To keep this simple, my wife and I are both 27 with one kid. Annual household income is 145k with a mortgage, over 6-month emergency fund, and maxing our IRA each year. The only other debt we have are my student loans with $38,000 left that I am paying aggressively on each month (Started 3 months ago) and our car loan with a lifetime 60-month 0% interest $37,000 left. My question is since I am on track to pay off my student loans in the next 18 months when that is finished should I pay the car off? I understand its "free money" at 0% but since it is a depreciating asset, is it worth paying the next 4 and half years? Should I get it paid off and use that extra money to invest, or should I continue minimum and use the "extra money " I used for quickly paying student loans to invest. Thank you for your input in advance.
Edit: I should also add, I do side jobs each month to bring in an extra $1500 minimum a month.
Posted by flx6leader
5 Comments
Start here: https://www.reddit.com/r/personalfinance/wiki/commontopics.
No there’s really no reason reason to pay off 0% debt
debt or invest: https://www.bogleheads.org/wiki/Paying_down_loans_versus_investing https://reddit.com/r/personalfinance/comments/16jcmnh/_/k0qox0x/?context=1 https://reddit.com/r/personalfinance/comments/zssug0/_/j1ddljd/?context=1
For car I’d pay aggressively until you are below the depreciation curve. Meaning you owe less than it is worth. That way you’re not under water. After that max Roth ira, 401k ect.
I would just pay the regular payment, you could definitely invest.
How much is in your emergency fund and what is the interest rate on your student loans? I would personally use a good chunk from the EF to pay off the debt (both student loans and car) and then build the EF back up quickly.
For the car, with no interest, I wouldn’t do anything to pay it off, because it doesn’t cost you anything. 0% interest, you can put it in an investment account and earn even 1 or 2% conservatively and make more than it costs you. Yes, pay off anything with interest aggressively.