how should i pay off my truck, or should i?

ok so im 21 years old and i have an excellent job at a power plant. i bring home roughly $2600-$3000 a month depending on how much OT i get. i've been wanting to save up for a house, but where i'm hardly home due to work or being at my girlfriend's ive decided it's best i live with my grandma until i MUST move out. she has no problem with it, i help out around the house and that's all she wants.

so i've decided to take the money i would've put towards a new house and start paying off my tacoma. i owe about $20k on it with payments at $432.51 a month. its a 66 month loan and i'm entering the 13th month. obviously my options are 1) pay extra towards principal or 2) make double, triple payments.

both has their cons, i hate the fact that if i make my regularly scheduled payment, then go in the next day and pay $2k towards principal, i still have to make my regualr payment next month. though i am paying it off quicker with less interest, i hate that thought. now i could pay up on it 3 months ahead each month, but id still be paying interest which sucks, but i like the idea of being paid up on it "x" amount of months just in case something happens and i need the extra money.

my third option is to just take the extra money and put it back and save for a house one day. what do you guys think i should do?

 

pay off your truck first, a house is a HUGE commitment

 

yeah i like the idea of paying it off before i buy a house, because that opens up my price range on a house a lot. but how should i pay the truck off?

 

I think if you have the truck payed of, you'll have more money per month to pay for a house.

 

no no no... you're establishing credit with your car loan. don't pay it off. and make every payment ON TIME without exception. continue saving for a house/condo - it will become one of your biggest and best investments. the truck is just a depreciating asset.

 

x2. once you pay it off, you are not building your credit any longer on that. I am making payments on my car right now, every so often i will do a couple double payments but i want to try and use all 5 years i have on that car so i can get full advantage of building my credit. I also have a credit card.... unfortunately... im working on getting that paid off too... just took it out of my wallet so i dont use it anymore until i get the balance back down to a reasonable level. anyway, Id continue payments on the truck, live with g'ma till the truck is paid off or you are forced out of the house, set an amount to put to the side for a house from each of your paychecks.

 

X2!!!!

 

I say buy a house, use the FREE 8000 dollars from the guberment for first time home buyers and pay off the truck with it. The tax credit ends Dec 1, so if your gonna do this, now is the time.

This is what I plan to do and I still owe about 19000 on my tacoma and I make less than you. Course I think I have enough in savings to pay off the truck with the tax incentive.

 

save up as much as you can for a few years, then take the money to vegas for a weekend and keep playing blackjack until you can payoff the truck and buy a house with the cash. It happens all the time, just don't get distracted by the strippers and hookers that will take all your money

 

thanks for all the opinions guys. i got a pretty good interest rate on the truck, 5.1%. i hate owing on things thats why i wanted to pay it off but i never thought that by keeping paying it it will increase my credit score. i do not have a lot in savings, actually i have no savings. but i do have about $6k in my 401k right now. as much as i want to buy a house with the first time homebuyer tax credit, i cant find a house i want right now which sucks. if i found one id get it though.

thanks for all the opinions, keep em comin if you havent already!

 

actually i'm almost in the same kind of bind. i've been paying double payments instead of the principle. just in case something happens. how about if you mix it up. like everyone said, you do need money for a downpayment. whatever you choose to do, i think the best decision you made is staying at your grandma's house so that way you have some extra $$$$.

 

pay the truck first man, if you are getting into a house loan, you will be better off with no other debt

 

You could always continue to pay each month on the truck and add $100 (or whatever) towards principal. NEVER pay monthly payments early....that won't save you anything. Putting money towards principal will save you money in the end. Less total money out of your pocket!!!

At the same time, save money for a house. A bigger downpayment will greatly help you with the purchase/percentage rates on a mortgage when you're ready for it.

And - DON'T CASH IN YOUR 401K!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Don't get yourself in the habit of using your 401K as a backup. If you do it once, then you'll do it again and by the time you retire, you won't have much save up for when you need it.

 

too lazy to see if this has already been said but defiantly do not just pay off your truck quickly, i mean put an extra 50 or so every now and then and pay early before due date thats what gonna sky rocket your credit score, then also suggest make an account and and put whatever you feel like into it for your house from your pay days and forget about it dont touch it, just keep doing that every time you get paid and you'll have a good amount of money saved up for your house when ready, and wont need to worry bout making money when ready for it.

 

Your best asset in all of this is time. You're 21 and making some good coin, don't have a mortgage and don't have children. Fcuk the truck and the house, you need to save for your future 50 years down the line. Save as much money as you can in as many nest eggs as you can.....compound interest is your friend (just look it up online). I know having bills sucks but as long as you can milk grandmas and keep that little girlfriend on the sidelines its in your best future interest. Ok, I've said enough.

You should come up with 2 goals, short term goals and long term goals.

1. Long term goal - pay yourself first. Open up some IRAs, try to contribute the most coin possible to your 401k. Time will help you here.

2. Short term, if you really want a house - save 10 - 15k for down payment/closing cost (besides you can always buy a house where the seller pays closing). Wait till you're married on the house, dual income will work wonders and it'll be something good for you and your wife to do. Believe me I was like you, I wanted to buy a house right after college cause I was making some nice coin, but now I'm glad I waited. I have paid off a $40k lot in a year and will custom build my house.

3. Short term, make double payments on your truck. You said your note was for 66 mths - 13 mths (already paid) = 53 months left, try to cut that in half and pay it off within the next 2 years (I'm sure can work backwards here to find what kinda payment you need to make to pay it off in 2 years). I'm about to payoff my truck next month, 3 years early because of double/triple payments. All the while saving for retirement and buyin a lot for a house.

4. Short term - have a separate saving just in case you lose your job, at least 6 mths worth of coin. (I got laid off last year but found something within a month. I always thought I would never get laid off. But it happens. So be prepared.)

5. Building Credit - there is so much stuff out there it's outrages a bunch of do's and don't and all kinds of $hit. The best advice I can give you hear is, if possible never make a late payment, and don't ever let anything go to collections and never, ever file for bankruptcy. Late payments and collection accounts will stay on your credit for 7 years like a bad stain, bankruptcy is 10 yrs. All the other $hit is irrelevant. Take care of those 3 things and you should be fine.
Hope this helps.

 

SO- I agree with Muy alot...and it's your money...So Save a bit, Pay off the truck faster, and go after what makes you happy!!

 

Roth IRA and any other retirement fund. Compounding interest is an amazing thing. The younger you can start saving for retirement the happier you'll be at 65.

 

1. Stick with your normal payment and as said on time.
2. Make a payment to yourself. Send some coin to a savings account!!
3. Put a couple bucks away & get grandma a special Christmas gift, she sounds awesome!

Your way ahead of a lot of folks, Wish I was more $$ savvy when I was 21 Kudos for thinking way ahead of the game. Best of luck!

 

thanks a lot guys for all the info. im definitely going to take the advice about exploring alternate means of putting money away for retirement. honestly i would like to retire before i hit 65, heck no later than 60.

as for the truck, i do want to pay it off early but im going to take some advice again make some extra payments towards principal and maybe double payments every now and then. as long as its paid off earlier than anticipated i should be fine. thanks again for all your help! if you have any more advice send em my way!!