needsmoney
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| Help! |
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Fresh out of a divorce (marriage and divorce literally took everything) and I'm looking for some financial advice. Still young (20's) so I'm looking to make some good moves financially right now to get me going in the right direction.
I make $4100 / month after taxes and I'm putting $1100/month into savings, while making minimum payments on my car, truck, and student loan, to which I owe a grand total of $41,000 (car, truck, and loan combined, all around 5% interest). I have about $3000 total savings right now.
My goal was to save up $10,000 as fast as possible in cash so I have some fall back, while just making minimums on the debt, and then start throwing the extra money at the debt. But now I'm wondering if $10k is even enough to start with? Should I get to $10k, then maybe still put in say $500/month into savings, while putting the extra $600 towards debt, or should I put ALL of the extra money per month towards debt?
Help!
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Mon Jul 19, 2010 7:55 pm |
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C9Consulting
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The longer you put off paying of your debt, the larger debt you have to pay. I'm curious why you would think that waiting to pay of your debt by making minimum payments will help you in the long run? Especially when you have $1100 in savings every month. Do you realize that if you cut your $1100 in savings and put all of it towards your debt, you will be out of debt faster? On your way to $10k your debt grows by $14,350(41,000*.05*7months to reach 10k) I believe I did that math right, I used a paper towel. That seems pretty counter-intuitive.
Also, think about selling the car or truck or both (and get a cheaper car). Use the proceeds to go towards getting a less expensive car in cash; and apply all of what's leftover to your debt.
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Mon Jul 19, 2010 9:54 pm |
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everypesocounts
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Yeah, I also think and this is just my opinion. It's always a better idea to consult professionals about this... Get a financial advisor or something...
But yeah, pay off your debts first... I think liquidating your assets and buying a cheaper car like C9Consulting said is a good idea. Pay off debt that has the higher interest first.
Those are just my ideas, please consult professionals.
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Tue Jul 20, 2010 12:32 am |
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oldguy
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I would definitely do something about the rolling stock - a pair of late-model vehicles depreciates at about $4000/yr each - that $8000/yr is disappearing.
It's not the 5% interest, that isn't costing much, only about $2000/yr - it's worth that to retain the use of the money - but the $8000/yr that is disappearing, I would want to fix that. Like everypeso said, look at your needs & pick one vehicle. Then own one that is over 8 yrs old valued at under $10,000. (LOL, sounds like my truck).
We don't keep $10,000 in savings, we limit it to about $5000. I invest in a taxable account (an index fund at a no-load company), the money grows tax deferred and it is available in 4 days.
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Tue Jul 20, 2010 2:17 am |
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needsmoney
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I think I'm going to sell my truck, which would reduce my debt by $8000 and free up an extra $400 a month. If I did that, I would have $1500/month to use towards savings or reducing the principal on my loans.
I guess I should go see a financial planner to see what to do with that money though...
Thanks!
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Tue Jul 20, 2010 12:43 pm |
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needsmoney
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Believe it or not, I posted my truck for sale, had a guy call me, he and his wife came and looked at the truck last night around 7pm, and bought it! I didn't even have a chance to second guess me selling it... Probably a good thing =)
It gave me enough money to pay off the truck (gotta go pay them today so I can get the title), and I can use the remaining amount (plus a little of the savings) to pay off one of my small student loans.
So on top of taking a $9300 chunk out of my overall debt, I have an extra $540/month (truck payment, insurance, and student loan payment combined) to use towards paying off my car and remaining student loans.
So now a total of $1600/month I can use to pay off PRINCIPAL of my loans (because I already have money allocated in my budget to make minimums). This could be fun...
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Wed Jul 21, 2010 1:06 pm |
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resrev
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Good job on making some tough decisions that most people refuse to make. Now that you got that taken care of put about $1200 of that a month to paying off debts and maybe $400 to savings. If it was me I would be more agressive and apply the full $1600 a month to pay it off. You can't build wealth until you are out of debt.
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Wed Jul 21, 2010 5:48 pm |
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needsmoney
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Spoke with someone yesterday afternoon about my financials like you guys recommended. He advised to keep putting cash aside for now, then once I have a few months savings, dump all of the extra funds into paying off the car first (since it's an asset I can sell if I need to), then the student loan.
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Thu Jul 22, 2010 1:55 pm |
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oldguy
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quote:
So now a total of $1600/month I can use to pay off PRINCIPAL of my loans (because I already have money allocated in my budget to make minimums). This could be fun...
Good job - the remaining $32k at 5%, $1600/m (plus the minimums) will be gone in about 18 months.
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Thu Jul 22, 2010 3:22 pm |
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Stuartthomas
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dont cut down your payment as it will create a problem rather than to help you..you have a good saving every month and you dont need to cut down your payments...as it will go longer to pay your debts...
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Fri Jul 23, 2010 8:06 am |
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kaiwen
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yep being in detb,can burn a hoe in your pocket.i would try to pay them off soon as u can are pay lil something atleast or else it just recur interest like on your posting..gl
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Fri Jul 23, 2010 9:12 am |
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mukeshkkashyap
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thanx for your post
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Mon Aug 30, 2010 12:09 pm |
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Jammy
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| 10k isn't much |
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n today's life 10K isn't much to be honest. It depends on your expenses as well. If you are someone who saves up a lot and does't spend much, then 10K is quite OK.
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Fri Sep 17, 2010 6:56 am |
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