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Im getting married in a couple weeks. We are both pretty frugal. We both have auto loans. And I hate the thought of having 2 auto loans. My truck is probably worth abiut $32000. I owe $13000 @ 2.1%. Her interest rate is 3.25 and owes about the same. Would you just pay one of them off. It will get into some of our emergency fund. We also have a mortgage and have about 9 years left on that. And contributing into 401k and roth ira. We are both 32 years old.
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I would probably want to see a bit more detail on figures for your EF & other assetsassets before giving a definitive recommendation....
But in general terms, if the money you're considering for use in eliminating one of the car loans (probably her higher interest loan) is held entirely in cash savings right now (earning probably less then 1%), it may very well be a decent idea for you to pay it off. If you don't want to touch the EF, then you could pay it down with available cash, then throw everything you can at the loan for a few more months, then be rid of it.
For what it's worth, this is very similar to what my wife & I did. Before we got married, I was determined to pay off my car loan from ~$9k at the time. I managed to do that mostly with cash flow except the last $3k or so from savings, & killed it off a month before the wedding. Once we were married, I had a chunk of cash in savings, and my wife had about $19k in student loans. We took about $12k from my savings, cash flowed the rest, and had those gone after about 6 months. We chose to tap about a quarter of our EF to make that happen, but we both had very secure incomes & low risk otherwise, and we were very keen on starting our marriage with no debt except for the mortgages on both of our homes.Last edited by kork13; 06-04-2015, 08:30 PM. -
As your status is about to change, I've no idea how you two have decided to manage income. Will you pool income? Will you each contribute a percentage of earnings to joint expenses according to income? Will you split bills 50/50? How will you make financial decisions?
I'm surprised you bought a truck with a 60 month payment plan. If the loan at 2.1% causes sleeplessness, why not pay it off? If you just dislike the idea of interest, I suggest you cash flow increased payments asking that the extra sum be applied directly to the principal.
I presume your bride will continue her employment and since her car loan interest rate is higher at 3.5%, you two may prefer to tackle her car loan 1st. In order to use income to best advantage, it's important to fully fund retirement. 1st to get any employer match, plus income allowable for full income tax benefit and finally, ROTH to Risk Tolerance which is expected to earn more than 3.5%.
You'll want to maximize income by having a total financial plan with written goals taking you to 5 years in the future.Comment
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Looking back at all of your other threads, it is really obvious how much this debt is bothering you.
Go ahead and pay it off. Get it over with. What are you waiting for? If you run into a problem and want the cash back, then go back to the bank and put another lien on it.Comment
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I just hate the thought of taking that out of my savings!!Comment
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Suppose your vehicles were paid off and you didn't have much money in your savings account, would you put a lien on the title, just to beef up your savings account?Comment
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Probably not !!!Comment
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