Author Topic: Where should I put my money first?  (Read 2410 times)

Rosewhipped

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Where should I put my money first?
« on: August 04, 2014, 05:57:14 PM »
After a monetarily unwise early adulthood (currently 27) I finally came to my senses and finance is my new favorite topic.  I've been reading MMM blog and various finance books for about 8 months now and moved back in with my immensely generous parents around the same time.  I moved back in after only 5 months out because my car (which i had started saving for) died about a year earlier than i expected.  Rather than financing I wanted to save enough to flat out buy it. 

I've saved about $14,000, which is more than enough for a decent car, but I am now tempted to throw it all at my student loans.  Which are currently at about $11,000.  The interest rates are not too high (between 2.08% and 6.55%), but paying it off would leave me completely debt free.  I'd then be able to put all my savings towards the car and it would only take a couple more months to amass enough for a car. 

Even though it'd be annoying to have to continue to share a car with my parents, none of us mind that much since my job is directly across the street from the train my dad takes into the city everyday.  So i drop him off and then use the car to go to work and wait 15 minutes for him at the end of the day.  Work is close enough that I could walk  if my mom need a car during the day, but she uses it only infrequently since she has bipolar/depression and isn't very independent so apart from an occasional drs appointment she doesn't really drive anywhere.  My dad has repeatedly said he doesn't mind sharing cars and i try to let him know in advance when i might need to use it.

*I do contribute 9% of my paycheck every week to a 401k with 3% matched (limit).  I wanted to put $5500 in a Roth IRA this year...but obviously that would be an additional amount to save.

This is too long winded.  What should i do with my money??!! Car or student loan debt?

Thanks for your time and advice!

Frankies Girl

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Re: Where should I put my money first?
« Reply #1 on: August 04, 2014, 06:28:48 PM »
Loans would be my choice if it was me in the same position. You don't technically need a car, since you and your parents are okay sharing, so it would be the best to take out the loans and then start saving for a car down the line. But technically, after the loans were gone, I'd save the following way: one third for car, one third for Roth funding and one third for emergency fund.

hexdexorex

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Re: Where should I put my money first?
« Reply #2 on: August 04, 2014, 07:11:18 PM »
I think every mmm person is gonna tell you loans : ). You can prob get a decent reliable car under 3k with the rest of your money.

La Bibliotecaria Feroz

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Re: Where should I put my money first?
« Reply #3 on: August 04, 2014, 07:23:57 PM »
Loans! Our rates were way lower than yours but we paid off and it feels awesome. I wrote a blog post about it, which I mention only because my grandfather, who I didn't know read my blog (!), was so moved by it that he sent me a thousand dollars to help with our moving costs. (http://frugalparagon.com/2014/05/25/debt-free-and-why-we-did-it/)

It's so nice not to have that money going out every month and not be beholden to anyone.

I would hold off as long as possible on getting a car. There are other costs to ownership besides just buying, of course, so if you and your parents can share, it benefits you AND the environment.

Rosewhipped

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Re: Where should I put my money first?
« Reply #4 on: August 04, 2014, 08:04:46 PM »
Thanks for the feedback, everyone.  Paying loans is what I was leaning towards and I guess I just wanted  the reassurance that it was the right thing to do before I throw all my money at it.
Cheers!

RyeWhiskey

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Re: Where should I put my money first?
« Reply #5 on: August 04, 2014, 08:06:53 PM »
You have 14k saved and 11k in loans which looks to me like an additional 3k to put into the Roth this year. I would put the money in the Roth over purchasing the vehicle pretty much everyday, especially given that you already have access to a car.