more cash flow? or pay off car...

[bYuPride]

I have been paying about $500 for my car for the last year and a half or so. My payment is $219. I owe about 5k left and the interest rate is 4.99%. I'm sick of always feeling low on funds, but I'm glad my car is getting paid off faster. I can probably afford to pay 700-800 on the car but then I'd really have to live frugally. What should I do?

A. pay the $219/mo and live the rock star lifestyle but pay off the car over 2 years.
B. continue to pay $500/mo and live okay and pay it off in 10 months.
C. pay $800/mo and pay it off in 6-7 months and get the nuse from around my neck and breathe easy for a while.

what are your thoughts?!

[creekster]

I have been paying about $500 for my car for the last year and a half or so. My payment is $219. I owe about 5k left and the interest rate is 4.99%. I'm sick of always feeling low on funds, but I'm glad my car is getting paid off faster. I can probably afford to pay 700-800 on the car but then I'd really have to live frugally. What should I do?

A. pay the $219/mo and live the rock star lifestyle but pay off the car over 2 years.
B. continue to pay $500/mo and live okay and pay it off in 10 months.
C. pay $800/mo and pay it off in 6-7 months and get the nuse from around my neck and breathe easy for a while.

what are your thoughts?!

THere are a lot of factors you don't explain, but I might be tempted to pay $219 a month and put the other $281 in a mutual fund, especially if you are young.

Btw, please tell me where one can live the rock star lifestyle for only $281 a month!

[Mormon Red Death]

I have been paying about $500 for my car for the last year and a half or so. My payment is $219. I owe about 5k left and the interest rate is 4.99%. I'm sick of always feeling low on funds, but I'm glad my car is getting paid off faster. I can probably afford to pay 700-800 on the car but then I'd really have to live frugally. What should I do?

A. pay the $219/mo and live the rock star lifestyle but pay off the car over 2 years.
B. continue to pay $500/mo and live okay and pay it off in 10 months.
C. pay $800/mo and pay it off in 6-7 months and get the nuse from around my neck and breathe easy for a while.

what are your thoughts?!

As Jason Giambi once said:

"Hit like an all star, party like a rock star and pound like a porn star"

[SteelBlue]

At that interest rate you're not hurting yourself by taking the 2 years to pay it off. As Creekster said, you could put the other $300 in a mutual fund each month. My personal preference is to be free of consumer debt so I'd pay it off on your 10 month plan. I think going to the 800/month option would be excessive especially if you are unable to put anything in your savings under that plan.

[Detroitdad]

Pay the damn thing off. You are already used to having to scrimp what is another six months. Then you can party some, save some into that mutual fund. Six months worth of mutual fund head start is not going to seriously disadvantage you in terms of compund interest. Besides having a debt paid off is worth a little in terms of piece of mind.

[marsupial]

Pay the damn thing off. You are already used to having to scrimp what is another six months. Then you can party some, save some into that mutual fund. Six months worth of mutual fund head start is not going to seriously disadvantage you in terms of compund interest. Besides having a debt paid off is worth a little in terms of piece of mind.

That's the best advice you're going get.

[tooblue]

I have been paying about $500 for my car for the last year and a half or so. My payment is $219. I owe about 5k left and the interest rate is 4.99%. I'm sick of always feeling low on funds, but I'm glad my car is getting paid off faster. I can probably afford to pay 700-800 on the car but then I'd really have to live frugally. What should I do?

A. pay the $219/mo and live the rock star lifestyle but pay off the car over 2 years.
B. continue to pay $500/mo and live okay and pay it off in 10 months.
C. pay $800/mo and pay it off in 6-7 months and get the nuse from around my neck and breathe easy for a while.

what are your thoughts?!

Pay it off as quickley as possible. We now have a car payment after 5 years of no payment on a van that went into the shop once in 11 years.

The new van is nice and had there been a way to stick with the older one a little longer we would've, rather than have to make that payment which truly is like boulder chained to an ankle.

[creekster]

Pay the damn thing off. You are already used to having to scrimp what is another six months. Then you can party some, save some into that mutual fund. Six months worth of mutual fund head start is not going to seriously disadvantage you in terms of compund interest. Besides having a debt paid off is worth a little in terms of piece of mind.



Here's my thinking: It's like playing a little game with yourself. As Steel says, at 5% you're not getting hurt badly on the interest, so you really aren't going to be far ahead by paying it off or by not paying it off or by spliiting with a fund. But most people aren't that disciplined to save, so if you are already able to do $500 a montrh, then just keep doing it but put siome in the Mutual fuind. THen when the car is paid off, you can treat yourself with the extra money in your budget but keep saving. Either way, saving should be the focus. Let me tell you that if I could go back and do anything over zgain financially, it would be to save just a little more than I did. Not a lot, just some, but to do it earlier and regularly. Savings is power as you reach middle age. You may not believe me now, but when you get there you will know exactly what I mean.

