I'm 23 with ~62K in debt. School and Car

I have about 2700 that I'd like to use toward my debts.

School Loans: Most at 6.8% Owe: ~27K (10 year graduated payoff plan, payment is going to increase up to 50% every year)
Car: 3.69%, Owe ~35K, payments at $635 (72 month loan)

Yes I was REALLY stupid and bought an expensive car even though I had student loans, I regret this. I have come a long away and getting smarter with my $ (IRA, mutual funds, etc)

I'm going to refinance my car loan. Could get this down to:
1.99% if I adjust to 48 months. (I'd have to use at least $1800 to get me low enough to afford the monthly payments)
2.19% if I adjust to 54 months (I could put down 500 and still be able to afford these payments)

I guess the question is:

Would it be a better move to put more $$ toward my car loan so I can refi to a 1.99% (pay this off quicker and less interest)
or
drop this cash into my student loads which have 3.69% interest?

Thanks!

Sell the car and use your tax return to help since you're probably upside down. Then buy a cheaper car.

quote:

---

Sell the car and use your tax return to help since you're probably upside down. Then buy a cheaper car.

---

Yes I know I made a bad decision financially

I didn't mean to sound like a jackass. My first vehicle purchase was a $36,000 truck on a $35,000 salary. Thankfully some savvy budgeting and a good wife got that paid off quickly. I then drove it for another 7 years before it got totaled. I'd still be driving it if I could.

What kind of car?

After graduation and into my first job, I got a 2011 Infiniti G37. I regret the purchase because it wasn't smart but I love the car.

quote:

---

I didn't mean to sound like a jackass. My first vehicle purchase was a $36,000 truck on a $35,000 salary. Thankfully some savvy budgeting and a good wife got that paid off quickly. I then drove it for another 7 years before it got totaled. I'd still be driving it if I could.

---

No probs, this is why I came here for advice. I bought a $38,000 car on a $53,000 salary so I didn't do as bad as you haha

quote:

---

What kind of car?

After graduation and into my first job, I got a 2011 Infiniti G37. I regret the purchase because it wasn't smart but I love the car.

---

I got a 2012 Camaro SS 45th anniversary edition. I'm in the same boat. I regret it, but love it.

I know you will get some great advice here (and slightly different from everyone).

My advice is:
1) If you don't have an emergency fund, start one with this money.
2) Read the "millionaires" thread on this board.

I love that people confess first and then brace for the outrage on this board.

TAX REFUND...freeloader!

quote:

---

I love that people confess first and then brace for the outrage on this board.

---

After you read the millionaires thread, sell the car, and re-read the millionaires thread.

quote:

---

Sell the car and use your tax return to help since you're probably upside down. Then buy a cheaper car.

---

This is my advice also. For the same monthly payment you could outright own a $7,500 vehicle in a year.

[This message has been edited by Are you a Wizard (edited 1/22/2014 12:18p).]

I agree with what most people are saying here. Sell the car, and use the tax refund to pay the under.

Current KBB is $30682. Sell the car, and use the tax refund to pay it down. You will owe about $1,618 given what you said.

Take mass transportation until the loan is paid off, and pay yourself that $600 for about a year. Use the $7200 you have earned to buy yourself a good used reliable vehicle which can be done on that budget.

Continue to pay yourself the $300 and use the remaining amount from the Camaro payment to pay down your student loans.

Invest the $300 dollars you were paying yourself in a good index fund such as the SPY (S&P 500) index.

Assuming you get on average about 8%, your $300 a month payment to yourself will have grown to about $27,607.60 which is much more worth than what your Camaro SS will be worth in 7 years. At that time, use $12,607 of it plus the trade in of your car to buy yourself an even much nicer used reliable car.

Leave the $15000 in the investment account and let it sit there again for 7 years, and wash, rinse, repeat...

[This message has been edited by aTm papi (edited 2/19/2013 1:06p).]

I was planning on trading my G37 in for a 2013 or wait for 2014 5 series. Not smart at all and it really is amazing how many rich people I know that don't drive flashy cars...well maybe they keep something in the garage for the weekends, but the richest guy I know is an Iranian immigrant and has his own oil company and he drives an Altima and his wife drives an old 4runner. They did buy their 17 year old daughter a brand new 3 series though.

a follow-up question based on aTmPapi post: (anyone can response)

I'd say 5-7 years is short-term to mid-term time frame.

What would your investment portfolio look like for that $15k?

Sell the car

quote:

---

Just curious, are you living at home rent free and that is how you are affording those payments on student loans and car?

---

I rent, but live in a cheaper part of town and have 2 roommates. I lived at home for a couple months and saved some to help cover expenses over time. Another bad decision was moving out, my parents said I could have stayed as long as I wanted. (would have been able to save well over 8K had I been stayed at home)

quote:

---

Current KBB is $30682. Sell the car, and use the tax refund to pay it down. You will owe about $1,618 given what you said.

Take mass transportation until the loan is paid off, and pay yourself that $600 for about a year. Use the $7200 you have earned to buy yourself a good used reliable vehicle which can be done on that budget.

Continue to pay yourself the $300 and use the remaining amount from the Camaro payment to pay down your student loans.

Invest the $300 dollars you were paying yourself in a good index fund such as the SPY (S&P 500) index.

