Let's say a guy has three notes, two for vehicles and one for a house.
He has 32 months left on one @9.75% , 53 months on one @6.5%, and the last has 360 months @ 6.625%.
Should he put all of his money for extra payments towards one note or split them up equally between all three?
one day
The 9.75% one.
Then the 53 month one.
Then the mortgage. While it's a higher rate than the other car loan, at least you get to write off the interest on that one.
"The choices we discern as having been made in the Constitutional Convention impose burdens on governmental proceses that often seem clumsy, inefficient, even unworkable, but those hard choices were consciously made by men who had lived under a form of government that permitted arbitrary governmental acts to go unchecked." INS v. Chadha, 462 U.S. 919 (1983) (Burger, C.J.)
exactlyOriginally Posted by Mike Rich
according to my church debt seminar, pay off the one you owe the LEAST on first, no matter what the interest rate is, while paying the minimum on the others. Then once that one is paid off, pay what you are paying for it PLUS the minimum of the next until it is paid, and work your way up.
Thanks. I was thinking the same but then thought that maybe it should be the house first because although it's cheaper than the 9.75 it costs more in the long run and the 9.75 payment is the smallest.
Thanks guys.
also, I was thinking that the sooner I got to the 20% paid mark on my mortgage I would stop paying PMI sooner for an added savings.
one day
**** debt and **** church debt semiars...wtf
i get the whole argument of paying off the smallest.....but i'd pay off the one charging the highest interest
who asked you?
one day
the guy that held the seminar is Bob Marette, he has several books out there, but I'm sure you can find his theory online. What he says makes perfect sense.
First thing I'd do is stop funding scholarships.
Then pay off the 9 percenter.
More important:
Why do you have 2 vehicles and who hates you so much that you got a 9.75% vehicle loan? Did you pee on the bank's rug? (That rug really tied the room together.)
the scholly didn't cost me a dime. Apparently all kids in Chickasha don't need any extra money for school as nobody filled out the app. Or the POS counsellors didn't tell them about it.
one day
It does make sense in that it's the easiest plan to follow-so from the standpoint of what will end up getting the average person out of debt as opposed to what would theoretically be the better way it does make sense.
In this particular case, it appears that both Marette and I agree on which loans to pay off the fastest. I always go in with the assumption that if someone asks me for advice they're going to follow it.Probably a bad assumption.
"The choices we discern as having been made in the Constitutional Convention impose burdens on governmental proceses that often seem clumsy, inefficient, even unworkable, but those hard choices were consciously made by men who had lived under a form of government that permitted arbitrary governmental acts to go unchecked." INS v. Chadha, 462 U.S. 919 (1983) (Burger, C.J.)
oops, it's not 9.75. That was for a little handshake type loan I had a few months ago.
The trailer has 44 months left and is 6.25, not 32 and 9.75.
To recap with correct figures:
44 mos @ 6.25
53 mos @ 6.5
360 mos @ 6.625
So the advice would be pay off the 6.5 then the 6.25 then the 6.625?
one day
I have been wondering about this.
When I was in banking, it was good to pay off the mortgage. But then mortgage rates were over 10% .At this point in time, I could pay off my house which is at 5.75% or keep on invested where I have been avging 12-13% annual return.
So would it be advisable to pay the mortgage anyway. I really would not save very much per month.
OBAMA= One Big A** Mistake America!
Yep. Depending on your marginal tax rate, you're paying an effective rate of around 4.8% on the mortgage-plus, it's debt that is leveraging an investment.
"The choices we discern as having been made in the Constitutional Convention impose burdens on governmental proceses that often seem clumsy, inefficient, even unworkable, but those hard choices were consciously made by men who had lived under a form of government that permitted arbitrary governmental acts to go unchecked." INS v. Chadha, 462 U.S. 919 (1983) (Burger, C.J.)
How close are you to retirement?
"The choices we discern as having been made in the Constitutional Convention impose burdens on governmental proceses that often seem clumsy, inefficient, even unworkable, but those hard choices were consciously made by men who had lived under a form of government that permitted arbitrary governmental acts to go unchecked." INS v. Chadha, 462 U.S. 919 (1983) (Burger, C.J.)
Just to complicate matters, which ones are assets that can be sold, and are you intending to sell any of them any time soon?
(Reason I ask is that depending on when you intend to sell the assets, and how quickly you can pay them off, it may make sense to take into account the rate of depreciation.)
I am 43.
OBAMA= One Big A** Mistake America!
Well, on the 44 mos 6.25, my trailer, I have it on a three year depreciation schedule and I deduct 100% of my payments being as it is for work. On my truck, the 53 monther, I only deduct mileage used for work.
one day
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