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Thread: What would you do?

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    #1

    What would you do?

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    What would you guys do?

    We are in that time of the year with income tax.

    We are planning on paying off the last of our debt from the move...! That will leave us a pretty good chunk left. About 4K. This is where my question is.

    We have an auto loan that has a 1.5% interest. I was thinking about putting 1k into our Roth. We would like 1k to get a few things around the house to set it up.

    Would it be better to put the remaining into a savings for future things (emergency?) or put it towards the auto loan? It wouldn't be much; but, it would bring the payments about 3 months left.

    So...what would you do?
    "Obstinacy is a fault of temperament. Stubbornness and Intolerance of contradiction result from a special kind of Egotism, which elevates above everything else the pleasure of its own autonomous intellect, to which others must bow.: Carl von Clausewitz
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    #2
    I would put it towards the car, because once that's paid off then you no longer have the payment, and each month could take what you were paying and put it in savings.


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    #3
    Do you have an emergency fund at all yet?
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    #4
    We have about 2k in an emergency fund.
    "Obstinacy is a fault of temperament. Stubbornness and Intolerance of contradiction result from a special kind of Egotism, which elevates above everything else the pleasure of its own autonomous intellect, to which others must bow.: Carl von Clausewitz
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    #5
    I would save the extra 1k in your emergency fund. keep paying the car payment as it is, because 1.5% is really really low. you will still owe anyway, for 3 months even after you paid the 1000 into it. In my opinion it is better to keep your payments as is, and save the CASH. even if you had a hard time paying the payments you'd have the 1000 to peel from if you had a hard time later. if you give it all now and end up having a hard time paying the monthly for the last three months you will have to peel it from your 2k which isn't a lot to begin with. I would pay the 1000 into it if it was the last of your payments. Like maybe wait until there is 1000 left on your car loan and pay that off all at once. just my opinion though. i understand wanting to pay it off sooner too though.
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    #6
    If I didn't already have 3 months of emergency expenses, I would fund that first. Then look at possibly doing the house stuff (assuming the stuff around the house is a want and not a need - if a true need, that would come first, then emergency expenses) or the auto loan. I agree it isn't very high interest so if you would rather have your house stuff first I don't think that would be a big deal.
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    #7
    Thanks you guys.

    We are going to put most away when it comes in and decide what to do. We will need in June to get our phones repaid for the year. We like to pay a year long and we use the smart talk plan. It is nice having it taken care of. I had forgotten about that. I think, savings is the best thing for now.
    "Obstinacy is a fault of temperament. Stubbornness and Intolerance of contradiction result from a special kind of Egotism, which elevates above everything else the pleasure of its own autonomous intellect, to which others must bow.: Carl von Clausewitz
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    #8
    I would make sure you're emergency fund is paid, then cars. If it'll leave only 3 months left, then by June they'd be paid and you could do the phones in cash AND no car payment!
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    #9
    Paying off a loan at less than 2% would be the very last of my priorities. In fact, I'd likely never pay a penny more than necessary. It's an automatic hedge against inflation, and you will beat that rate (long term) in the market by far.

    I'd probably beef up the emergency savings and if I had any left then I would fund a Roth.

    I would also change my W-4 immediately so I wasn't giving the government an interest free loan of my money. Getting a big refund is actually a bad thing. If you'd have kept that money all year, instead of paying it and getting it back, it could have been earning interest or growing in the market (or saving on interest on your moving debt) over the course of the last 12 months.
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    #10
    Quote Originally Posted by villanelle View Post
    Paying off a loan at less than 2% would be the very last of my priorities. In fact, I'd likely never pay a penny more than necessary. It's an automatic hedge against inflation, and you will beat that rate (long term) in the market by far.

    I'd probably beef up the emergency savings and if I had any left then I would fund a Roth.

    I would also change my W-4 immediately so I wasn't giving the government an interest free loan of my money. Getting a big refund is actually a bad thing. If you'd have kept that money all year, instead of paying it and getting it back, it could have been earning interest or growing in the market (or saving on interest on your moving debt) over the course of the last 12 months.
    This

    I would put it towards yall's emergency fund. Its good to have at least 3 months of expenses but 6-12 months is even better.

    With the loan having such a low interest rate I wouldn't bother paying it off. You can invest the money and make a lot more than the interest charged on that loan.

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