Wife wants to keep the auto loan- I do not! Financial Help (HSA, paying)
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I would like some feedback here. My wife and I have all but about 5k in revolvong debt paid off. This will be completely gone within the next 6 months.
We have never really budgeted and would like to start. The only loans we have will be our auto loan(16k) and a home loan. We bought our first house 2 years ago. We run on my income alone and have a few children. I do well enough where she doesnt have to work and we can spend money pretty free, but I am tired of wasting it! I WANT TO RETIRE YOUNG!
My question is, should we get rid of the auto loan and save the $360 month and buy a family suv/van with cash? Or will I pay the same on average with buying an older vehicle, with more miles?
My wife loves her car and says " we can afford it, we have very little debt", my response is always " we cant afford it if we borrowed money to get it" .
Thanks,
Your wife doesn't work, she has kids. She probably needs the car, depending on where you live. She can get a part-time job and pay the loan on "Her" car. Even if she babysits a child in the house, it is cash coming in ( that is assuming your kids are little). Another good one: try for a job at the school. Unless that is something she "can't deal with"
You two need to start with a real monthly budget:
Let's assume you have about $2500/pay check X 2 in a month ($5000 net) -- I am being really generous (I am assuming about a $70K income/year. Adjust as needed, use same percentages)
-Pay 10%+ into savings ($500/mo). Minimum
-Pay yourselves at least 5% ($250/month, no accountability to anyone) Minimum
-Then pay your other bills: House, utilities, taxes, insurance, credit cards, school loans, food... you get the idea. [**In any case, the housing ( loan and taxes) should be no more than 25% of net/with utilities and insurance 30%**]
- Get college funds for kids started
- Use the rest to pay off any other debt faster.....
If you can't do it, she gets a job or you dump the car.
That is the formula we used. We retired at 50 and 54. We also made a LOT less -- and paid for the house, paid the cars, paid the kid's college and still did it. We now may live in a little house, but my bills come in and I pay it the same day and we carry no debt. What isn't spent, goes into savings.
I would like some feedback here. My wife and I have all but about 5k in revolvong debt paid off. This will be completely gone within the next 6 months.
We have never really budgeted and would like to start. The only loans we have will be our auto loan(16k) and a home loan. We bought our first house 2 years ago. We run on my income alone and have a few children. I do well enough where she doesnt have to work and we can spend money pretty free, but I am tired of wasting it! I WANT TO RETIRE YOUNG!
My question is, should we get rid of the auto loan and save the $360 month and buy a family suv/van with cash? Or will I pay the same on average with buying an older vehicle, with more miles?
My wife loves her car and says " we can afford it, we have very little debt", my response is always " we cant afford it if we borrowed money to get it" .
Thanks,
Either get aggressive with the loan you have now and pay it off fast, or sell it and get a used car. If she loves her car that much she will be willing to sacrifice like crazy to keep it rather than sell it.
I would tell your wife that being able to afford something isn't being able to afford the payments, it's actually being able to pay for it. Also 21k is a decent amount of debt (5k + 16k car). Is she not counting the car as debt?
i have an auto loan that im 3 years deep in and the balance is about 6200. the interest rate is 6.65%. so i want to do away with it. i could pay it off at once, but i dont like that idea. the thing is that at this point, its mostly principle and very little interest in each payment. so if i finance the 6200 even at 0% its almost the same payment to pay it off in 2 years. for some reason that seems strange to me but this is a new situation for me. do i basically have a 0% interest loan for the rest of the 2 years so i may as well just leave it be?
I should clarify that she isn't deeply in love with the car. She isnt a status driven woman, juat likes her car and She just thinks because that is the largest debt we have it isn't worth getting rid of it and buying something for 5k(ex: used suburban with 100k miles,realistically we will not pay it off early within the next 2-3 years.
It sounds like the best thing to do is sell the car as buy an older model with higher miles. Is this the what you guys think?
Personally, I'd use the $5K you want to spend on a different vehicle to knock out the $5K in CC debt, and use the roughly $1K you're paying on the cards each month toward the car note. There's no reason you shouldn't be out of debt besides the mortgage in under a year.
I understand your desire to get out from under this debt as quickly as possible, but you haven't mentioned any problems with your current vehicle and any time you buy used there is a certain amount of risk that you might wind up with someone else's problems.
I would also do the 5K on the credit card bills, Then build up your savings, with the money you were paying on the credit cards. Also can you pay off your car? Many car loan have the intrest on the full term of the loan, Even if you pay it off early you still pay the full intrest cost. You need to check your loan docs. At this point i Would build up your savings, Fund a IRA/Roth/529 with the extra money.
I agree with some of the others here. Assuming you have no prepayment penalty, I would pay off the CCs first, then fund a bigger emergency fund, then start contributing to IRAs/401k/etc. Once you have that efund, are investing a decent amount and have no other debt, then chip away at the car loan as fast as you can. At that point, you will be on the road to being financially healthy.
I think having the efund and no other debt is more important than paying off the car in the short term.
If you sell the car now, will you realistically get enough for it to pay off what you owe, or will you have to pay the balance from your efund? That is an important consideration. Many people are upside down when paying on a car loan.
We could sell the car and at a worst case scenario break even. I am a bit concerned with now having a strong Efund. I think that we will pay off the cc now and get 6-8 months of Efund
We could certainly pay extra on her car, but is it wise to keep it or buy something with cash, get rid of the loan and save?
It really depends -- you need to do some research. Right now, out here, used cars are very very expensive. So what you can buy for 5K, you very well might end up with a crappy car. It might make sense to keep your car, and keep it up so you can keep it forever.
Do the research and run the numbers.
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