Assuming you get on average about 8%, your $300 a month payment to yourself will have grown to about $27,607.60 which is much more worth than what your Camaro SS will be worth in 7 years. At that time, use $12,607 of it plus the trade in of your car to buy yourself an even much nicer used reliable car.

Leave the $15000 in the investment account and let it sit there again for 7 years, and wash, rinse, repeat...

[This message has been edited by aTm papi (edited 2/19/2013 1:06p).]

---

Good advice, thanks! I will keep this in consideration for sure.

outside of selling the car, what recommendations do y'all have for the return?

I have about 6K in saved up (cash + tax return), I was thinking:

Open short-term mutual fund (similar to UUSTX) and put ~ $3K down (start emergency fund)
Put $1K toward Auto Loan (refinance and get interest rate dropped by 1.14%)
Put $2K toward student loans (clearing two of my 5 loans with 6.8% rate, have 2 others @ 3.4%)

or something like this:

Open short-term mutual fund (similar to UUSTX) and put ~ $3K down (start emergency fund)
Open moderate allocation fund (similar to UFSGX or USBLX ) put ~ $1K down
Put $1K toward Auto Loan (refinance and get interest rate dropped by 1.14%)
Put $1K toward student loans (clearing 1 of my loans, and paying off 1/2 of another with 6.8% rate)




[This message has been edited by hennessy11 (edited 2/19/2013 3:50p).]

[This message has been edited by hennessy11 (edited 2/19/2013 4:09p).]

dp

[This message has been edited by hennessy11 (edited 2/19/2013 3:46p).]

Not trying to derail - this thread is great - your last post makes me wonder what folks opinions are on emergency funds. Should they be straight, liquid cash in a savings account, or do you guys recommend other places that are low volatility, but still investments?

quote:

---

Not trying to derail - this thread is great - your last post makes me wonder what folks opinions are on emergency funds. Should they be straight, liquid cash in a savings account, or do you guys recommend other places that are low volatility, but still investments?

---

Very little of my "emergency fund" is in cash. I keep a cushion in the operating account for the business and a cushion in the home accounts, but my true emergency fund is not in cash.

I probably have a little more than i should in cash (6-12 months of living expenses) but we have a ton of other investments too. we are just too busy with life and our business to worry about where our savings are parked, so we re-allocate a couple times a year or so.

when i was a recent graduate, my emergency fund was small (couple thousand) so it was in cash until we had something to invest. If you have no experience investing, i would recommend you wait until you unload your cash in to ETFs... haha.

quote:

---

If you have no experience investing, i would recommend you wait until you unload your cash in to ETFs... haha

---

I spoke with a financial advisor who recommended putting my emergency cash into an a short-term fund, so it builds more interest than a savings account but not much as much risk as an aggressive fund.

[This message has been edited by Hennessy11 (edited 2/19/2013 9:16p).]

My emergency fund is in the S&P and a total bond market fund. I'm OK with this.

One recommendation I have is stop pounding the 'WTB Season Football Tix' threads over on the Ticket Exchange! You obviously don't have the money to get the tickets, or you are just wasting everyone's time on this board.

If we're making recommendations to the OP then how about him editing his ridiculous comment on the USAA thread on the OB.

Pretty classless.

Ok, my comment on the etfs was a little tongue in cheek. I have no problem with parking emergency cash in an etf, like an S&P fund. As long as its parked there. You should never "gamble" (read become a day trader) with your emergency fund.

quote:

---

One recommendation I have is stop pounding the 'WTB Season Football Tix' threads over on the Ticket Exchange! You obviously don't have the money to get the tickets, or you are just wasting everyone's time on this board.

---

I did stop. Please review your notes to compare the last time I responded to one of those threads and when I started this thread. I have humbled myself a bit by posting on here in hopes to learn how to spend my $ wiser. I have admitted that I have a problem speaking $ outside of my means, l but thanks for being a d**** about it.

Please stop pounding posters on there for selling tickets at a premium. I disagree with it too but I don't waste my time trying to moderate a free market

quote:

---

If we're making recommendations to the OP then how about him editing his ridiculous comment on the USAA thread on the OB.

Pretty classless.

---

what are you talking about?


[This message has been edited by Hennessy11 (edited 2/20/2013 2:53a).]

quote:

---

Ok, my comment on the etfs was a little tongue in cheek. I have no problem with parking emergency cash in an etf, like an S&P fund. As long as its parked there. You should never "gamble" (read become a day trader) with your emergency fund.

---

ahh that makes sense. I'll look into that literature, thanks!

quote:

---

what are you talking about

---

http://mobile.texags.com/Forums/34/Topics/2266688?page=0#r34898995
Where you threw a board sponsor (that based on your age I assume you've never worked with) under the bus, get called out on it by several of us, and have yet to respond.

Probably the fact that you said do not use a particular forum sponsor, but then provided no explanation as to why.

quote:

---

quote:

---

what are you talking about

---

http://mobile.texags.com/Forums/34/Topics/2266688?page=0#r34898995
Where you threw a board sponsor (that based on your age I assume you've never worked with) under the bus, get called out on it by several of us, and have yet to respond.

---

Forgot I did that. Removed and apologized for the comment. You have successfully derailed yet another decent thread by taking personal shots at somebody, well done sir, well done.

Don't be sensitive... at least you aren't JRS04. That guy is a bigger distraction to any thread on texags than Johnny Manziel is to a classroom on campus.