Anonymous
11/08/2013 13:42
Subject: Pay off debt?
Anonymous wrote:Just bought a house, so savings are pretty much depleted (closing on old home, so should have around 40k in cash soon).
What debt should I pay off? DH and I each have a car loan of about $9k, at about a 4% interest rate. There are 4 years left on each loan.
55k in student loans at 3.5% ($300 per month)
credit card balance of around 10k (buying house stuff).
Obviously, the credit card balance needs to be paid off. Thoughts on whether we pay off the others?
St loans at fixed rate? Leave them
Anonymous
11/08/2013 12:16
Subject: Pay off debt?
Anonymous wrote:The "equity stake" poster (not me) was definitely suggesting that it makes more economic sense to lease a car. SMH.
I read that poster as saying that if you're afraid of depreciation, it would drive you to leasing rather than owning. It shouldn't alter your analysis of whether to buy in cash or finance. Which seems correct to me.
Anonymous
11/08/2013 10:53
Subject: Pay off debt?
Anonymous wrote:I would pay off credit cards and the car. I always pay cars in cash so I don't like having a loan out on that.
Student loans can wait.
Build up expenses in case you're laid off. Like pp said, 3-6 months is perfect depending on how stable your jobs are.
I would continue to pay off your student loans as those are not dischargable in bankruptcy. All the other debt is. Pay the minimum if you want, and then start with the highest interest consumer loan.
Anonymous
11/08/2013 09:56
Subject: Pay off debt?
The "equity stake" poster (not me) was definitely suggesting that it makes more economic sense to lease a car. SMH.
Anonymous
11/08/2013 09:21
Subject: Pay off debt?
(Setting aside that depending on your lifestyle, leasing can, in fact, be cheaper).
Anonymous
11/08/2013 09:19
Subject: Pay off debt?
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:I am not that PP, but paying any interest, even cheap interest, on a depreciating asset turns a lot of people off.
+1
Obviously they're free to feel however they want, but that makes no economic sense. If only there were some way to take possession of a car for, say, the first 36 months, without purchasing any equity stake in it. . .
Wait - is someone suggesting that it makes more economic sense to lease a car than to purchase one? Seriously? <headdesk>
No. Read the thread.
Anonymous
11/08/2013 08:11
Subject: Pay off debt?
Per Dave Ramsey:
1 - Have a baby emergency fund of 1K (I used 3K).
2 - pay off all debts, smallest to largest, regardless of interest rate (Time magazine recently published an article in support of this theory.)
3 - Bulk up your emergency fund to 3-6 months of expenses (not pay, expenses)
After that it's about saving for college, saving 15% for retirement, paying off your house, and getting richer.
Good luck!
1 - Have a baby emergency fund of 1K (I used 3K).
2 - pay off all debts, smallest to largest, regardless of interest rate (Time magazine recently published an article in support of this theory.)
3 - Bulk up your emergency fund to 3-6 months of expenses (not pay, expenses)
After that it's about saving for college, saving 15% for retirement, paying off your house, and getting richer.
Good luck!
Anonymous
11/08/2013 07:44
Subject: Pay off debt?
Anonymous wrote:Anonymous wrote:Anonymous wrote:I am not that PP, but paying any interest, even cheap interest, on a depreciating asset turns a lot of people off.
+1
Obviously they're free to feel however they want, but that makes no economic sense. If only there were some way to take possession of a car for, say, the first 36 months, without purchasing any equity stake in it. . .
Wait - is someone suggesting that it makes more economic sense to lease a car than to purchase one? Seriously? <headdesk>
Anonymous
11/07/2013 21:29
Subject: Pay off debt?
Anonymous wrote:http://www.daveramsey.com/media/flash/elearning/drive-free/player.html
Dave Ramsey is not my preferred financial advice provider. He is risk-averse to a fault (IMO). I'm pretty disciplined though - if you are not disciplined, listen to Dave.
Anonymous
11/07/2013 21:28
Subject: Pay off debt?
I would leave the car loans and keep the cash. At 4%, the rate is fine.
Anonymous
11/07/2013 17:38
Subject: Pay off debt?
Anonymous wrote:http://www.daveramsey.com/media/flash/elearning/drive-free/player.html
There were a number of things wrong with that math.
(Though I agree with the bottom line that buying a lightly used car and driving it into the ground is the cheapest form of car ownership).
Anonymous
11/07/2013 16:23
Subject: Pay off debt?
Anonymous
11/07/2013 15:59
Subject: Pay off debt?
Anonymous wrote:Anonymous wrote:Anonymous wrote:I am not that PP, but paying any interest, even cheap interest, on a depreciating asset turns a lot of people off.
+1
Yes, I'm that PP and it's for that reason. We would love to have zero debt but are okay with mortgage (since it would be so hard to save up the amount needed for a house in this area and didn't want to rent forever) and student loan debt (because it resulted in huge pay increases for both of us). But if I'm going to borrow money for a car, why not just lease one?
Because eventually you own the car and have no payments.
Anonymous
11/07/2013 15:37
Subject: Pay off debt?
Leasing gives you a car payment all the time. It works for a small subset of people who need/want a new car every two or three years, and who can deduct the payments as a business expense. (Perhaps the rising young executive who takes clients to the airport?) 
But it makes more sense to buy and keep the car for a much longer time, giving you years without a payment to save up cash for the next car.
But it makes more sense to buy and keep the car for a much longer time, giving you years without a payment to save up cash for the next car.
Anonymous
11/07/2013 15:37
Subject: Pay off debt?
Anonymous wrote:Anonymous wrote:Anonymous wrote:I am not that PP, but paying any interest, even cheap interest, on a depreciating asset turns a lot of people off.
+1
Yes, I'm that PP and it's for that reason. We would love to have zero debt but are okay with mortgage (since it would be so hard to save up the amount needed for a house in this area and didn't want to rent forever) and student loan debt (because it resulted in huge pay increases for both of us). But if I'm going to borrow money for a car, why not just lease one?
Because if you've decided to buy over lease, it is presumably to hold the vehicle long enough that it makes economic sense to have purchased, in which case your money is tied up for an unnecessarily long time without providing a reasonable return on investment. I agree that leasing is often a better option than buying. But if you're going to buy, there's no reason not to finance if the cost is low enough.