Pay off Taco early??????

So I have 10k saved up and need help trying to decide what to do with it. I feel like it should just go to pay down mah Taco. I would still owe 15k but its something. Wife thinks we should vacation with the kids. Obviously not with all of it tho. Or I have thought about starting my own business or investing. Then there's saving it for our first home. Im 26. Shes 24. She thinks a home can wait. We're young. I want one before I'm 30. Would love advice or different points of view.

 

Use some for a vacation. Then save da rest as a rainy day fund. It seems you already budgeting good and can afford the payments on the truck I wouldn't waste it on paying it down only 10k. Maybe if you could pay the entire truck off that's a different story

 

I don't see the point in paying down 10k when you still gonna owe 15K.

Unless she is gonna put some money down for this vacation personally I wouldn't do it either. I would use like $1000 for a nice road trip somewhere and make use of the taco though.

Investing would be smarter. Hell just having that money sitting in a bank with a high interest rate will give ya back quite a bit for mod money a few years down the road.

 

So obviously paying it down dont make much sense. Damn she was right. We live in Hawaii so a road trip aint taking us very far. We have thought of moving somewhere on the mainland and using this vacation to go see some places.

 

Depends on your interest rate, if it's low then I wouldn't bother paying down the taco, I'd save it up for a home. If it's really high (say 6%) then it might make sense to save a bit more and pay it off asap.

 

Just think of how much extra money you will have once the truck is paid off, 10k goes a long ways. We paid off both of ours, a 2017 HRV and my 18 Off-Road and it ended up being the best decision ever. Our extra money goes for fun stuff now like truck parts, camera gear, gym, personal trainer. Stuff we could never do with almost $1000 a month for truck and car payment.

 

Spend a few bucks and go see an independent financial planner. You and your wife need to figure out what your collective goals are and how to reach them.

 

I bought a Mustang for 8k in the early nineties. Had I just put that money into Coca cola or Pepsi with dividends it would be about 250,000 today. At least that's what I tell my kids who both had 6 figure bank accounts in their early twenties just from saving from childhood and low paying jobs. Had to save 80% of income if they lived with us and they hold safe stocks like Mcdonalds Starbucks ect. Now my son works for his sister walking and watching dogs and banks 30k a year. So I would definitely recommend the lift with 33s.
Seriously learn about safe dividend investments save for 20 years and have enough to buy all your family their own tacomas.

 

If you can make more in an investment (greater percentage) than the interest on the truck (interest rate) then invest it. If not, pay it off. My loan was at 1.75%. You can beat that easily. I doubt yours is that low. Mine was 3 1/2/ years ago.

G.

 

Pay off the Taco then buy a house would be my only advice. I paid my taco off a few days after I picked her up which leaves a lot of cash for other things.

 

So here's the thing. $10k is not a lot of money in the grand scheme of things.

If all you have in 10k, you really only have $4k to work with safely. Without being able to do a budget analysis with you, generally speaking you should keep at least $5,000 in an emergency savings account. A savings account is quick to access which is why it's good for emergencies. A bare minimum of $1,000 in your checking account will save you if you forget and overspend from time to time, but you must think of both these accounts as $1000 and $5000 being your $0 dollar line. Once they dip, you need to replenish them.

The rest, put into a Roth IRA (individual retirement account). Garyji is absolutely right to compare those interest rates against what your anticipated gains will be. Which is why you shouldn't invest when you have high interest debt, like credit cards. It's better to pay it off first. Because if you gain 10% but lose 19%, you still lost 9%. (All amounts being equal, if you have more $$$ invested you might be able to win out, but you'll always be fighting against yourself until you get rid of the debt)

Paying off the truck will give you your car payment every month in new disposable income. I'm a big fan of lowering overhead, but because you're so young you both need to start growing your retirement accounts now, when you have the longest possible timeline for compound interest to work in your favor.

It's important to not get so caught up in saving youre unable to enjoy life, but spending it all would be a huge mistake. Even you set up your IRA contribute to it regularly, and when you pay off your truck, roll your car payment right into it. You're already used to living with the amount you're getting now, so whenever you get a pay raise, roll it into your investments.

