Debt payoff/paying for a huge trip question | TigerDroppings.com

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TDsngumbo
LSU Fan
Member since Oct 2011
5056 posts
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Debt payoff/paying for a huge trip question


I have about $12,700 in car and student loan debt right now. The interest rate on the car debt is 4.25% (purchased two years ago) and the interest on the student loan debt is 6%.
I'm currently paying $1,300 extra each month toward this debt which will have everything paid off by the end of October 2013. However, I have a $7,000 trip planned for the summer of 2014. I currently plan on paying everything off by October 2013 then paying off the trip within a few months after that.
Should I only pay off the car debt (until May) then pay off the trip, and THEN pay off the student loans -- OR -- pay off the student loans first, then car, then the trip?
I have an emergency fund that is equal to a little less than 6 months of expenses currently and I will begin investing the extra $1,802/month in payments that are currently going toward the car and student loan debt. These investments will consist of maxing out my IRA, my wife's IRA, and an additional growth mutual fund along with a little going into savings each month.

What does the money board think about this plan? How can I improve it or am I doing well the way it is?







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Chris Farley
Maryland Fan
Regulating
Member since Sep 2009
3637 posts

re: Debt payoff/paying for a huge trip question


Pay off the higher interest debt (student loans) first.





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dewster
Maryland Fan
Tennessee
Member since Aug 2006
8993 posts

re: Debt payoff/paying for a huge trip question


General question....can you pay of some student loans early but not others?

I have one private loan that I am almost ready to pay off, and some subsidized loans that I'm not.






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TDsngumbo
LSU Fan
Member since Oct 2011
5056 posts
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re: Debt payoff/paying for a huge trip question


I can pay them off whenever I want. Should I do the higher interest debt first? I guess that makes sense.





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geauxtigers003
LSU Fan
Lafayette
Member since Aug 2007
83 posts

re: Debt payoff/paying for a huge trip question


you need to factor in the ability to write off the tax right off on the student loan.





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Daygo85
LSU Fan
Member since Aug 2008
2651 posts

re: Debt payoff/paying for a huge trip question


Smallest loan first then roll payments into larger loan. Cash flow that vacation for sure if u already are putting away 15% in retirement. And of course you have NO other consumer debt.

That's my 2 cents FWIW.






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TDsngumbo
LSU Fan
Member since Oct 2011
5056 posts
 Online 

re: Debt payoff/paying for a huge trip question


quote:

Smallest loan first then roll payments into larger loan. Cash flow that vacation for sure if u already are putting away 15% in retirement


That's what I'm currently doing.

quote:

Daygo85

Daygo? Hmm... you must be an expert on the subject






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