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This is my first visit to the Personal Finance forum and I would love some opinions on how to pay off my debt. I don't think I have a lot of debt (excluding mortgage), but I just hate having it.
*15,000 auto loan at 5.25% (I elected the higher rate because I didn't want to auto-pay).
*$9750 remaining on my last student loan at 6.8%.
*Not a loan, but I make YMCA payments for after-school care and track-out care through the next school year. I need to pay off $1246 for after-school care and $1193 for track-out camp. This is interest-free.
Family members have advised me to keep making the student loan and YMCA required payments and put extra towards the auto loan.
I think I want to pay off YMCA first, then use that extra money towards the auto loan and lastly the student loan. What would you do?
Payoff the accounts with the highest interest as soon as possible, then take the money and pay extra on the lower interest accounts.
That is what I would do and have done.
Then avoid new debt like the plague. Let's face it, debt IS a plague!
Yes, things happen that require debt. But, pay it off as soon as possible, and avoid adding to it!
My family's rationale has been to keep the student loan because it's tax-deductible, and to keep YMCA because of zero interest and tax deduction. If I paid off YMCA, it would free up $274/mo. Car payment is $260/mo and student loan is $125/mo.
This is my first visit to the Personal Finance forum and I would love some opinions on how to pay off my debt. I don't think I have a lot of debt (excluding mortgage), but I just hate having it.
*15,000 auto loan at 5.25% (I elected the higher rate because I didn't want to auto-pay).
*$9750 remaining on my last student loan at 6.8%.
*Not a loan, but I make YMCA payments for after-school care and track-out care through the next school year. I need to pay off $1246 for after-school care and $1193 for track-out camp. This is interest-free.
Family members have advised me to keep making the student loan and YMCA required payments and put extra towards the auto loan.
I think I want to pay off YMCA first, then use that extra money towards the auto loan and lastly the student loan. What would you do?
What is your current annual income and how much extra funds do you have each month for debt repayment?
The interest on the student loans is deductible, but not free money, so you just get taxed less. I was a bit less fortunate, making too much to deduct.
Regardless, deducting lowers your taxable income at the cost of whatever you're paying in excess of the actual amount. You lose in the end generally, so best advice is to take out the highest interest rate debt first while paying minimum on others so you don't default. If you come out ahead, it's by such a small amount that you're better off just getting rid of the debt if you psychologically want to.
An example, on my loans I saved $125 over the course of the 5 years left with their rates in the low 3% range. Just, meh haha. I paid them off because I like being debt free. I now have no carrying balance of debt (but still use credit cards because I need a good credit score and like my free flights).
My family's rationale has been to keep the student loan because it's tax-deductible, and to keep YMCA because of zero interest and tax deduction. If I paid off YMCA, it would free up $274/mo. Car payment is $260/mo and student loan is $125/mo.
Using that logic, you should go buy a $250,000 Recreational Vehicle, and a $500,000 house, because the interest on the loans would be tax deductible!
I described my thinking, and stated that is exactly what we did.
I doubt if your student loan interest lowers your Adjusted Gross Income to any truly appreciable amount.
But, the bottom line is, your finances and mine are entirely different. You have to do what you think is best for you, and what will keep your family happy.
Good luck.
This is my first visit to the Personal Finance forum and I would love some opinions on how to pay off my debt. I don't think I have a lot of debt (excluding mortgage), but I just hate having it.
*15,000 auto loan at 5.25% (I elected the higher rate because I didn't want to auto-pay).
*$9750 remaining on my last student loan at 6.8%.
*Not a loan, but I make YMCA payments for after-school care and track-out care through the next school year. I need to pay off $1246 for after-school care and $1193 for track-out camp. This is interest-free.
Family members have advised me to keep making the student loan and YMCA required payments and put extra towards the auto loan.
I think I want to pay off YMCA first, then use that extra money towards the auto loan and lastly the student loan. What would you do?
YMCA I'm assuming is some sort of monthly installment, eg a bill. I'd pay that monthly. If you're behind I would pay it back as quickly as possible.
Highest interest first.
Confounding factors is the different types of debt. If you default on your car, they will repossess the car. If you can't pay a federal student loan, it's easy to claim an economic hardship and temporarily stop or reduce payments so it won't impact your credit. On the other hand the only way to get out of federal student loans without paying them back is to be on ICR/IBR for a very long time, do something where they are forgiven after X years (teaching for example), or dying. Private loans you pretty much have to die. Depending on your liquidity paying off the auto loan first might make sense event though it's lower interest rate.
You don't mention your credit score.. If it's good, I would go to lightstream com and refinance the auto loan down to 1.9% then just concentrate on the student loans.
Jim1921- About $83000 gross income excluding my prn job. I make 18.90/h at the prn job, but am lucky if I can get in there once every other week. I give them dates, but they don't need me for all of them. I think I will have around $500-600 for debt repayment if I keep the Y payments.
Credit score is 777. I don't think I am interested in refinancing. I am not keeping this auto loan for 5 years.
The student loan payments are probably going to be deferred here again since I just started a bachelor's program today.
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