[bluegoose]

Btw, please tell me where one can live the rock star lifestyle for only $281 a month!

Maybe he's more referring to the rock stars along the lines of Winger or Skid Row of 80's fame, busying their schedules with playing at the Sanpete county fair and cousin Vinny's Bar Mitzva.

[Detroitdad]

Here's my thinking: It's like playing a little game with yourself. As Steel says, at 5% you're not getting hurt badly on the interest, so you really aren't going to be far ahead by paying it off or by not paying it off or by spliiting with a fund. But most people aren't that disciplined to save, so if you are already able to do $500 a montrh, then just keep doing it but put siome in the Mutual fuind. THen when the car is paid off, you can treat yourself with the extra money in your budget but keep saving. Either way, saving should be the focus. Let me tell you that if I could go back and do anything over zgain financially, it would be to save just a little more than I did. Not a lot, just some, but to do it earlier and regularly. Savings is power as you reach middle age. You may not believe me now, but when you get there you will know exactly what I mean.

I am all with you on this. I just think that a 6 month time horizon is not worth the piece of mind that you would get.

I envy you that you have had the luxury to wish that you had more savings younger. Shortly after I had started saving and investing for the long term a substantial portion was wiped out by the internet/tachnology bubble. And I did not even get the joy of daytrading or even owning internet stocks, but the mutual funds I owned got hammered. So, paradoxically I am one of the rare people who can say, "i wish I had not invested so much when I was young." It was a hard way to learn a valuable lesson.

[creekster]

I am all with you on this. I just think that a 6 month time horizon is not worth the piece of mind that you would get.

I envy you that you have had the luxury to wish that you had more savings younger. Shortly after I had started saving and investing for the long term a substantial portion was wiped out by the internet/tachnology bubble. And I did not even get the joy of daytrading or even owning internet stocks, but the mutual funds I owned got hammered. So, paradoxically I am one of the rare people who can say, "i wish I had not invested so much when I was young." It was a hard way to learn a valuable lesson.

Bummer. sorry to hear about your situation. Not sure if I have the luxury to wish I had saved more, becasue if it is a luxury, it is one you can buy pretty cheaply and you never lose it once you have it.

[Detroitdad]

Bummer. sorry to hear about your situation. Not sure if I have the luxury to wish I had saved more, becasue if it is a luxury, it is one you can buy pretty cheaply and you never lose it once you have it.
If I could just get that market timing thing down it would be a cinch. My next investment tip? Sub prime mortgage lenders.

[BarbaraGordon]

Shortly after I had started saving and investing for the long term a substantial portion was wiped out by the internet/tachnology bubble. And I did not even get the joy of daytrading or even owning internet stocks, but the mutual funds I owned got hammered. So, paradoxically I am one of the rare people who can say, "i wish I had not invested so much when I was young." It was a hard way to learn a valuable lesson.

Us too. Before the kids we were able to invest quite a bit. This was pre-dot-com-bust.

We even went to our adviser in Nov 1999. Said we wanted to pull everything and reinvest because we had concerns about the sustainability of the tech/telecom industry.

He said. This is a quote: "Every indicator is that technology will continue to drive the market."

He convinced us to leave our "balanced portfolio" as it was.

Well, within months technology indeed drove the market - straight to hell. We lost a ton. We could have set fire to our money to largely the same effect, except that at least then we'd have been able to roast marshmallows.

[SteelBlue]

I envy you that you have had the luxury to wish that you had more savings younger. Shortly after I had started saving and investing for the long term a substantial portion was wiped out by the internet/tachnology bubble. And I did not even get the joy of daytrading or even owning internet stocks, but the mutual funds I owned got hammered. So, paradoxically I am one of the rare people who can say, "i wish I had not invested so much when I was young." It was a hard way to learn a valuable lesson.

Sounds like you and I got started around the same time. I thought I was an investing genius in early 1999 before the bubble burst. Yeah, I lost a lot of my first investments, but with 30 years to go those big dips will be times that I picked up cheap shares.

Just for kicks, what was your biggest flop in those days? Mine was Fidelity's aggressive growth fund. I owned the majority of my shares in the 60-80 dollar range. It dropped to $12.

[Jeff Lebowski]

Us too. Before the kids we were able to invest quite a bit. This was pre-dot-com-bust.

