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Here's my situation, money is not an issue but its safer to horde money than spend cash like that.
I'm also 5.5 months pregnant and expect my daughter in May & my husband and I are doing house renovations right now (we're almost done).
I owe just under $10k left on my car.
I was planning on paying monthly payments this year to pay it off by the end of the year.
I USED to drive my car daily when i was working at my old job.
With my NEW job i take public transportation. So i drive my car now on the weekends if i need to but my husband also has a car.
I can't sell my car because I need to drive to get to public transportation. So just incase my husband is out, i'd need a car.
Thanks in advance for your feedback!
Based on the above facts, should i pay off my car?
The key you are missing is the interest rate... and what would you do with the money saved on interest rate.
No one can answer without that information.
If the interest rate on the 10k principle is 0%, I would pay off other debts/expenses first. From the consumer standpoint, paying interest is throwing money down the toilet. However, not everyone has the cash for such large purchases or the cash is earmarked for other things. So we use loans and pay the bank a % for using their funds.
If money's not an issue, then why have any debt at all? I'd pay it off at least you'll own it free and clear. Especially since you said you need the car. That being the case the car is a necessity. Depending on whether or not the renovations to your home are a necessity or not you could put them off. It really is a matter of priorities, unless you don't mind having debt.
We had a 15 year mortgage, after our home was paid off we haven't had any debt. We never use our credit card for anything, we only have one in case of a dire emergency. I'm proud to say that everything we own is ours free and clear and we don't owe anybody anything. We've always lived within our means. Still we own our home along with 3 vehicles, two are antique cars that I restored. It's always been pay as you go. If we didn't have the money we just didn't buy it. I've always done my own labor both on our vehicles and home, that saved us a fortune. The only time I had to hire someone was for the roof on our home of which we had the money to pay for it.
I know some people that are in debt up to their eyeballs and they keep on accruing more. They just can't seem to ever get rid of it. God forbid if they lost their jobs or if anything should happen to them. Sure they've got their nice granite countertops, $10,000 gas ranges and drive $80,000 vehicles of which they've gotta' have a new one every two years, but they really don't own a GD thing and probably never will. Unfortunately it's just too easy to get sucked up into all of that.
My wife and I both lost our jobs in manufacturing and because we'd lived within our means we were able to keep what we had. We were able to start our own home based business and had enough to get by on until the business was able to sustain us. It wasn't easy but at least we never lost or had to sell anything. Not to mention not having bill collectors come banging at our door.
As far as hoarding money goes unless the money you're hoarding is paying you more in interest than the cost to borrow money then it doesn't make any sense to hoard it at all. As the above poster already mentioned that you'll just be throwing your money down the toilet.
Last edited by Ex New Yorker; 01-19-2019 at 10:13 AM..
Neither. I've been leasing a new 4 dr. Toyota Camry every three years since the mid 90's. Outside of the lease payments I haven't paid anything for repair or mantenance, except for replacing a tire that hit a pothole and shredded. By the time the three years is up I can already start smelling exhaust, and the car no longer rides or feels like a new car. For roughly $325 a month, and no down payment, my car costs are fixed and I always have a nice looking and handling, full sized, dependable car.
Neither. I've been leasing a new 4 dr. Toyota Camry every three years since the mid 90's. Outside of the lease payments I haven't paid anything for repair or mantenance, except for replacing a tire that hit a pothole and shredded. By the time the three years is up I can already start smelling exhaust, and the car no longer rides or feels like a new car. For roughly $325 a month, and no down payment, my car costs are fixed and I always have a nice looking and handling, full sized, dependable car.
The only problem with that is after the lease is up you don't own anything. If you go over the allowed milage you have to pay extra for it. You still have to maintain the car. If you never bother to change the oil and the engine seizes up, you'll be held responsible for it as it's not your car. Leasing is really nothing more than having a long term rental agreement on a car. I guess it's okay if you've just gotta' have a new car every 3 years. Then buying a new one every 3 years wouldn't make any sense. As you'd lose your shirt when you traded it in and be starting out with a new loan. One of our neighbors did that every two years until she finally realized that she'd be better off leasing.
I've got a 19 year old one ton truck that I bought new, being a car guy I've taken good care of it. We paid for it outright, at the time it was $28,000. Nothing really fancy just a one ton 4x4 with air conditioning. Other than regular oil changes, chassis lube and tires the only thing I've replaced was a water pump, spark plugs and wires. It's been garage kept since new and still looks just as good as the day I bought it. It's like still having a new vehicle. I've had a lot of people asking me if I'd want to sell it. Granted not everyone takes care of their vehicles like I do. But it can be done, and if properly maintained a vehicle should last you a long while.
If I were you, I would only pay off the car now, if spending $10k still lets you have a 6 month emergency fund. You a have a big life event coming up, that although we all hope goes smoothly, doesn't always go according to plan. I would want to have as much cushion as possible if I where in your shoes unless you already have a big cushion. I know that you stated money isn't an issue, but that can mean you have a steady comfortable income to cover your expenses or that you have a substantial amount of money saved up and you don't wont part ways with it.
I've also been musing about paying my car off within the year myself, so I'm in a similar dilemma. For me I have about 4 options. One option would drain my savings completely but I could have my car paid off by the middle of the year. On the other end I could keep saving as much as I can, pay my scheduled payment amount, and pay the difference off at the end of the year If I feel comfortable doing so. The other two options involves hybrid versions of the first two options. In my case I will most likely use most of my leftover income for the month and apply it toward paying my auto loan. Doing it this way will keep me from derailing myself from paying off my auto loan by the end of the year and keep my e-fund safe.
At the end of the day if you have the means to pay of your loan now without putting yourself in a bind it boils down to to a mental issue. Do you prefer the satisfaction of owning your car right NOW or does seeing that $10k in the bank bring more comfort to you.
Hopefully the OP's thread doesn't get derailed with the pay for cash v auto loan debate and how much of a depreciating asset a car is as almost every thread dealing with car finances does.
Yes i agree that we need more info. Such as " money is not an issue because we have $100k sitting liquid in the bank at 2.15%", such as " the car note is at 8%", such as "my husband alone makes $150k and our mortgage is only $500/m. And we could survive easily on his income alone" such as "we spent $50k on a kitchen reno that is almost done and paid for".
WE'RE NOT being nosy. Just need more info.
If the above is all true. Go ahead and pay it off.
However if " money is no object" means " we only have $12k in the bank" or " our mortgage is half our incomes " or ",the car note is only 0%", then whats the rush?
I also agree you have a baby coming, that can be a monkey wrench.
Will you decide to stay home for the next 3 or 4 years till the daughter is in preschool?
Will your husband's income alone support your family?
Will day care costs be exorbitant? Many places only take babies 18 m and older.
Will the loss of your income make things too tight with your car note?
Its more about YOU. Its all about your comfort level. If having the debt really bothers you, pay it off. If the debt doesn't bother you, and the rate is low, just keep up the monthly payment.
Your information does not relate to a financial decision with the exception that you said money is not an issue. Based on that statement pay off the car. You should also be ahead by not paying more loan interest than you can earn on the savings.
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