I have about 20k available in cash, currently in a money market / CD / and mutual fund.
This does not include my current 401K, IRA or stock holdings so future assets are not going to be touched, but it is a good portion of the cash on hand.
Current Liabilities
Mortgage (high)
2nd Mortgage - (~50K)
Car Loan (19K)
Should I:
Pay off the car loan (saving $500 month - thus allowing future savings)
Pay down the 2nd
Invest it or Do nothing?
Advice is greatly appreciated.
2007-04-05 00:56:41 · 10 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
Since the car loan rate is most likely higer than the rate you are earning in the money market CD, I would suggest you pay off the car.
Then, take that $500 you were paying to the car and add that to the regular payment on your second mortgage. This will pay that off much faster. If this is an equity line of credit, make sure you don't put more on there and defeat what you just did.
Next, apply those two payments to your mortgage payment.
You should be out of debt amazingly fast if you do this. It takes discipline though.
"Do for a few years what others won't, and you can do for a lifetime what others can't." (Not sure who said it, but very true)
2007-04-05 02:48:01 · answer #1 · answered by Anonymous · 0⤊ 0⤋
First of all, you don't want to pay down a mortgage until that's the only debt you have. Generally, mortgage interest is the lowest rate you have, and it's tax deductible, making it effectively even lower. Between the mortgages and the car, the car should be paid first.
Between paying the car and investing, you need to consider the risk and tax factors. There is no risk at all to paying debt early to eliminating interest, you will save the interest, no more, no less. Can you make more than that from investing, and if so, what's the risk? How does that change when you consider that the money SAVED on interest is nontaxable, but everything you make on investments is subject to tax?
Whichever works out as best for you, you should keep enough to cover your basic expenses for at least three months in liquid assets, in case your company turns into Enron.
2007-04-05 01:42:12 · answer #2 · answered by open4one 7 · 0⤊ 0⤋
Assuming you have no other debts, I would suggest paying off the car loan first. Then take that car payment money and all other money and pay off that 2nd mortgage. Make sure you have an emergency fund in place-Life happens. And, the next time you need a car pay cash. Spending tons of money with years of interest on a car is a waste. Cars go down in value-all cars. Put your money in investments not equipment.
2007-04-05 01:26:06 · answer #3 · answered by ontopofoldsmokie 6 · 0⤊ 0⤋
If you were an experienced investor, i would say just pay of the interest on the loans, which would allow you to make significant returns on the 20k. However since you arent an experienced investor, i recommend paying of the lowest loan first wrking your way up to the biggest loan.
So, this means pay of the car loan, then save all your money and pay off the others and maybe put some cash aside also to invest down the road.
Good luck.
2007-04-05 01:23:14 · answer #4 · answered by billjoio28 2 · 0⤊ 0⤋
The value of your car depreciates daily, but the amount you have to pay does not go down. So, pay it off first.
Divide the money saved into two portions: one goes into your second mortgage (to pay it off faster) and one goes into a saving or investment account.
You are also going to need to have some cash on hand for emergency. (4 month of your salary to start with)
2007-04-05 02:26:09 · answer #5 · answered by coldrain 5 · 0⤊ 0⤋
It changes. Right now, dealer financing is probably more desirable as most dealers are having a hard time moving cars. There are many dealers offering 0% financing right now. There are times when a local bank or credit union has better terms.
2016-05-17 22:06:39 · answer #6 · answered by ? 3 · 0⤊ 0⤋
Your 1st and 2nd mortgages are tax write-offs so you never want to pay those off. A suggestion would be to re-fi the 2nd and add your car in. To have more disposable income for savings go to www.workathomeunited.com/joanntal
2007-04-05 02:09:55 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Assuming your have no other debt...
Pay off the car, then apply the balance to your 2nd Mortgage, then start working on paying off your 1st Mortgage.
When in doubt, talk to Dave! 888-TALK-BAK (888-825-5225)
2007-04-05 04:56:12 · answer #8 · answered by unknown11 1 · 0⤊ 0⤋
know the interest rates of each, and the interest rate on cash and it should be clear/ cut your overhead know where each dollar is spent.
2007-04-05 01:48:08 · answer #9 · answered by k n 1 · 0⤊ 0⤋
I believe you should contact me regarding same and my company and I will show you exactly what to do.
2007-04-05 02:15:26 · answer #10 · answered by Richard L 1 · 0⤊ 0⤋