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BestBanker
New Orleans Saints Fan
Around here.
Member since Nov 2011
10754 posts

re: Pay off Debts or continue to Max Roths?
What role does time play in your decisions?

If you pay off debt, you have a larger pile to save.

If you keep investing as is, you have a larger pile of exponential growth.

We can't replace time in a compound equation. Remember that your real estate should also be rising in values as well, even without paying it off.


632627
Southern Cal Fan
LA
Member since Dec 2011
8981 posts

re: Pay off Debts or continue to Max Roths?
Shocking how much bad advice has been given.

In what world does it make sense to pay off a loan at 1.9%?

Are we next going to recommend that he stockpiles physical bills under his mattress?


Brobocop
LSU Fan
Baton Rouge, LA
Member since Feb 2018
510 posts

re: Pay off Debts or continue to Max Roths?
It would take 3 years of paying down debt (sans mortgage) to essentially free up an additional $1,500 a month. Currently we have $1000 going to the Roth's each month.

After the 3 years, we resume Maxing of the Roths.

I could see time playing a huge factor if we were to stop contributing for a longer period of time, but this is a temporary thing.

I do feel like shedding some debt will also be a huge weight lifted as well. We aren't over extended (Total Debt to Income Ratio is ~25%), but it will be nice to only have a mortgage (11% of Income).
This post was edited on 8/13 at 7:53 am


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Brobocop
LSU Fan
Baton Rouge, LA
Member since Feb 2018
510 posts

re: Pay off Debts or continue to Max Roths?
Lol. By the time the investment property and lot are paid off, the 1.9% interest vehicle will be nearly paid off. I agree it doesn't make sense to pay off early, other than freeing up cash flow.


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Ric Flair
LSU Fan
Charlotte
Member since Oct 2005
10386 posts

re: Pay off Debts or continue to Max Roths?
Can you cut down on your spending a little and do both? Either cut expenses or get a side hustle to throw extra money on the “lot” loan.

I would sell the lot, if possible. Sounds like a big money (and yearly tax) drain with no income. All other loans look more than reasonable, but over 5% interest on a lot at 20 years seems crazy. Unless the “lot” is on a lake or in Manhattan.


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