11
Mar
Paid off the car yesterday
I was looking at our accounts yesterday, which are finally starting to do pretty well, and thought to myself “we don’t owe that much on the car anymore, and we have enough money to pay it off, how cool would that be?”
So yesterday we clicked the right button and paid off our car. We now own both of our cars free and clear, which is a great feeling. From a technical perspective, this actually wasn’t the best choice. We have an interest rate of 4.5% on the car loan and something much higher on our second home loan. Technically the right thing to do would have been to put that money towards our second home loan. But it feels so much better to get rid of a debt entirely. It’s just one of those things that sometimes works for the better even if it isn’t the best choice.
So in terms of debt we are now down to just our student loans and our mortgage. That’s not too bad, I think. The student loan ones we are in no rush to pay off especially since my wife’s loan is at some ridiculous 2.25% or something like that rate. It’s cheaper to not pay off that loan almost!
June 25th, 2008 at 8:00 am
Congrats! It helps mentally to have achievements along the way.
A car will get repossessed faster than a house. The education can’t be repossessed. The fewer debts, the lower risk for something funny happening on any single one of them.
Getting your house repossessed would take months.
The main way the student loan can hurt is by hurting credit. If you are not dependent upon credit, than you are fairly immune to this threat.
And the stu loan is low interest. I consolidated two into one, and accepted the deal that the interet cost would be rolled into the loan, and I owe the total (i.e., I can’t pay off early and save money).
For these reasons, I will pay off the house (80K; hopefully pd in the next 8 yrs) before the student loan (30k; should be around 8K when the house is paid).