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    Am I on the right track?

    So I feel like I'm on the right path for financial happiness, but I just can't decide where to go next with taking on paying off debt or saving cash. So I'll start with what I have and what I've been doing. First off I'll list my current debts and monthly expenses.

    Cell Phone $173.00
    Personal Line of Credit $151.00 ($7,700 balance @ 10.25%)
    Auto Loan 1 $399.55 ($13,900 balance just refinanced 36 mo/1.74% was at 3.35% with 39 months to go)
    Mortgage $1,017.00 ($108,000 left, 19 years to go, 5% APR refi not possible)
    Boat Loan $292.04 ($34,000 left, 13 years to go, 4.5%)
    Auto Insurance $102.30
    Energy Bill $280.00
    Stafford $50.00 ($1,900 left, 3%)
    Stafford $101.45 ($4,700 left, 7%)
    Water Bill $45.00
    Stafford 2 $145.70 ($15,000 left, 3%)
    Life Insurance $46.01
    Internet $47.46
    Auto Loan 2 $417.50 ($27,700 to go, just refinanced from 72 mos left at 4.5% to 72 month 2.49%)
    Netflix $21.00
    Childcare $168.00
    Medical Care $60.00
    TiVo $15.00
    Gym $10.00

    So with a monthly NET income of $5,300 and monthly bills totaling $3,540, I have $1,700 left for gas, groceries and fun. I also have $20,000 in a rewards checking account earning 4.59%.

    Where I'm torn is do I pay off that personal loan and reduce my cash reserves by $7,700 or do I just bump up the payment to around $600 month until its gone. I'm a big fan of keeping liquid cash for emergencies but at the same time recognize the need to not pay interest. I met with a financial advisor, but all he was interested in doing was selling me CD's and the like. I can't seem to find a professional to run my numbers by and get some advice.

    I know I'm in a pretty darn good spot, but I want to keep heading that way and do it right. Cars are my passion and I want to get to a point to buy a nice fun toy down the road. Thanks all!

    #2
    You have way too much debt. You are losing a lot of money with all of that interest you are paying.

    Cell phone bill is way too high.

    Retirement savings - 401k, Roth, other?

    College savings?

    Age?

    Pay off the personal loan using some of the 20k. Either one lump payment or something like 7700/6 payments to avoid the shock of 7700 less in your account.

    I'd also pay off the $1900 stafford loan.

    6 year car loan is absurd.
    Last edited by Jluke; 02-25-2016, 01:44 AM.

    Comment


      #3
      Originally posted by rffanat1c View Post
      I can't seem to find a professional to run my numbers by and get some advice.
      Professionals need to get paid, if they are offering 'free' advice, then they must be profiting off of whatever they are selling. Don't look for financial advice from professional salespeople.

      Originally posted by rffanat1c View Post
      I know I'm in a pretty darn good spot, but I want to keep heading that way and do it right. Cars are my passion and I want to get to a point to buy a nice fun toy down the road. Thanks all!
      You may be in a pretty darn good spot with cash flow, but how good are you with net worth growth? I see a lot of debt for depreciating assets.

      Cars are my passion as well, but I learned to stop going into debt to fuel my passion. I spent about 10 years autocrossing in the SCCA, but I learned to do it without carrying debt, because I got tired of paying interest. I would pay off the line of credit and the higher interest stafford loan, then start rebuilding cash reserves. I would also come up with a long term strategy to save upfront to buy toys like cars and boats, instead of borrowing money from the bank.

      Comment


        #4
        This is how much interest you paid to the bank in the last month:
        Code:
        Personal Line of Credit		$  65.77 ($7,700 balance @ 10.25%)
        Auto Loan 1			$  20.16 ($13,900 balance, 36 mo/1.74%)
        Mortgage			$ 450.00 ($108,000 left, 19 years to go, 5% APR)
        Boat Loan			$ 127.50 ($34,000 left, 13 years to go, 4.5%)
        Stafford			$   4.75 ($1,900 left, 3%)
        Stafford			$  27.42 ($4,700 left, 7%)
        Stafford 2			$  37.50 ($15,000 left, 3%)
        Auto Loan 2			$  57.48 ($27,700 to go, 72 month 2.49%)
        TOTAL				$ 790.58
        If you paid off the personal line of credit and the 7% stafford loan, then you would free up $250 of cash flow and reduce your interest cost by $92/month.

