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Old 12-29-2013, 03:19 PM
 
Location: 78250
923 posts, read 2,075,533 times
Reputation: 333

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we have a $195,000 mortgage at 4.25% APR/30 years, with taxes we pay $1370 every month, we also have a $17,000 car loan with RBFCU at 1.65%, 5 years plan.

Looking at my budget sheet (sad i even have one), my discover card, bill me later and sony debt will be paid off around April May next year. And I will have roughly $300-$400 to go on extra payments towards the mortgage and car.....would it be fine to split $200 extra to mortgage and $200 extra to car payments? Or how else could I decrease the debt that I have? would it be better to pay down the car first, then concentrate on paying down the mortgage. I'f i'm posting in the wrong forum also, please can a mod move it to the appropriate forum.

thanks
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Old 12-29-2013, 03:21 PM
 
Location: N/A
849 posts, read 1,499,195 times
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put it towards the house or put into a roth. 1.65% is CHEAP MONEY.
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Old 12-29-2013, 03:28 PM
 
Location: 78250
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i need to learn more about what a roth is and what its used for....
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Old 12-29-2013, 03:28 PM
 
Location: Central CT, sometimes NH.
3,255 posts, read 4,908,347 times
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I'd pay it all toward the mortgage. It's a higher rate and even with the tax effect it's still higher than your car loan. You can significantly reduce the term of your mortgage by making extra principle payments each month. I have used this approach for multiple properties using a laddering approach as my income rose allowing me to pay the loan off in some cases in 1/4 of its term.
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Old 12-29-2013, 04:04 PM
 
Location: The Berk in Denver, CO USA
13,114 posts, read 18,715,776 times
Reputation: 20419
Default Roth

Put $5000/yr into a Roth for each of you.
Roth IRA - Wikipedia, the free encyclopedia

Bogleheads • View forum - Investing - Help with Personal Investments
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Old 12-29-2013, 04:06 PM
 
5,563 posts, read 7,637,571 times
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I pay the car off. The investment on a house is much longer term. The extra money on the car will dramatically cut that debt, and then you will have more to put toward the house or save.
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Old 12-29-2013, 04:26 PM
 
Location: 78250
923 posts, read 2,075,533 times
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Quote:
Originally Posted by davebarnes View Post
saving for my husbands retirement also???
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Old 12-29-2013, 04:31 PM
 
Location: NJ
22,674 posts, read 28,559,598 times
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Quote:
Originally Posted by Spazkat9696 View Post
I pay the car off. The investment on a house is much longer term. The extra money on the car will dramatically cut that debt, and then you will have more to put toward the house or save.
but the interest rate on the mortgage is higher. this isnt rocket science. if you want to pay down debt, you go with the higher interest first.

i wouldnt put extra money towards either; id invest the money.
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Old 12-29-2013, 09:10 PM
 
Location: Chapel Hill, NC
8,354 posts, read 12,057,006 times
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Do you have a rainy day fund aka emergency fund? I'd build up that before I'd put anything toward either debt.

If you have one, then I'd do an IRA or 401k toward retirement. If you are intent on paying down loans, the advantage of paying down the car is that you would free up that monthly payment very quickly. 5 years may become 3 years and you would lose that monthly payment. If you lose your job or something else happens, you would not have that burden anymore. If you pay it toward your house, while it is a higher interest rate, you will only shorten the term, it doesn't get you out of paying each month, so if something happens like job loss, you will still have both obligations for awhile.

Some people like to put the extra money in a fund earning interest and then when you have the money to pay off a loan in full, pay it off then. This way, it acts as extra liquid money if you should need it.

To get a better answer, though, you should give us more details - age, emergency fund, any other savings, etc.
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Old 12-29-2013, 09:29 PM
 
5,563 posts, read 7,637,571 times
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Quote:
Originally Posted by CaptainNJ View Post
but the interest rate on the mortgage is higher. this isnt rocket science. if you want to pay down debt, you go with the higher interest first.

i wouldnt put extra money towards either; id invest the money.
No fewer bills is better. The long term house payment will not go away as quickly as the car payment which will free up more money.
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