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Paying off debt strategy
Posted on 9/28/26 at 2:20 pm
Posted on 9/28/26 at 2:20 pm
Got a little bit of extra cash to put on debt. My truck is almost paid off and has a pretty low rate. Wife’s care still has a good bit to go and rate is higher. Mortgage is still way out but rate is pretty low thanks to Covid.
Paying off the truck will really only save $100 or so in interest since it so close to being paid off.
Putting it on the wife’s car will save around $1000 in interest over the life of the loan and make a good dent in overall principal.
Won’t make much of a dent in the total bill on the mortgage but will save a substantial amount(almost 5k) over the lifetime of the loan.
Thoughts on what you would do and why?
Paying off the truck will really only save $100 or so in interest since it so close to being paid off.
Putting it on the wife’s car will save around $1000 in interest over the life of the loan and make a good dent in overall principal.
Won’t make much of a dent in the total bill on the mortgage but will save a substantial amount(almost 5k) over the lifetime of the loan.
Thoughts on what you would do and why?
Posted on 9/28/26 at 2:22 pm to AUVet21
your car is a depreciating asset. Your house is not. Pay off the car
Posted on 9/28/26 at 2:23 pm to AUVet21
You sure about that that? Isn’t the entire term worth of interest baked into the loan and has to be paid off regardless of early payoff or not?
Posted on 9/28/26 at 2:28 pm to BawtHouse
Posted on 9/28/26 at 2:58 pm to AUVet21
If you want "feel good" then pay off your truck.
If you want to be financially savvy, apply it to the higher rate on your wife's car.
If you want to be financially savvy, apply it to the higher rate on your wife's car.
This post was edited on 9/28/26 at 3:01 pm
Posted on 9/28/26 at 3:05 pm to BawtHouse
quote:
Isn’t the entire term worth of interest baked into the loan and has to be paid off regardless of early payoff or not?
normally...yes.....unless he got simple interest financing
Posted on 9/28/26 at 3:07 pm to AUVet21
I would put it towards the smallest debt to free up budget faster. Freed up budget makes a bigger impact on people's financial stress than anything else.
Posted on 9/28/26 at 4:51 pm to AUVet21
Pay off the truck then roll those payments over to the car to pay it off faster. Having a vehicle paid off is a good feeling and relieves a lot of stress.
Posted on 9/28/26 at 6:33 pm to Bard
Yep, snowball it. Pay off the truck and use any leftover to put towards car. Then take whatever you were paying on the truck and pay it towards the car. Once the car is paid off, keep making that payment towards a HYSA to pay as much as you can when you have to buy a new car.
Posted on 9/29/26 at 7:12 am to Suntiger
No better feeling than being debt free
Posted on 9/29/26 at 9:32 am to Popths
quote:
No better feeling than being debt free
Tons of studies coming out these days proving this to be true. Hell, even a bigtime finance guy on youtube who preached nothing but leveraging debt to build wealth has come around and is now preaching the benefits of paying off debt.
Posted on 9/29/26 at 9:44 am to AUVet21
I'm all for paying off and avoiding unnecessary debt. Rates still matter though. Are these sub 4% rates? If so, I'd be in no rush to pay off and would rather fully fund tax advantaged investments first.
Also, depends on how financially secure you are. Is emergency fund robust, job extremely stable? If not, keeping the cash in a HYSA until you have enough to pay off a debt in full and free up the payment could be best approach.
Also, depends on how financially secure you are. Is emergency fund robust, job extremely stable? If not, keeping the cash in a HYSA until you have enough to pay off a debt in full and free up the payment could be best approach.
Posted on 9/29/26 at 9:50 am to AUVet21
Pay off your smallest debt. Roll that payment to the next smallest debt. Rinse and repeat.
Snowball, snowball, snowball. It absolutely works and gives you a great feeling of accomplishment every time a debt is paid. It will motivate you.
Snowball, snowball, snowball. It absolutely works and gives you a great feeling of accomplishment every time a debt is paid. It will motivate you.
Posted on 9/29/26 at 10:00 am to TorchtheFlyingTiger
quote:
depends on how financially secure you are. Is emergency fund robust, job extremely stable?
I was going to ask if OP has an emergency fund, but just decided to answer the question. But I agree that OP should have an emergency fund and make sure that liquidity issues are met before paying off debt.
As far as interest rates go, I think that’s the personal decision in personal finance. High interest rate debt like CC debt should absolutely be paid off as quickly as possible. Vehicles are a depreciating asset, so those should probably be paid off as well, but if you have a sub-4% rate, I get the math on investing vs. paying off debt. But I would pay the debt. Mortgages are a completely different issue.
Posted on 9/29/26 at 10:13 am to Suntiger
Emergency fund is stocked and my truck rate is 3.5. I think for me saving the interest money on my wife’s car is worth the few extra months of paying on my truck. It will be paid off in February so I know the light at the end of the tunnel is near
Posted on 9/29/26 at 10:14 am to notsince98
quote:
Hell, even a bigtime finance guy on youtube who preached nothing but leveraging debt to build wealth has come around and is now preaching the benefits of paying off debt.
George Kamel finally got through to him.
Posted on 9/29/26 at 10:31 am to AUVet21
don't go in debt for depreciating assets pay cash is what i do . i kinda giggle when i see the dumb people driving around in 60k trucks
This post was edited on 9/29/26 at 10:33 am
Posted on 9/29/26 at 10:45 am to Suntiger
quote:
Vehicles are a depreciating asset, so those should probably be paid off as well,
quote:I've never quite understood this concept. How does it matter whether or not the asset appreciates? If you NEED the vehicle or can afford it, why not take out low interest debt to fund the purchase and keep more $ invested in appreciating assets? What's different about paying down a depreciating asset debt versus one that appreciates? Assuming same rate, I'd make the case that paying down car loan is better than mortgage because the car can be sold easily making it a more liquid asset instead of tieing up your capital in home equity for decades (expensive to access via HELOC or sale)
don't go in debt for depreciating assets pay cash
Posted on 9/29/26 at 10:53 am to TorchtheFlyingTiger
buy a cheap used vehicle is what i was trying to say . who wants a 1k a month truck note plus interest ? put that money to work in real-estate or etfs.
Posted on 9/29/26 at 10:58 am to REB BEER
quote:
George Kamel finally got through to him.
Yes! It was Graham Stephan that is now a convert. Graham even went over some new data that George hadn't seen. Really great stuff.
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