Retire Debt or RetireMent

[jIM_Ohio]

Well, from a strictly dollars and cents standpoint, it doesn't matter who the lender is. It only matters what the interest rate is. Of course, in your case, your parents aren't going to come reposess your belongings or put you in collections if you miss a payment and you don't have your credit report to worry about.

I'd still stick with my previous post and say you should fund your IRA out of current income and use what's left to repay debt, even if that means taking a little longer to repay the debt.

agreed on all points

[LivingAlmostLarge]

Does it matter though the loan is family? Does it make it a higher priority to pay it off because you feel bad or someone (sister) is resentful?

[boog]

Does it matter though the loan is family? Does it make it a higher priority to pay it off because you feel bad or someone (sister) is resentful?

No, it doesn't matter to me. I don't feel bad and no one is resentful. Obviously I don't want to abuse anyone, and if it got to a point where I was being a burdon I would get financing somewhere else.

That is the reason we are charging ourselves interest on the family loan. That way, my sister is not getting short changed. My use of my parents money robs some of her inheritance. Therefore, to compensate her for that, I am paying my parents interest for the use of the money.

I do feel inclined to pay them back as soon as possible, but my parents want me to pay off the other loan first. That way if things get tough they can be more forgiving if I can't pay things off at a certain pace.

[Scanner]

Well, it's a promissory note, whether it's from your parents or not. It's a legally binding loan and I think everybody was smart to do it that way.

It's a personal decision on which you would rather retire first - your parents or the bank.

I'd have to think about that one.

On one hand, it's nice to not owe a person personally for a debt. I'm sure your parents, no matter how well off, wouldn't mind seeing a return of that money and could do other things with it. On the other hand, you know someday the estate will be coming back to you - it may be okay to retire your parents debt last if everyone's relationship is strong and they keep getting their monthly check.

Number-wise, you just aim for the more expensive term and interest rate.

My parents offered to finance my business at 0% when I first started out but I wasn't comfortable. Now. . .that was just me. I went to the bank and have a circulating LOC going from about $16,000 up to $29,000 and now back down to $7800. I prefer to use the 'rents as a parachute, rather than a lending source.