- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Buy stocks or pay off student loans & car?
Posted on 1/18/15 at 10:43 am
Posted on 1/18/15 at 10:43 am
I owe approximately $13,000 on car @ 0% interest and $5,800 in student loans at 5% interest.
I have approximately $800-1,000 a month to use. Do I buy stocks or pay off debt?
I currently have $26,500 in retirement accounts and a $10,000 emergency fund.
Stocks I'm looking at:
Hilton
Disney
Ford
GE
Walmart
Apple
Home Depot
I have approximately $800-1,000 a month to use. Do I buy stocks or pay off debt?
I currently have $26,500 in retirement accounts and a $10,000 emergency fund.
Stocks I'm looking at:
Hilton
Disney
Ford
GE
Walmart
Apple
Home Depot
This post was edited on 1/18/15 at 11:20 am
5
Posted on 1/18/15 at 11:04 am to TDsngumbo
Kill the student loans to reduce debt service, but you should never pay off free money.
After you pay off your student loans, fund your ROTH IRA until the max. What you invest in is up to you.
After you pay off your student loans, fund your ROTH IRA until the max. What you invest in is up to you.
Posted on 1/18/15 at 11:38 am to TheHiddenFlask
quote:
Kill the student loans to reduce debt service, but you should never pay off free money.
This
Posted on 1/18/15 at 12:01 pm to BACONisMEATcandy
That's where I was leaning also but y'all don't think it's best to just pay off everything first - regardless of interest rate?
Posted on 1/18/15 at 12:01 pm to TDsngumbo
quote:
GE
This...
Posted on 1/18/15 at 12:23 pm to TDsngumbo
Whatever you do, do not pay off that car loan while the money is free. There is no benefit to paying off free money.
First thing I would do is pay off the student loans just so I didn't have that hanging over my head for long.
Then max out ROTH, then start buying stocks.
First thing I would do is pay off the student loans just so I didn't have that hanging over my head for long.
Then max out ROTH, then start buying stocks.
Posted on 1/18/15 at 12:24 pm to dj30
Why so excited about GE? I already own them but just curious. I hope it goes up
Posted on 1/18/15 at 12:41 pm to TDsngumbo
quote:
That's where I was leaning also but y'all don't think it's best to just pay off everything first - regardless of interest rate?
HELL NO! Again, unless you need to fix your debt to income ratio in order to get a mortgage or something you should never pay a loan with no interest off early.
Posted on 1/18/15 at 12:50 pm to lsu480
quote:
That's where I was leaning also but y'all don't think it's best to just pay off everything first - regardless of interest rate?
it's free money. put it in one of those online cd's or savings accounts that make 1%. don't pay it off early.
Posted on 1/18/15 at 12:52 pm to 632627
You would think that would be common sense
Posted on 1/18/15 at 2:19 pm to lsu480
Some people just don't like debt. They listen to Dave Ramsey or their parents/grandparents, or are very undisciplined. Free money is great, but not if the actual money burns a hole in your pocket and will get spent on frivolous things.
OP, if your emergency fund is sufficient, and you feel you're putting enough into retirement (At minimum 401k full match and Roth max), then throw the extra money to the student loans. They are also tax deductible and very forgive able, so they are also very low priority.
No need to pay off car at 0%. Just pay minimum on it and ride it out long term.
OP, if your emergency fund is sufficient, and you feel you're putting enough into retirement (At minimum 401k full match and Roth max), then throw the extra money to the student loans. They are also tax deductible and very forgive able, so they are also very low priority.
No need to pay off car at 0%. Just pay minimum on it and ride it out long term.
Posted on 1/18/15 at 5:09 pm to TDsngumbo
quote:
I owe approximately $13,000 on car @ 0% interest and $5,800 in student loans at 5% interest.
I have approximately $800-1,000 a month to use. Do I buy stocks or pay off debt?
I currently have $26,500 in retirement accounts and a $10,000 emergency fund.
Stocks I'm looking at:
Hilton
Disney
Ford
GE
Walmart
Apple
Home Depot
pay off car and loan its a no brainer
Posted on 1/18/15 at 5:25 pm to Double Oh
quote:
pay off car and loan its a no brainer
There sure is someone not using a brain here.
If OP gives the loan holder $13k to remove the debt this instant, what does OP have? No dollars and no debt.
If OP pays the 0% interest car loan off monthly on time over the course of the next three years (just an assumption here) and invests that $13k making 2% a year simple interest, at the end of the life of the loan, what does the OP have? Almost $800 and no debt.
Either way, he's gonna pay $13k. The only question is whether he's gonna make the returns on that 13k over the remaining life of that loan or the loanholder will.
