Financial Advice Needed

I need some financial advice.
Currently I owe $17,250 on my truck.
As a Dave Ramsey believer I eliminated my emergency fund and stopped retirement.
If the second stimulus goes through then I will probably pay off the truck mid-April.
Or I could take it a bit slower, continue investing, building up the emergency fund, and (most importantly) buying mods for my truck.
Any thoughts? Thanks.

 

Different people have different views, but I would never stop adding to my retirement to pay of a truck. I don’t know what your interest rate is, but my guess is you could net more money if you added to retirement instead of the truck.

 

Interest rate is 2.49%. Pretty good rate. The idea of getting out of debt early just consumes me. However, I don’t think it makes sense financially.

 

I won’t knock someone for paying off debt, it’s nice not having a truck payment, but dollar to dollar you’re better of investing it right now.

 

NO. NEVER.

GET THAT STARTED AGAIN. MAXED OUT. Then we will talk.

I don't know Dave Ramsey from my lightly salty gonads but I am unsure if this is his true advice.

But other than that, yes do without and pay the truck off.

 

I like everything except adding mods to the truck and stopping saving for retirement.

I'm not sure what DR is preaching, but not saving for retirement is not one of them.

Ive never read or listened to a word of the dude, but losing debt is pretty good advice.

Spending stimulus money on mods is very insulting to us that have earned and saved to get wherever are.

Go the slow route. Make an extra payment or 2 a year, save for the emergency fund and retirement.

 

I agree. I dumped everything from my accounts into the market. Tons of gains to be had at low risk right now, don’t see this too often. My recommendation is to pay as a little as possible on the truck and put it toward investments

 

Thanks for the advice. I wouldn’t spend any stimulus money on modifications. Maybe I’ll put it towards the EF.
Thanks to everyone for their advice.

 

Agreed. Assuming you're relatively young it really pays off to put as much into your retirement fund as possible as early as possible. I'm 38 and was pretty good about adding to my retirement fund as soon as I was out of college and had a full time job. 15yrs later I now wish I'd done even more. For the past few years I've been upping my 401k contribution every year. For the past 5yrs, maybe closer to 10yrs I've taken all or almost all of the money from each year's raise and put that into my 401k or other forms of investment.

That said, Navynuke is correct that it really depends a lot on your interest rates. With your fairly low interest rate of 2.5% I would 100%, definitely be funneling money into investments instead of paying off that loan. Do the math and the answer is probably obvious.

I recently refinanced my mortgage and learned this exact lesson. Originally, my mentality was wanting to pay off my loan as early as possible and save as much as I could over the life of the loan. I was willing to continue paying the same I am now or even maybe a little more in order to accomplish that. I got a few loan options to compare and then started calculating. My new loan is 2.5%, if I continued to pay what I used to (~$400/mon extra) then I'd save around $90k over the life of the loan. By comparison, if I paid the minimum and instead funneled $400/mon into an investment account it would likely be worth $250-500k when I finally pay off the loan. I know there's a big range there and that's because it's impossible to predict returns on your investments. The $250k was a very conservative estimate of averaging a 4% return, basically a worst case scenario.

Another factor for you is that if you're doing a standard 401k that you're also receiving benefit from the fact that you're paying the truck off with after tax monies but investing with pre-tax monies.

Either way. Do the math and you'll have your answer.

 

This is certainly the best advice I’ve received. It just makes sense. What got me rethinking things was seeing a post by someone who took four years to pay off his truck. I don’t want to be making payments in more than three years from now on this truck.

 

You got a great interest rate. Don't steal money from your future to pay off the present. Pay it off early, just not super early.

 

Yeah, I hate debt too. Never had a penny of debt before I bought my house and I don't foresee having anything but real estate debt. I always have and plan to continue to buy all my vehicles with cash. I also think that I'll likely never buy a new or even near new car. It's a depreciating asset and the curve is steepest when new.

As for the interest rate stuff... look at it this way. If you can borrow money at 2.5% and then put that money into an investment that makes 5% you will net a 2.5% return. And you just did that using someone elses money. In a situation like that you should theoretically borrow as much money as you can and invest it all.

 

So you’re saying over the next 3 months you have an extra 6k month? If you don’t pay off the truck are you investing that 6k each month or pissing it away? You can’t say you’re a DR follower then not follow the plan. The reason for wanting you completely debt free is because in the long term you have more money to invest and will make up for the short term loss of not investing or maxing out 401ks etc. Also having you in the frame of mind of debt free, emergency fund fully funded etc. The feeling of financially feeling safe is part of the plan. As someone who’s 100% debt free I can assure it will make you make better financial decisions.

 

Over the next three months I will receive my FY20 bonus. Another part I was banking on was the extra $1,400 stimulus per person (that sounds pretty likely). I don't make enough money to pay off $17k in three months.

 

https://www.google.com/amp/s/www.fo...hings-dave-ramsey-gets-wrong-about-investing/

 

I paid my truck off two years in advance. How? I lived with in my means, kept the truck paid at least three months in advance and worked extra odd side jobs to pay for any mods. Everyone has a different situation but remember, always prepare for the future (ie savings/retirement) don't be afraid of the work be afraid of when the work ain't there.

 

Thanks for the clarity. Makes more sense now.

 

You still think I should go full Dave Ramsey, stop retirement, and pay it off in March? I could get a full EF by June. So that’s half a year not investing.

 

In addition, don't drag us down by trading the truck in as soon as it's paid for.

Own that fucker for 6 years after it's paid for.

Used Tacoma's sell for stupid big money even with 250k on the clock!

 

No!

If your rate is as low as you said, take your time paying it off and steadily invest in other things mentioned.

Time is your friend now.

Investing $20 now will make much more than investing $50 in 5 years. In 40 years you will be amazed at the money that compounded .