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Started By
Message
Debt Payoff Strategy Advice
Posted on 7/16/13 at 9:01 am
Posted on 7/16/13 at 9:01 am
I have two major forms of debt at the moment.
5 year Used Auto Loan $230 biweekly @ 3.25%.
15 year moveable mortgage loan $351.90 @ 5% interest (Trailer w/ Lot rental property)
The auto loan is brand new (last Monday) And my first payment is scheduled for August 9th.
The trailer is my first rental investment. Rent is $650/month (Insurance + Taxes around $400/year)
This my only debt. I don't have a mortgage and pay no rent, fortunately. I do have bills (vehicle insurance, cell phone, utilities, etc.) that average probably $700/mo.
My Question is what would be your strategy in attacking these two loans and paying them off as quickly as possible?
5 year Used Auto Loan $230 biweekly @ 3.25%.
15 year moveable mortgage loan $351.90 @ 5% interest (Trailer w/ Lot rental property)
The auto loan is brand new (last Monday) And my first payment is scheduled for August 9th.
The trailer is my first rental investment. Rent is $650/month (Insurance + Taxes around $400/year)
This my only debt. I don't have a mortgage and pay no rent, fortunately. I do have bills (vehicle insurance, cell phone, utilities, etc.) that average probably $700/mo.
My Question is what would be your strategy in attacking these two loans and paying them off as quickly as possible?
5
Posted on 7/16/13 at 9:03 am to LSUengineer12
Send $ to your lienholder 
Posted on 7/16/13 at 9:37 am to LSUengineer12
What kind of used car did you get to need a 5yr auto loan?
Posted on 7/16/13 at 11:33 pm to LSUengineer12
quote:
what would be your strategy in attacking these two loans and paying them off as quickly as possible?
I'm not so sure that paying them down asap is the best idea. Keep in mind that a 2-3% loan is right around the cost of inflation, so that is fine so long as you have income to make the payments. At that rate you do not profit from paying off.
You have a 3.25% loan. That's pretty reasonably close to the inflation rate, no emergency here.
You have a mortgage at 5%. You can deduct that from income tax, so the real rate is more like 4% or less. Still okay.
Bottom line - don't worry about "attacking" debt that only costs a percent or so above the rate of inflation. There are better ways to use money than that.
Posted on 7/17/13 at 11:57 am to LSUengineer12
I would attack the car note if it were me. If the trailer and lot are in good condition and you have a high percentage of rent time per year on it, I would get rid of the car note if it were me.
Posted on 7/17/13 at 12:17 pm to LSUengineer12
It depends on what your goals are. If its to reduce the total interest you pay, put all the extra towards the higher interest. If it's to reduce liabilities, pay it towards car, then stack that payment to trailer.
I personally would prob put a little extra toward trailer, but save more. Maybe contribute more to a retirement account, or some other investments. Both rates are pretty low, so assuming you have a secure job, no need to pay since you could make more in the market. Possibly also saving for a house down payment if that's in your future. Rates are quickly rising.
I personally would prob put a little extra toward trailer, but save more. Maybe contribute more to a retirement account, or some other investments. Both rates are pretty low, so assuming you have a secure job, no need to pay since you could make more in the market. Possibly also saving for a house down payment if that's in your future. Rates are quickly rising.
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