Which debt first?

Question

I've got $10k sitting in a savings account at 2%. Which debt makes sense to put $6k or $7k down on first? My auto loan with $13k left at 8% or my home with $113k left at 6%?

Answer 1

First, you can put that money in an online savings account. There are a couple that are paying 5% or more.

That being said, pay off the highest interest debt first, which in your case would be the auto loan. That loan is costing you the most in interest. The quicker you pay it off, the more you'll save on interest. The added benefit is that you'll have no car payment much sooner, and can then take that additional money every month and invest it.

Answer 2

Pay off the loans... no invest in the following co's

Open an account via amertitade.com or etrade.com

I have been investing for 10+ yrs (I am only 24) and have increased my accound around 4,000%

I would be a buyer in the following stocks (all for which I own)

ENG (best should double by end of yr I have owned this for 5 yrs)
AOB (should test $8-10 by dec)
VCLK ($20 by Dec)
ARTG (Do research its primed to at least hit $5)
HOM (I sold at $3 it then shot up to $12 now at $6 may be a buying opportunity)

NOTE: I have a MBA in Finance from Wayne State University (Detroit) and am 75% through the MA in Economics (Monetary Policy/Int'l Finance) program as well.

FYI: Do not listen to anyone on TV i.e. Jim Cramer everything he says may not be bad but think about this what he says is the gospel for many so according to supply and demand his listners all do the same thing after he speaks which can throw a strong company out of whack for a while (note my ENG a few months back)

Do not be scared of the stock market and remeber to make money you have to take risks the reccomendations are in my oinion the best way for you to make some good $$$ w/ in the next 6 months. Then when you sell out look at putting the $$$ in a CanadianEnergy Trust like PenGrowth ticker PGH (pays a monthly dividend)

Answer 3

Why not put $8k toward the car loan. Then as you save $1k pay that toward the car loan until it's paid off. Next, depending on your tax bracket open a money market account with Vanguard or a discount brokerage firm. Deposit money in there until you have enough so you don't need to borrow to buy the next car, etc. That done you may now start to save to invest. With a 6% mortgage you have cheap money (likely less than 4% after tax) so I wouldn't pay that off.

Answer 4

Auto loan for sure!
Highest interst rate!
You will pay that car off quick!
Then when you are done with the car payment take 1/2 of the car payment and put into emergency fund, other 1/2 to pay extra principal on your mortgage along with your regular payment. Send a separate check and on the "note" line write extra principal or it might just end up in escrow.

Answer 5

Put it toward the car loan, higher %age rate and don't forget you can write off interest on a mortgage when you file your tax return. Also put that money in a higher yielding CD or savings account, 2% is very low.

Answer 6

Pay off the high interest 8% loan first! And put the remainder of your savings in to a higher interest account. There are now 5.5% CDs out there!!

Answer 7

Hire a Debt Counselor:
http://www.askaquery.com/Answers/qn1584.html

Answer 8

common sense.. i'd try to pay that car first off.. because of the higher interest rate (8%)

always remember mortgage debt is better than installment loans such as cars (because auto's decrease in value)

find a better savings acct too w/ a higher APY%.. right now ING direct is at 4.25%

Answer 9

Auto, its a depreciating asset. And you can write off the interest on your morrgage.

Answer 10

There is some good advice here.