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Pay off debt or keep savings

Discussion in 'Stocks & Investments' started by gupster88, Jun 8, 2012.

  1. Aug 22, 2012 at 9:50 AM
    #81
    Evil Monkey

    Evil Monkey There's an evil monkey in my truck

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    There are laws that will reattach the original loan amount to the house if you do this.
     
  2. Aug 22, 2012 at 10:38 AM
    #82
    Evil Monkey

    Evil Monkey There's an evil monkey in my truck

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    You make some valid points but it is also dependent upon where you live and what the market is like for purchasing vs renting. I did some comparisons to the home I just bought. In my area, there is a lot of rental price pressure because so many homes were foreclosed on. Foreclosures and short sales have depressed the cost of buying a new home considerably. To rent a home of slightly smaller size (2300 sq ft) it would have cost me slightly more than my payment, even including mortgage insurance, property insurance, taxes and principle. Plus, my 2600 sq ft house sits on 1.5 acres of land whereas the rental was .5 acres. I also still get a mortgage interest tax deduction which makes the cost even cheaper. I could have bought a home of comparable sq footage size and lot size for even less money. Plus, my payment is locked in for 30 years after which it drops to just the cost of my property tax.

    I've rented in San Diego since 1980. I've rarely seen rent go down for a dwelling unless you want to keep moving around to lower and lower quality areas or move further away from the city. For the most part, the best it has been is stable. Here's a rental pricing trend chart since 2000:
    http://www.apartmentratings.com/rate/CA-San-Diego-Pricing.html
     
  3. Oct 17, 2012 at 6:47 PM
    #83
    wildcats11

    wildcats11 Member

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    james
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    grill guard, hydraulic bed cover, off road tires, tube steps, windows tinted, sport bucket seats
    As a continuing veteran of 17 almost 18 years, I have only managed to put 1200 dollars into an investment. It's not due to poor pay, it's due to poor decisions, poor marriage, poor options. I wish I could have 10,000 thou to put into an account and leave it alone. My advice to you would be to look for a low risk mutual fund with a company that has been around awhile, or maybe even a CD. The reason I say not to pay that off, in todays economy, perfect credit is difficult to have, and the better you can make your credit history, the more solid it appears to creditors, the better your interest rate will be, the easier it will be to get a loan (emergency surgery, emergency travel etc). Lets say you do find someone to finally settle down with and you want to buy a house. The fact that you have a good payment history is more important to creditors than it is that you had money and payed something off. If you are able to put so much money away, why worry about paying something off? Continue to make payments, look into better investment/return opportunities and move your money around alittle. This is the advice of a combat veteran who has little money. Consider yourself very fortunate! Not to mention, you will eventually reach a point in your life where you want to retire. It's better to save and invest now, 40 years later, you will be thankful.
     
  4. Oct 18, 2012 at 6:40 AM
    #84
    Evil Monkey

    Evil Monkey There's an evil monkey in my truck

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    It depends on how high your credit balances are. The only thing that is really important is how long you've had the card (>2 years) and how high the limit on the card is (>$2500). Those will get you a higher score. Having high balances will lower your score. If your credit cards are higher than 50% of the credit limit, it will harm your score. If you're using more than 50% of all your available credit, that will harm your score as well. Deciding to make regular payments won't increase your score as much as paying it off. The credit card company will only ding you if you don't pay on time. The only risk to having a 0 balance is the credit card company may close the card if it's not used (typically 18 months). If it is a long term card, that would hurt your score. If the card has had a high balance at one time but now shows 0, that is a positive. It doesn't matter if you're paying a monthly payment continuously. Once the card is 2 years old or longer, having a balance makes no sense. Just pay it off every month. Having too much available credit can hurt but not as much as balances.

    I had a large amount of money where I had some decisions to make. I could have paid off my truck, paid off my credit card debt or put it in savings. Paying off the credit card debt made my overall score jump over 20 points. Paying off the truck would do nothing as it's considered secure debt.

    Financially, if you're holding credit card debt, you're paying interest on that debt. If you pay it off, you are not paying that interest so that is money back in your pocket. You'll make more money faster by paying off debt and then taking the money you would have paid and putting it to savings. Savings interest rates right now are dismal especially compared to credit card debt interest.

    I also use a service call "Credit Keeper" to track my credit reports (www.creditkeeper.com). It's $10/month. You can see your credit reports and scores for all three of the services and you can pull a report once per month. Plus they will tell you what is hurting your score and what is helping it. They also have a "What if" tool that will let you see how paying down certain debt will affect your score. I used this tool before buying my house. Focusing on debt increase my score quite a bit (about 80 points over all). All three of my scores are higher than 770.
     
  5. Oct 18, 2012 at 6:44 AM
    #85
    cgs2k2

    cgs2k2 Ohio Member

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    didn't read through the whole thread, but, simply put:

    pay cash for things you want
    finance things you need

    live by this, and you'll be fine.
     
  6. Oct 22, 2012 at 9:37 AM
    #86
    The Driver

    The Driver Trail Runner/Barefoot Beach Runner/Snow Skier

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    NICE, I like it! :thumbsup:

    I also came up with this when I left the Army "if I can't afford it, I don't need it" ;)
     
  7. Nov 23, 2012 at 6:14 AM
    #87
    coffeesnob

    coffeesnob Well-Known Member

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    I'm taking money out of my savings to pay off my truck today. My payments aren't that high but I want to loosen that noose a little bit.
     
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