Save, Pay Down, or Buy?

[dank69]

Not true. It will take longer to pay off $12700 than it will $5000 at 0%. You need ammunition for snowballing payments, so the quickest battle won gives you momentum.

This advice...this advice is...not good.

 

[[DHT]Osiris]

Not true. It will take longer to pay off $12700 than it will $5000 at 0%. You need ammunition for snowballing payments, so the quickest battle won gives you momentum.

Huh? It's not a race to reduce monthly payments, it's a marathon to reduce your total outgoing money. Get the interest down.

 

[dank69]

Correct order of doing things:

1) Build emergency fund with 1 month pay.
2) Buy bare minimum/used essentials
2) Pay down lowest debt first.
3) Once paid off, apply that payment to the second lowest debt.
4) Continue to pay off debts until complete
5) Build savings account with one year salary and pay cash for everything.

Note: Debts with low interest rates (under 5%) are OK to keep- house, car, etc.

One year of salary in savings? That is a lot of wasted earnings potential.

 

[MtnMan]

Or just be a grown up adult that understands middle-school level math and pay based on which has the highest interest rate - not the lowest amount of debt.


$12,700 Credit Card @ 21.95% interest
$5,000 Credit Card @ 0.00% Interest for first 12 months
$10,000 Home Equity Line of Credit (HELOC) @ 6.00%
$7,500 Student Loans @ 4.50%

If anyone ever tells you to pay off the $5,000, $7,500, or $10,000 first - you're simply a complete idiot.

Yep, you and your fucking emperor trump are about as money smart as my fucking dog. I bet you too could bankrupt a casino. The fact you have $12,700 on a 21.95% credit proves that.

 

[s0me0nesmind1]

Yep, you and your fucking emperor trump are about as money smart as my fucking dog. I bet you too could bankrupt a casino. The fact you have $12,700 on a 21.95% credit proves that.

lol.

Yes, I invest over $60k in tax advantage accounts annually (+after-tax investments as well), and I have debt on a 21.95% interest credit card.

You're pretty slow, thanks for showing it for us all.

Middle-school math apparently is hard for people here.

 

[Lost_in_the_HTTP]

Or just be a grown up adult that understands middle-school level math ...


$12,700 Credit Card @ 21.95% interest


- you're simply a complete idiot.

Any adult with a middle school level of math that takes on that kind of CC debt is a complete idiot and not a grown up.

 

[Red Squirrel]

Why would anyone even hold on to credit card debt when you have a credit line? Just pay it off every couple weeks with the credit line at least. I have my credit line setup as an overdraft account basically, so it's almost an extension of my account. Whatever balance I have left in my account at midnight just goes on the credit line.

Every couple weeks I login to my credit card account then pay whatever the balance is. Whether or not I have the money in my bank account it will get paid and just tack on to the credit line if it has to. Whatever is left over from my pay cheque after bills then goes to make a payment on the credit line.

I normally would have the credit line at 0 but I went and bought a truck last year... lol. Should have just bought a small car and trailer tbh. I do tend to go on sketchy bush roads though so the truck is nice for that.

 

[dank69]

Any adult with a middle school level of math that takes on that kind of CC debt is a complete idiot and not a grown up.

It happens quite often and last I checked schools don't teach that stuff to everyone. They are happy if you can add 1/4 + 1/2 before you graduate HS.

 

[s0me0nesmind1]

Any adult with a middle school level of math that takes on that kind of CC debt is a complete idiot and not a grown up.

The average revolving (non-paid off monthly) credit card debt is ~$7k. That means half are above that amount.

Yes, we have plenty of idiots.

 

[Lost_in_the_HTTP]

Correct order of doing things:

1) Build emergency fund with 1 month pay.

One year of salary in savings?

The correct answer is six months.

 

[dank69]

The correct answer is six months.

No way. 1-2 months of expenses, tops. The rest should be in an investment account that you can liquidate before you burn through the savings.

 

[Lost_in_the_HTTP]

The average revolving (non-paid off monthly) credit card debt is ~$7k. That means half are above that amount.

Yes, we have plenty of idiots.

My general CC debt is between $300 and $1,000/month and is always paid in full each month.

I charge everything I can, including utility bills and groceries so I can earn the various rewards and promos. I usually 'earn' a few hundred dollars a year that way.

I made a major purchase recently and one store card is now about $3,300.00 on a 24 month same as cash promo. I'm paying about triple the monthly minimum so I can pay it off before the 24 months.

 

[Red Squirrel]

The more the better. If I had enough extra money I'd do a year personally. It means you have 1 year to find another job before you need to sell the house and move back with parents (or go homeless), gives you a bit of breathing room and feels less stressful.

That emergency fund does not necessarily need to be ALL cash but it should be mostly cash or at least something stable like gold. Bitcoin is probably a bad idea.

