you see yourselves relative to the generic Investment Order?

MoneyizHere

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Re: What would you do in my shoes?
« Reply #8 on: May 14, 2019, 07:49:22 AM »
I would pay off all the loans if I was in your shoes.  I'd make the 1 car work - adjust our life routines and keep banking the margin until that comfortable Emergency fund is built back up.  I know for myself that I could get a short-term float if I ever actually needed from family and could always use a Credit Card for the time between my paychecks (I would get a new credit card to help you float it longer with 0% interest for up to 18 month-ish).  Then make the bare minimum payments   


frugaliknowit

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Re: What would you do in my shoes?
« Reply #9 on: May 14, 2019, 08:41:37 AM »
"Kill" all but C, so you have a few bux in the bank.

Family trips?  Unless it's not on a plane and no hotels, you guys go nowhere until your debt is gone and have an EF.

six-car-habit

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Re: What would you do in my shoes?
« Reply #10 on: May 14, 2019, 10:41:59 AM »
If it were my money / situation I would take all but $2000 and pay off 2 of the loans (6.8%) in this case.

Then since it sounds like the 1 car thing is working ok I would stick with one car and rent a car for a day or two when needed while paying off the last loan.

Once that loan was paid off I would start putting additional money into an emergency fund and saving for a 2nd car.

If I no longer desired a 2nd card I would then shift that money to the e-fund and start investing.

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This - what The Fixer suggests is the plan i would use.

GW

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Re: What would you do in my shoes?
« Reply #11 on: May 15, 2019, 06:25:32 AM »
Thanks for all the input everyone! As we are in Investment Order 2 still, here's what we've ended up doing. We do have retirement savings ~$100K and an HSA ~$5K. (Early 30s)

We wiped out Loan A - $5,453.60 @ 6.80% and kept the rest in the emergency fund in tact for peace of mind. When the side gig pays me out, that money will go towards wiping out Loan B. We're going to continue to use 1 vehicle for as long as we can while we save cash for a second if needed.

Patience

The family trip is for a wedding we're in.

the_fixer

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Re: What would you do in my shoes?
« Reply #12 on: May 15, 2019, 05:32:20 PM »
Congrats now get off the internet and go make some money at your side gig :)

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