        If you stick to a budget with your fun money, then you could rebuild the cash reserves fairly quickly.

        Comment


          #5
          In summary, did you pay about $ 9,600. in interest in 2015? Your passion [cars] are a depreciating asset! What happens sometime in the future when interest rates normalize?
          PS, agree on decent car, don't agree on 5 year financing, wasn't there a re-financing fee? Ph: $, 2076. How often do you upgrade phone? Those are somewhere near $ 800 ea.
          Last edited by snafu; 02-25-2016, 07:47 AM.

          Comment


            #6
            Originally posted by Jluke View Post
            You have way too much debt. You are losing a lot of money with all of that interest you are paying.

            Cell phone bill is way too high.

            This is for my wife and I. Lowest I've found from main carriers and keeping a data plan.

            Retirement savings - 401k, Roth, other?

            I have a pension through my job. I'll collect 75% of my last year's salary after 30 years of service (19 to go)

            College savings?

            No savings. Don't plan on it either. I put money away for my one child for whatever she may need it for at 18.

            Age? 34

            Pay off the personal loan using some of the 20k. Either one lump payment or something like 7700/6 payments to avoid the shock of 7700 less in your account.

            I'd also pay off the $1900 stafford loan.

            6 year car loan is absurd.

            I'll have to disagree. Just one area I'll spend some money. I won't pay $1,000 a month on a car payment for a shorter term and I can't drive a $15k Chevy spark for 10 years. Yes I CAN technically but I'm going to be stubborn there
            I figured debt is just a part of life. Who can start out at 23 in a full time job and wait 15 years to pay cash for a house and rent all that time? I get some people can live bare bones in regards to all aspects of their life. I can in most places, like no eating out, same clothes for years, coupons, frugal in many places but boating and decent cars are my hobbies. So that's one place I'm willing to compromise.

            Comment


              #7
              It would seem that I did snafu. That's quite the number when you look at it that way. I see the house as an unavoidable expense. That's half right there. I bought before the market dived and had an interest rate of 6.5%. Got down to 5% in 2009. I've been upside down since 2008 and I only paid $130k. House is worth $72k now.

              I do appreciate all of the different views and opinions this far, thanks all

              Comment


                #8
                Cell Phones: Cricket Wireless, Virgin Mobile, Boost Mobile, etc... $35/month. pay for phone outright. At least consider it. You could be paying just $70/month or so.


                Everyone has different views on debt so as long as you're comfortable with the debt you've acquired, most of us are just pointing out how much it is costing you in interest.

                But you should have a plan to reduce it quicker. then you can really start saving your monthly cash flow for future toys that you pay cash for.

                Comment


                  #9
                  I will look into it Jl. I appreciate the hard numbers and info. I am pretty comfortable but now there's that drive to pay off and pay off more lately. We kept our last car 10 years and these ones we wil as well. While not investments per se, they last us a decent amount of time.

                  I've been doing to snowball method with a few small debts I did have a few months ago. March begins making payments of $535 to the personal loan but I had been debating knocking it down completely hence my post and question. After that's gone I just didn't know where to go next. Car, mortgage, student loans etc

                  Comment


                    #10
                    Originally posted by rffanat1c View Post
                    I figured debt is just a part of life. Who can start out at 23 in a full time job and wait 15 years to pay cash for a house and rent all that time?
                    The mortgage doesn't concern me, it's the $75k+ debt for passion that I wouldn't be comfortable with. Saving up to buy a car with cash is much easier than saving up to buy a house with cash.

