Money modding or paying off the taco.

Ok so I think I have debt anxiety and throw all my money towards paying off my truck. I see so many people modding brand new trucks right off the bat. Maybe they paid for them in cash I'm not sure. Just curious if its normal in tacoma world to mod rather than pay more on the principal.

 

Valid point. I guess I meant to ask is if most people just make there minimum payments and not worry about paying it off fast.

 

I make double payments.

Same. Mine's just a grocery gettin' prius anyways

The only other truck I couldn't live without is another Tacoma!

 

My vote, pay it off.

I have no idea how much you owe, but applying towards principal can add up fast. Personally, i take satisfaction when i own something out right. It's mine. I worked hard for it.

Though if you have low interest rates, having a loan may be a good thing. Mods definelty make the truck more fun and there is also a satisfaction of building something unique.

I traded in a Tacoma i had a small loan on. It was a 2005 at that. Now i have a 2003 4Runner, paid for in cash. What i would have spent on the loan for the few months after, i bought sliders and tires. I also just paid off my wife's 2010 Forester. So now, two cars are paid for and we are saving $600 a month, combined, on what would have been going to payments. Save up a couple months and you can have a decent build. Save up for a year and you'll have some hefty change to spend. Who knows, maybe your expectations for the build would have changed once you figure out what you can do with a stock truck.

 

It depends. What is your rate. If its below 2.5%, doesnt make much sense (other then piece of mind) to pay the principal down. Cheap money may not be here for long. I rather throw that money into a brokerage account.

Mods, thats a whole other story. You pretty much wont make any back on the mods, but who cares, we didnt buy our trucks as an investment vehicle.

 

With interest rates so low now doesn't hurt much to keep on schedule with your payments and do something else with your money like invest it for the future, even stick it in a money market for a down payment on your next truck but if you're asking for permission to spend " a little" on some mods... YES! JMHO

 

It's bad that TW is still waiting for a build thread from you..

 

It depends on your situation. Most importantly..what is your interest rate? Being military...you should be able to get a super low rate though one of the military/federal credit unions.....they have billboards around town for .99% - 1.65%....that is borrowing money extremely cheap...so cheap...you are much better off putting your excess money into a mutual/index fund making at least 10% instead of paying off your truck. It is a no brainer. In my opinion it is way better to have a few thousand saved in case you fall on hard times. Lets say you have been making extra payments and something happens you can't make them...the bank isn't going to care that you made extra payments...they want the next payment no matter what.....but if you have a some money put away (& making interest)....you can use that to float you for a few month...but not just your Tacoma payment...you may need that money for something else.
As far as the balance of mods....establish what mods YOU REALLY need...budget them accordingly. And do one a year, which leaves you plenty of time to research. You don't need to mod your Tacoma like everyone else...do what suits you.

 

I vote for paying it off, although Mike makes a valid point. If you have a really low interest rate, invest that 2nd payment in something with a higher return. That way even though you're paying interest, interest earned on the investment will offset it and at the end of the loan you'll come our ahead.

 

If you lost your job what would you rather have, a truck paid in full or a truck with mods?

I'm pretty conservative so I paid mine off in under a year. I already have enough exposure the the stock market so it made more sense paying off the debt instead of using that money to invest in the stock market.

 

Not all debt is truly bad.
(A reasonable price/within your means) Home and car are both necessary for most people and I do not consider them a bad thing. As long as the payments aren't killing you....these payments are fine and normal for most working class folks.

The debt you absolutely don't want is credit card debt...that is usually very high interest....that is what you should pay off if you have any.

Other forms of bad debt. Boat, watercraft, atvs, motorcycle, 2nd car, vacation home...these things are not essential for most people unless you are already well off and in that case you probably don't even need to borrow money to get them.

Remember you should always pay yourself first...which means putting money way in savings/investments.

 

The truck is my only debt and i got a 2% rate. My loan term is 6 years. The extra I'm paying right now it will be paid off in 2. It might sound crazy but if i have a paid off 2015 truck by 2017 that would be awesome. I have an oh crap fund set aside already.

Plus if I pay it off then i have a bunch of spare cash to mod and not have to worry about car payments.

 

I'd pay it off first. I love the peace of mind of knowing it's mine, plus modding generally reduces a vehicles value (at least for quick/easy sales/trade-ins)-- that could put you in a bad spot if you ever wanted/had to get out of it and still owed money on it. Why diminish the value of something you don't even own outright yet?

 

It's simple intrest. Basically that loan cost you about $1500 over the course of 3-5 years. Depending on intrest rate etc. I say pay minimums and mod your truck. Assuming you are still saving in other areas. If your spending all of your money on your truck. Pay it off. Then mod with that payment money.

 

It is a a very bad time to be making any loans with the price of oil dropping. There most likely is going to be a lot of people out of work in all areas when oil starts shutting down. We are already seeing it start. it will take about 6 months to hit all areas of industry. My suggestion is to have enough savings so that you can live a year and still make all payments with no job in case things get rough.

 

Paying off your debt should be the first thing you do as an adult.

 

Every circumstance is different....

Several years ago I asked a former neighbor how he could afford two new vehicles, new cabin in Norther Mn, new boat, extensive remodeling of his home (he eventually built a new 4000sq ft mansion) and a new baby? He answer was debt. He didn't have a penny in savings. I knew what his salary was, and it wasn't that much.

My advice is pay off your debt and live within your means - you will be much happier in the long term. Pay for your mods as you can afford them. We all need to use debt at some time in our lives, but use it responsibly!

 

Some people can live comfortable with dept on a car, other can't - I know it makes me uneasy so I paid cash for mine.

 

Lots of good points in this thread. Unless you have an emergency fund equal to 6 months of living expenses then paying off your truck off early is a fools errands. Someone else pointed that out as well. Remember that all debt isn't created equally. Its a balancing act but comes with being an adult.