 

[dank69]

The more the better. If I had enough extra money I'd do a year personally. It means you have 1 year to find another job before you need to sell the house and move back with parents (or go homeless), gives you a bit of breathing room and feels less stressful.

Bro, invest that shit. It shouldn't take more than 1-2 months to liquidate if shit goes south.

 

[snoopy7548]

I like to keep a balance on my credit card, since your credit score increases faster if you pay interest.

 

[Lost_in_the_HTTP]

I have no interest in paying interest.

 

[allisolm]

I like to keep a balance on my credit card, since your credit score increases faster if you pay interest.

You might want to rethink that.

"Myth: Carrying a balance on my credit cards will improve my credit score.

Fact: Paying off your credit cards in full every month is the best way to improve a credit score or maintain a good one."

Credit score myths that might be holding you back from improving your credit | Consumer Financial Protection Bureau

These common myths may be stopping you from improving your credit score.

www.consumerfinance.gov

 

[s0me0nesmind1]

You might want to rethink that.

"Myth: Carrying a balance on my credit cards will improve my credit score.

Fact: Paying off your credit cards in full every month is the best way to improve a credit score or maintain a good one."

Credit score myths that might be holding you back from improving your credit | Consumer Financial Protection Bureau

These common myths may be stopping you from improving your credit score.

www.consumerfinance.gov

I got the image that there was some implied sarcasm there....

 

[Exterous]

No way. 1-2 months of expenses, tops. The rest should be in an investment account that you can liquidate before you burn through the savings.

While I agree the difference between holding 3-6 months in savings vs 3-6 months in a principle conserving portfolio won't be that significant over even a 20 year scenario. You'd probably get ~3-4% ROI at best (You don't want to be too risky with your emergency fund. It would kinda suck if you figured out $10k was what you'd need but the market tanked at the same time you lost your job so now you only have $6500) so running through the math with a $15,000 emergency fund as an example after 20 years that would only turn into $27,000 - or ~$1,000 a year in retirement with a 4% SWR.

I used to live in a lower-middle class neighborhood.

It's the only place I've ever seen an absolute ton of people parking their vehicles always in the drive-way - and a good number of them even parking on the street every day/night so that I have to weave left and right to avoid them daily to get back home. So you just generally would think - oh maybe they have a bunch of vehicles from kids 16+ living there or something.

Nope. Catch them with the garage open. It's filled to the brim with shit. Complete and utter shit that they would be FAR better off simply throwing in a dumpster than ever holding on to. It won't return any real sum of money. It would actually cost you more in time than it is worth to try and sell DVDs for $0.50 each.

Around here people with $500k houses (Median in MI is ~$200k) and three car garages will still sometimes park a vehicle or two in the driveway because they can't fit them in the garage. They put in a new subdivision with $400k+ 3,000-3,400 sqft houses with full basements but 'only' a two car garage and damn near every house has at least one vehicle in the driveway

 

[s0me0nesmind1]

Around here people with $500k houses (Median in MI is ~$200k) and three car garages will still sometimes park a vehicle or two in the driveway because they can't fit them in the garage. They put in a new subdivision with $400k+ 3,000-3,400 sqft houses with full basements but 'only' a two car garage and damn near every house has at least one vehicle in the driveway

With how many cars I had to dodge left and right in the public street - I have ZERO qualms with just having a car in the driveways. I'm used to 3 cars in the driveway blocking the sidewalks - and tons parking on the streets.

Couldn't wait to get out of that shithole.

 

[Exterous]

With how many cars I had to dodge left and right in the public street - I have ZERO qualms with just having a car in the driveways. I'm used to 3 cars in the driveway blocking the sidewalks - and tons parking on the streets.

Couldn't wait to get out of that shithole.

My post was more in relation to upper-middle class houses also being filled to the brim with shit. If you can fill up a 1500sq ft basement and 2 of your 3 garage bays with shit that is an impressive amount of junk you have

 

[Lost_in_the_HTTP]

The amount of storage space available to you is directly proportional to the amount of stuff you accumulate.

 

[Red Squirrel]

The issue with parking the car in the garage is it will rust faster, even if it's an unheated garage the heat from the engine will cause the snow and salt to melt and the salt will eat at the car faster than if it's in the driveway and stays frozen. Residential garages also tend to be very tiny so if you do park in it, you have no room for absolutely nothing else, not even a workbench. Garages are better suited as a workshop area so you get more useful use out of the space. After all these years of living here I'm finally getting around to converting mine as it was mostly used for storage and required lot of work to get it into a state that I can start to convert it. Needed new floor etc.

 

[Lost_in_the_HTTP]

^^ My garage is 24' x 30'. I have room for two cars, a small shop and a lot of 'stuff'. And I don't do snow.

 

[Red Squirrel]

^^ My garage is 24' x 30'. I have room for two cars, a small shop and a lot of 'stuff'. And I don't do snow.

That's different then. Not everyone is as fortunate.