This post was edited on 1/18/15 at 5:30 pm
Posted on 1/18/15 at 5:29 pm to TigerstuckinMS
Economically these guys a right about not paying off the car. The exception, imo, is for some people it can be a psychological distraction. It sounds weird what I am saying, I know.
Posted on 1/18/15 at 8:30 pm to TigerstuckinMS
quote:
here sure is someone not using a brain here.
If OP gives the loan holder $13k to remove the debt this instant, what does OP have? No dollars and no debt.
If OP pays the 0% interest car loan off monthly on time over the course of the next three years (just an assumption here) and invests that $13k making 2% a year simple interest, at the end of the life of the loan, what does the OP have? Almost $800 and no debt.
Either way, he's gonna pay $13k. The only question is whether he's gonna make the returns on that 13k over the remaining life of that loan or the loanholder will.
Dave Ramsey would not like you my friend.
Posted on 1/18/15 at 9:34 pm to TigerTatorTots
quote:
Whatever you do, do not pay off that car loan while the money is free. There is no benefit to paying off free money.
First thing I would do is pay off the student loans just so I didn't have that hanging over my head for long.
Then max out ROTH, then start buying stocks.
I have to respectfully disagree. A man who chooses to stay in debt when he doesn't have to is not making a wise decision. It's not free money either. You pay a butt load of interest of you don't pay it off in time. You never know when life is gonna punch you in the nuts, so why remain slave to a lender who will make life worse when that happens?
If you have to borrow money so that you can make investments elsewhere, then are you really doing as well as you think you are?
I'd knock out the SL quickly then focus the momentum on the car. Don't stop til you're completely out of debt except the house, then ramp up the retirement savings.
Remember, if you still owe money on something, you don't own it. Someone else owns it.
This post was edited on 1/18/15 at 9:39 pm
Posted on 1/18/15 at 9:38 pm to TigerstuckinMS
quote:
There sure is someone not using a brain here.
If OP gives the loan holder $13k to remove the debt this instant, what does OP have? No dollars and no debt.
If OP pays the 0% interest car loan off monthly on time over the course of the next three years (just an assumption here) and invests that $13k making 2% a year simple interest, at the end of the life of the loan, what does the OP have? Almost $800 and no debt.
Either way, he's gonna pay $13k. The only question is whether he's gonna make the returns on that 13k over the remaining life of that loan or the loanholder will.
I get the math. It makes sense. The variable that you're not taking into account is the fact that life punches you in the nuts when you least expect it. If you can get out of debt, then do it. Otherwise, you're gambling.
Posted on 1/18/15 at 9:38 pm to jacquespene8
quote:??? That is not what 0% interest means
It's not free money either. You pay a butt load of interest of you don't pay it off in time.
Paying the minimum payment on a zero percent interest car note actually makes your purchase price cheaper over time due to inflation. In addition, it makes it even more cheaper by taking that extra money he would have paid on the 0% interest loan, to pay down other high interest debt or throwing it into the market where he will likely make money off of that extra amount. He has an emergency fund. That is its purpose...if life punches you in the nuts, the emergency fund comes into play.
quote:And I do not understand 1 bit why you would pay off something that you are paying zero interest on BEFORE something that is charging you 5% per year to carry. That makes NO SENSE what so ever
I'd knock out the car loan quickly then focus the momentum on the SL. Don't stop til you're completely out of debt except the house, then ramp up the retirement savings.
This post was edited on 1/18/15 at 9:42 pm
Posted on 1/18/15 at 9:46 pm to TDsngumbo
Unless you are just terrible with money or in fear of losing your job I would not pay it off 
Posted on 1/18/15 at 9:54 pm to TigerTatorTots
I misread original post. On second look I saw that SL is 5800, not 58000. In that case, yes pay off SL first then concentrate on car.
My point is that his emergency fund is less than his outstanding debt. And choosing to stay in debt, no matter the interest, so that you can put your BORROWED money at risk is foolish.
Everything you guys are stating adds up mathematically, I get it. But you're tricking yourself if you don't think you can get underwater on an interest free auto loan. Cars lose value by the day. It's just dumb to invest and try to make money off of borrowed money when you're in debt on a depreciating asset.
What do you call an interest free loan? Debt.
My point is that his emergency fund is less than his outstanding debt. And choosing to stay in debt, no matter the interest, so that you can put your BORROWED money at risk is foolish.
Everything you guys are stating adds up mathematically, I get it. But you're tricking yourself if you don't think you can get underwater on an interest free auto loan. Cars lose value by the day. It's just dumb to invest and try to make money off of borrowed money when you're in debt on a depreciating asset.
What do you call an interest free loan? Debt.
Page 1 of 3
Popular
Back to top
Follow TigerDroppings for LSU Football News