                    Originally posted by rffanat1c View Post
                    I get some people can live bare bones in regards to all aspects of their life. I can in most places, like no eating out, same clothes for years, coupons, frugal in many places but boating and decent cars are my hobbies. So that's one place I'm willing to compromise.
                    I get that, because I was there. I was frugal everywhere else, just so I would have more money to spend on my car. The interest was annoying, but for me, the depreciation was much worse. I bought a brand new subaru in 2004, and three years later it's value had dropped by $10k. So I spent $2k in interest and $10k in depreciation over 3 years. I don't have any regrets, but I'm glad I broke that cycle. I've learned ways to enjoy my passion without all of the debt. I do plan to buy another ridiculous sports car in the future, but not until I have so many assets earning interest, that the depreciation doesn't have much affect on my net worth.

                    Another way to look at paying interest is like it is stealing from your future self. Picture yourself in 10 years, are you going to have the same values that you do currently? Are you going to have two new car loans and still be paying off the boat? or are you going to have every debt paid off besides the mortgage, with much better cash flow?

                    Comment


                      #11
                      It's hard to say what my values in 10 years will be like. My current plan is all debt gone by the time I retire except car payments. I guess I feel they are just a part of life by my definition. However the goal is to be putting a good chunk of money down and a paid off trade in with future cars. The boat will be used until it falls apart.

                      I do look at it that the sooner I pay off this stuff the more cash I can save. It's just a matter of getting there in the right order now.

                      Comment


                        #12
                        Originally posted by rffanat1c View Post
                        I've been doing to snowball method with a few small debts I did have a few months ago. March begins making payments of $535 to the personal loan but I had been debating knocking it down completely hence my post and question. After that's gone I just didn't know where to go next. Car, mortgage, student loans etc
                        There are plenty of tools out there. snowball seems to be a Dave Ramsey concept, so look into that if you haven't.

                        Do you have a set budget that you track? There is You Need A Budget online and others that may be of value.

                        Set up an amortization schedule for each of your loans. That may help you to decide which to eliminate next. Questions to ask yourself: am I comfortable paying that much interest for this item (pay off highest rate/longer term)? Will I feel better having less loans (pay off smallest balances)

                        Of course there's a balanced approach too where you can pay extra on a few of the loans.

                        But definitely eliminate that personal loan first (and quickly).

                        Comment


                          #13
                          I will do the tables, that's a great way for me to decide. I use mint currently. My wife wouldn't use a thing like YNAB, I've never been able to get her to track her spending to save her life. Mint is ok, but doesn't exactly fit my style of budgeting.

                          I have a $1,000 set each month for our budget. $500 goes to gas and groceries and then we each get $250 for our personal spending on whatever we want. So when I track the transactions on mint.com, it automatically categorizes them but I don't have set grocery, gas, clothing budgets just one general $500 one. I of course go in and manually change this stuff. The one feature I'd love to have is a notification to both of us that a budget is approaching but mint only does one phone number.

                          I've been looking into others, but keep coming back to mint or quicken. And quicken just seems like a pay for version of mint.

                          Comment


                            #14
                            did I miss savings for the future- retirement, college if appropriate, etc?

                            paying interest drives me crazy, I would be doing whatever I could with extra cash to pay down those debts so you don't have over $700 in interest every month. Think what an extra $700 a month in retirement savings could mean.

                            I get the desire for a toy but agree with others about not taking on debt to fund it.

                            I do not get why you say you will always have a car payment when it appears you have the means to save and eventually pay cash for one.

                            Comment


                              #15
                              I forgot to say I just switched to cricket, my bill went from $65 to a flat $30 with the exact same amt of data, we did a family plan so it's $90 total for 3 people. I brought over my phone and came from AT&T so I did not get the bring your line over discount, but we got $100 for the other two leaving Verizon. I got them to upgrade to smart phones that cost a dollar and are plenty for seniors to handle. There were other perks that will show up in the next few months.

                              they use AT&T towers so I have had zero reception issues, everything feels exactly the same as when I had AT&T. I no longer understand the reasoning of sticking with one of the big 4.

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