You want a house, shoot for having as close to 20% of it's value as a down payment as possible to minimize your interest rate. Make sure you calculate properties taxes, HOA fees in with your mortgage because you will need to pay for those as well. Do your research before you buy. When you think you've done enough, do more.

 

There are a lot of unknowns here. The Hawaii thing was the first. Where this money came from, and will it come around next year is the next. Household income, debt, education level, long term goals, any other financial hardships the family unit might encounter are others. One thing that is a concern is that you came into some money and didn't have a plan, or priorities identified to make it easy to allocate that money. I've had it beaten into me to have some money aside in a rainy-day account, so the first thing I'd suggest is to shave off half a months household income, use that to open a savings account in a credit union and don't touch it (unless you move, as credit unions are frequently regional). Credit unions frequently offer loan rates competitive to banks, so it's nice to have a pre-existing relationship.

Second, I'd reconsider the vacation-as-a-move-to-the-mainland expedition. Either move or don't. The vacation would exhaust resources that could be vital in a move, and I don't think you would be able to gather a lot of knowledge in a vacation period of time.

I can't recommend for or against or anything else about investing or starting a business, as I don't know what your plan is there.

What I would recommend is to think long term.

Putting some money away to be used only for emergency expenses is one example.

Paying down the truck, not thinking that you will still owe $15K (or lets say $17K), but thinking that you would reduce a 5 year term to a 3 year term, possibly less if this $10K flow of money happens again, is another example. This would eliminate this obligation by the time you are 30, your goal for house ownership.

Discussing the shit out of this with your wife and planning out the next 10 years would be a really good idea. At appropriate levels, so have the next year planned out in detail. Then the next 2 years in a bit less detail / higher level. 2 years after that, in less detail. Then 5 years after that in even less detail, but still have some goals at each milestone, and how you are going to reach those goals. What you do now will impact what you have then.

Definitely go with a financial advisor / financial planner. Get a babysitter so you can both go. You and your wife need to have a unified understanding of your family financial plans or take that 10K and go get a divorce lawyer.

Look at where others have succeeded and failed. Focus on not making the same mistakes where others have failed. Many people look at successful people and try to duplicate it. Just try to make as few mistakes as possible and keep moving straight ahead.

I don't want to sound like a dickhole, but I would not rule out considering trading the Tacoma for a used Sienna to further reduce debt.

 

Most importantly, if you don't already have 3 months of income saved, save the money. If you are paying a high interest rate on your Tacoma loan it would make sense to try to pay it off as soon as possible.

 

Keep saving.

It's great that you've saved 10k, a lot of people can't do that (there's some fact floating around about a high percentage of US homes being unable to come up with 2k in an emergency). Don't look for a reason to spend it, keep saving.

 

I wouldn't ask for financial advice from a car forum.

I've found this to be pretty helpful.
https://old.reddit.com/r/personalfinance/wiki/commontopics

 

^^^ this ^^^

 

Wait. What??

Are you suggesting that the OP not take financial advice from random dudes on an internet truck forum and instead speak to a professional in the field of finance?

Crazy talk!!!

 

We have as much of a feduciary responsibility to him as 90% of financial advisors in the US...which is 0 lol

Edit: my point being that yes, everything here should be taken with a grain of salt.

 

I wouldn't pay off your Tacoma, unless you have a high interest rate which shouldn't be the case considering typical low rates over the past couple years.
Invest if in a good sound low risk mutual fund, such as one of the Fidelity funds and let it grow until you decide best use.

Edited to add: I see you live in Hawaii, so assume at 26 you don't own a home considering high real estate prices there. So yes, invest in hopes of owning a nice home some day.
Good luck!

 

This is the best answer on here. This is the kind of advice you get on a car forum..."if your still gonna owe $14K, then why pay off $10K of it."

Based on the data you've given...I'd put $1000 in a Emergency Savings Fund of sorts. Then put the remaining $9000 on the Tacoma. But again...you should find a person to sit down and talk to rather than looking here.