We even went to our adviser in Nov 1999. Said we wanted to pull everything and reinvest because we had concerns about the sustainability of the tech/telecom industry.

He said. This is a quote: "Every indicator is that technology will continue to drive the market."

He convinced us to leave our "balanced portfolio" as it was.

Well, within months technology indeed drove the market - straight to hell. We lost a ton. We could have set fire to our money to largely the same effect, except that at least then we'd have been able to roast marshmallows.

Sounds quite similar to my story. Well, I guess there is some solace in shared misery.

[bYuPride]

THere are a lot of factors you don't explain, but I might be tempted to pay $219 a month and put the other $281 in a mutual fund, especially if you are young.

Btw, please tell me where one can live the rock star lifestyle for only $281 a month!

Being a student, and having a wife and kid, $281 would make me feel like a rock star! That's a lot of #6's at Wendy's! :) I don't trust myself to pay the extra $281 on my own so I have everything EFT'd from my account.

[Detroitdad]

Sounds like you and I got started around the same time. I thought I was an investing genius in early 1999 before the bubble burst. Yeah, I lost a lot of my first investments, but with 30 years to go those big dips will be times that I picked up cheap shares.

Just for kicks, what was your biggest flop in those days? Mine was Fidelity's aggressive growth fund. I owned the majority of my shares in the 60-80 dollar range. It dropped to $12.

I bought very small amounts of about a dozen individual stocks nothing ridiculous, but for instance I bought Cisco at 75-80$ (IIRC) and within about six months it was at 15$. My mutual funds did not fare as badly. But I did make my biggest buy of individual stocks on the day before the peak of the market in 2000. It was supposed to be a healthy start for my daughter's college fund. She will be attending for one semester I guess, at College of Eastern Utah.

[creekster]

You people are killing me. Come on now, how often do we have a high tech bubble? The basic principle of saving often and early is sound, time tested and should be followed by everyone, if at all possible. Anyone in the market in 2000 lost a boatload when the bubble burst. I lost a fair chunk too, but this does not mean that the principle isn't sound.

[SteelBlue]

You people are killing me. Come on now, how often do we have a high tech bubble? The basic principle of saving often and early is sound, time tested and should be followed by everyone, if at all possible. Anyone in the market in 2000 lost a boatload when the bubble burst. I lost a fair chunk too, but this does not mean that the principle isn't sound.

I'm with you Creekster. The earlier the better and as much as you can.

[Surfah]

If you're not upside down on the car I'd keep making the minimum monthly payments. As stated you're not getting killed on the interest. You can take the other half of that $500 and make more than the 4.9% you're paying to the bank. That's what I'd do.

Personally I'd look to put it into something other than the stock market. I don't like stocks. For investing purposes you can make more money putting it into something not as speculative. I just have little faith in it. Trading is a zero sum game and I have ethical issues with that. So I am just not a fan of stocks. I'd rather deal with real property or something tangible like that.

[marsupial]

I am no financial person, but where are you going to earn more interest than what you are paying on the car? I'd just pay the sucker off. Rich people didn't get rich from making car payments every month.

[creekster]

I am no financial person, but where are you going to earn more interest than what you are paying on the car? I'd just pay the sucker off. Rich people didn't get rich from making car payments every month.

5%? There are many places where you should be able to get this rate or better.

[SteelBlue]

I am no financial person, but where are you going to earn more interest than what you are paying on the car? I'd just pay the sucker off. Rich people didn't get rich from making car payments every month.

Just about every money market fund in the country is giving more than 4.9% right now. That's about as low risk as it gets.

[Surfah]

I am no financial person, but where are you going to earn more interest than what you are paying on the car? I'd just pay the sucker off. Rich people didn't get rich from making car payments every month.

Rich people get rich by making their money work for them. I heard a quote by former BYU basketball stud Devin Durant after he purchased Liberty Square for a significant sum:

You're worth what you owe.

Having debt isn't always a bad thing. Your car is a liabilty even if paid for. Not having a payment is nice, but if you're not upside down on the loan that money could be better put to use elsewhere. As was pointed out money market accounts, CD's, and even most savings account offer at least 5% now. There's stocks and low minimum mutual funds as also noted that should earn more than 5%. But if you're a homeowner why not consider something like a small remodel? Something that you can enjoy while adding equity to your home.

Just some thoughts. But this is coming from a guy who refinanced a vehicle once to squeeze an extra hundred bucks a month for use though I could have paid the vehicle off. So take it for what it's worth.

[marsupial]

Just about every money market fund in the country is giving more than 4.9% right now. That's about as low risk as it gets.

Shoot, I need to get myself a money market account. I didn't realize they had come up this much.