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who cares how things "look". i have 11 student loans, all with sallie mae, and they deduct one chunk out of my checking account every month on the 19th. advising someone to pay off 0% loan and maintain two 5% loans is beyond financially idiotic.
Based on the balances on the 0% debts and the fact that the highest interest rate on the other loans is 6.55%, the difference between paying one loan off rather than the other between now and January is less than $10. Hardly seems worth getting in a huff about.
Again, if the OP bears down she should easily be able to pay everything off within a year. There's no great avantage to using one method over another based on the timeframe and interest rates on these obligations. If she had a couple of cards hanging out there at 23% it would be a different story, but that's not the case.
Based on the balances on the 0% debts and the fact that the highest interest rate on the other loans is 6.55%, the difference between paying one loan off rather than the other between now and January is less than $10. Hardly seems worth getting in a huff about.
Again, if the OP bears down she should easily be able to pay everything off within a year. There's no great avantage to using one method over another based on the timeframe and interest rates on these obligations. If she had a couple of cards hanging out there at 23% it would be a different story, but that's not the case.
sure, the cost of doing A vs B isn't as bad due to the interest rates being low, but that doesn't make the advice of paying of 0% debt prior to 5% or 6.55% debt any more logical. it just means the impact of the mistake isn't as costly as if the debt remaining was a 23% credit card.
that's $2,271 she has at 0%. if she pays that off instead of putting it towards Loan 7 (5%), that will cost her about $113.55 over the course of 12 months. where did you get $10?
sure, the cost of doing A vs B isn't as bad due to the interest rates being low, but that doesn't make the advice of paying of 0% debt prior to 5% or 6.55% debt any more logical. it just means the impact of the mistake isn't as costly as if the debt remaining was a 23% credit card.
that's $2,271 she has at 0%. if she pays that off instead of putting it towards Loan 7 (5%), that will cost her about $113.55 over the course of 12 months. where did you get $10?
I compared paying the zero interest obligations now vs paying them off when they are due in August, December, and January as opposed to paying other debts now and paying the 0% obligations when they are due. The difference is actually about $60, not sure where I got $10 unless I forgot to hit the = sign after the last part of the calculation.
Regardles, as I said before she should have no problem knocking out every last one of these debts in the next year without any significant sacrifice, and if she does that the difference in what she'll pay in interest won't be much more than $100 regardless of the order she pays them off. Given that and the fact that her post suggests that she's just overwhelmed by the scope of the debt, I think it's probably in her best interest to attack them in such a way that she sees things start to drop off quickly. It's easy to get wrapped up in the logical aspects and ignore the psychological aspects.
who cares how things "look". i have 11 student loans, all with sallie mae, and they deduct one chunk out of my checking account every month on the 19th. advising someone to pay off 0% loan and maintain two 5% loans is beyond financially idiotic.
Because the OP said:
Quote:
I am starting to struggle a bit with understanding
Quote:
I am starting to feel the pressure a bit on the student loans esp at my income level where I can't write them off on taxes!
Quote:
Where in the heck do I even start?!
I gave stargirl007 a way to start, and how I would do it.
And I did it without calling people names. Since I recently retired early, don't have any debts, and am financially secure until I hit 150 years old ... I guess my way worked for me.
Because the OP said:
I gave stargirl007 a way to start, and how I would do it.
And I did it without calling people names. Since I recently retired early, don't have any debts, and am financially secure until I hit 150 years old ... I guess my way worked for me.
Worked for you does not make it the best way. Playing the lottery worked best for the guy who won the jackpot. Doesn't mean people should recommend playing the lottery.
Money wasted is money wasted. Paying them off based on interest rate is the way to go, especially since you pointed out that the debt could be paid off relatively quickly.
The majority of people who use the lowest balance method don't have a grasp on their total debt and need to break things down. The OP will have eliminated the majority of that component with the quick pay down from savings.
Good lord, did I say that?
No. I said how I would do it.
Help the OP, give suggestions, and stay on topic, people.
Instead of pontificating.
I gave a suggestion. You suggested an alternative based on the "it worked for me" reasoning and acknowledges that it will cost more money over time to take your advice.
I disagree with your suggestions and don't think it's a good one. My original suggestion is still on the first page and I don't believe in requoting my own suggestions.
Dismissing your suggestion is on topic when you propose an opposing suggestion. That's all there is to it.
Because the OP said:
I gave stargirl007 a way to start, and how I would do it.
And I did it without calling people names. Since I recently retired early, don't have any debts, and am financially secure until I hit 150 years old ... I guess my way worked for me.
it worked for you. that's great. but that doesn't make it the most financially logical way to do it. i didn't call anyone any names either, i just stated the facts. paying off a 0% loan prior to paying off a 5% loan is financially idiotic. that's not calling you a name. I realize that's how you would do it, and that's fine. I just wanted to make sure stargirl007 understood paying off a 0% loan just to "feel good" isn't the financially smart move. congrats on retiring early, but it sounds like you probably could have retired even earlier.
I compared paying the zero interest obligations now vs paying them off when they are due in August, December, and January as opposed to paying other debts now and paying the 0% obligations when they are due. The difference is actually about $60, not sure where I got $10 unless I forgot to hit the = sign after the last part of the calculation.
Regardles, as I said before she should have no problem knocking out every last one of these debts in the next year without any significant sacrifice, and if she does that the difference in what she'll pay in interest won't be much more than $100 regardless of the order she pays them off. Given that and the fact that her post suggests that she's just overwhelmed by the scope of the debt, I think it's probably in her best interest to attack them in such a way that she sees things start to drop off quickly. It's easy to get wrapped up in the logical aspects and ignore the psychological aspects.
you're right. if you don't want to follow things in logical ways, then don't listen to me. if you have a pyschological need to pay an $800 balance off that's "free money" for you, then do it. personally, i never turn down free money.
Pay off all of the debts first
Put all of that money into an emergency fund
Put as much as you can into an emergency fund until it is fully funded
Put money into savings and IRA at equal amounts until you reach the maximum on the IRA
Put money into savings and start small with the investing.
Pay cash for everything, no financing for anything
Live debt free.
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