Need some financial advice....

[dxkj]

I mentioned in a previous post my wife and I have about 56k in debt


Amount----Rate
5700-------0.05
3388-------0.05
16897-----0.0275
17536-----0.03
13000-----0.039

56,521


Savings- 2%, $4400
Checking- 0%, $2200
Stocks/Funds- ?%, $10,000


Ive been trying to decide if I should sell off all of my stocks/funds and pay off the 5% school loans. About 5,000 of the 10,000 is in XOM and pays a decent dividend. I think its $1 a year per stock right now. So about 2% interest.


Anyway, Im bored at work and thinking things over. Let me know what you guys think. heck, I will make a poll.

 

[Kipper]

I'm not a financial genius, but wouldn't less debt = good?

Presumably, since if an emergency occurs the debt will still be there anyway.

 

[Jumpem]

I would keep the stocks, and slowly pay off the other things. I think in the long run it'd be better to let the investments grow.

 

[Jumpem]

Can I be nosey and inquire if all of that is student loans.. or something else?

 

[kermalou]

try to transer debt to a cheaper card/refi the loan

 

[dxkj]

Originally posted by: Jumpem
I would keep the stocks, and slowly pay off the other things. I think in the long run it'd be better to let the investments grow.

the mutual funds have been less than steady in the growth area... also have an index fund but you have to think long long term with the market lately.

 

[dxkj]

Originally posted by: Jumpem
Can I be nosey and inquire if all of that is student loans.. or something else?

13,000 is a car loan, the rest is student loans for 2 students.

 

[Garet Jax]

Originally posted by: dxkj
I mentioned in a previous post my wife and I have about 56k in debt


Amount----Rate
5700-------0.05
3388-------0.05
16897-----0.0275
17536-----0.03
13000-----0.039

56,521


Savings- 2%, $4400
Checking- 0%, $2200
Stocks/Funds- ?%, $10,000


Ive been trying to decide if I should sell off all of my stocks/funds and pay off the 5% school loans. About 5,000 of the 10,000 is in XOM and pays a decent dividend. I think its $1 a year per stock right now. So about 2% interest.


Anyway, Im bored at work and thinking things over. Let me know what you guys think. heck, I will make a poll.

Do not liquidate your existing portfolio. The market is low right now, you would take a killing.

Reduce your monthly costs as much as possible. Really squeeze. Sell you expensive cars, buy jalopys. Get rid of you cell phones, your cable, your DSL, ....

Reduce all unnecessary expenses.

Create a positive margin in your monthly expenses. Apply the entire margin at the beginning of the month to the best debt (a combination of the one with the highest interest rate, the shortest payoff schedule and the highest payment). Pay the debt off. Take the margin and the previous payment, combine and attack the next bill. Continue until all debts are paid off.

 

[dxkj]

Originally posted by: kermalou
try to transer debt to a cheaper card/refi the loan

5% is the highest... and all of these are school loans except the 13k car loan. I'm not sure what your advice is saying.... because I dont know of any way to get a perkins loan lower than 5% without consolidating, and even then it just averages it into the larger loan so you still pay equivalent of 5% interest.

 

[dirtboy]

The interest on your student loans should be tax deductible. No reason to rush and pay off, especially if it is at a low interest rate.

 

[Kenazo]

Originally posted by: dxkj

Originally posted by: kermalou
try to transer debt to a cheaper card/refi the loan

5% is the highest... and all of these are school loans except the 13k car loan. I'm not sure what your advice is saying.... because I dont know of any way to get a perkins loan lower than 5% without consolidating, and even then it just averages it into the larger loan so you still pay equivalent of 5% interest.

It's funny that 5% is your highest, I remember not too long ago when 15 to 20% was the norm.

 

[dxkj]

Originally posted by: Garet Jax

Originally posted by: dxkj
I mentioned in a previous post my wife and I have about 56k in debt


Amount----Rate
5700-------0.05
3388-------0.05
16897-----0.0275
17536-----0.03
13000-----0.039

56,521


Savings- 2%, $4400
Checking- 0%, $2200
Stocks/Funds- ?%, $10,000


Ive been trying to decide if I should sell off all of my stocks/funds and pay off the 5% school loans. About 5,000 of the 10,000 is in XOM and pays a decent dividend. I think its $1 a year per stock right now. So about 2% interest.


Anyway, Im bored at work and thinking things over. Let me know what you guys think. heck, I will make a poll.

Do not liquidate your existing portfolio. The market is low right now, you would take a killing.

Reduce your monthly costs as much as possible. Really squeeze. Sell you expensive cars, buy jalopys. Get rid of you cell phones, your cable, your DSL, ....

Reduce all unnecessary expenses.

Create a positive margin in your monthly expenses. Apply the entire margin at the beginning of the month to the best debt (a combination of the one with the highest interest rate, the shortest payoff schedule and the highest payment). Pay the debt off. Take the margin and the previous payment, combine and attack the next bill. Continue until all debts are paid off.

Good sound advice. Our two jalopy's just putzed out on us so we invested in a new car with warranty... It will be worth having one reliable car.

Monthly Budget:

Electric 55
Rent 801
Cable/Internet 75
Car Insurance 100
Groceries 190
Gasoline 35
Entertainment 20
Dinner 50
Loans 160
Drugs 15
CellPhone 63
Child Support 15
Tithe 261
Insurance 130
Car Payment 293


The only places we could trim here would be: $75 cable/internet, $20 entertainment.

Cellphone = contract so we would be paying a ton to drop the plans, plus we are not using a land line now, so its not costing that much

tithe = Religion = expensive 🙂

Our monthly surplus after paying bills, etc is $500 approx, so that will be applied to the higher loans and partially towards savings.

 

[mflacy]

How much do you make a year combined?

 

[Mill]

At 5% interest, there is no way I'd dump stocks to pay that. They will probably accrue at a better rate than 5%(it is a gamble). I'd still try to trim stuff back even more and pay more toward the debt.

 

[Garet Jax]

Originally posted by: dxkj
Our monthly surplus after paying bills, etc is $500 approx, so that will be applied to the higher loans and partially towards savings.

Don't save while paying off these debts (unless the interest you are paying is nominal or unless you can beat the interest rate with your rate of return). Every dollar you save is a dollar you are paying interest (compound interest even) on. By paying it down, you are implicitly saving the interest you would have paid, making for more money for you in the long run.

Remember, appreciation through investment is probable. Interest is definite.

 

[dxkj]

Originally posted by: mflacyIs the car worth less than the loan? If it were me, I'd sell the car and drive a POS car for a few years while I paid off the student loans.


How much to you make a year combined?

Both of our cars just died on us and we work 100 feet apart from each other so we will be sharing one reliable car right now. We are not upside down on the car. Current value of the car is ~ 16-17k and the loan is 13k. The loan is 48 months, and by the time we pay it off the car will probably be worth around 10k.

We make ~40k a year combined. She will be going to gradschool in a year, and I will be trying to get a real job sometime soon.