Which should we pay off first? - Mothering Forums

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#1 of 10 Old 07-15-2014, 05:23 PM - Thread Starter
 
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Question Which should we pay off first?

We are on track to pay off our car by the end of the year, leaving us with two remaining loans; a 6.5% interest rate 16k balance student loan and a 0% interest rate 6k balance family loan. Which would be the smarter choice to snowball our car payment into? DH thinks the student loans because of the interest rate, but I hesitate because we can write off the interest anyway, and we could pay off the family loan pretty quickly if we snowballed it into that.
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#2 of 10 Old 07-15-2014, 07:39 PM
 
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if i owed family members $ I would want to pay them off first, regardless of interest rate. Other than that, it makes more fiscal sense to pay off the higher interest rate loan. However, I might also choose the 0% loan just to get it out of the way since it is smaller. I wouldn't pay much attention to the tax deduction, as you are only really getting a small percentage of the interest balanced in that way. Way to go on the car pay off!!! I will be there in just a couple of months.
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#3 of 10 Old 07-15-2014, 08:13 PM
 
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I agree with the pp. If the smaller loan is from a family member then get it paid off first. The student loan can be paid on as long as you need plus has options for deferments and lower payments if needed but you don't want to hassle with family over money. I'd get it paid off asap.

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#4 of 10 Old 07-16-2014, 03:58 AM - Thread Starter
 
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Thank you emsmom and crazyms! I am super excited about getting the car loan paid off, especially since we were super upside down on our old car before this one so we rolled the existing loan (for a car with pretty much zero value that needed to go) into this loan, so it was basically two car loans in one. SO freeing to be getting it paid off!

I think y'all are both right about getting that family loan out of the way first. It'll go relatively quickly once we no longer have the huge car payment, and it'll be so nice to not have that particular debt hanging over our heads every time we are with family.
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#5 of 10 Old 07-16-2014, 12:13 PM
 
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Do you have an emergency fund?

I might split the difference - put 2/3 to the family loan, and 1/3 to the student loan.

How much was the car payment? Are you making regular payments on the family loan now?

If the chips are down, the buffalo is empty.

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#6 of 10 Old 07-16-2014, 06:24 PM
 
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Originally Posted by nd_deadhead View Post
Do you have an emergency fund?

I might split the difference - put 2/3 to the family loan, and 1/3 to the student loan.

How much was the car payment? Are you making regular payments on the family loan now?

I was going to amend my response to account for the fact that maybe your family members would really prefer for you to use it to get ahead on the other loan. But if you truly feel it hanging over your head every time you are with family, go for it. You won't regret taking care of that loan at all!

Really great work on the car loan!!
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#7 of 10 Old 07-20-2014, 06:17 AM - Thread Starter
 
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Originally Posted by nd_deadhead View Post
Do you have an emergency fund?

I might split the difference - put 2/3 to the family loan, and 1/3 to the student loan.

How much was the car payment? Are you making regular payments on the family loan now?
We do have a small e-fund, though not as big as I'd like. I planned on beefing it up to 6 (and eventually 12) months expenses once all our debt is paid off. Would it be wiser to build up our e-fund before paying down the other debts over what our normal payments are? We are making regular payments to the family and student loans. Our car payment was technically $300, but we have been sending $500 a month to pay it off faster.
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#8 of 10 Old 07-20-2014, 06:21 AM - Thread Starter
 
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Originally Posted by EmsMom View Post
I was going to amend my response to account for the fact that maybe your family members would really prefer for you to use it to get ahead on the other loan. But if you truly feel it hanging over your head every time you are with family, go for it. You won't regret taking care of that loan at all!

Really great work on the car loan!!
Thanks! I honestly don't know what she would prefer (the family loan). It's from my mom who I have a rocky relationship with (getting better over the years but will never be what I wish it was...) so I really think getting her paid off would help, though she would never know we have the extra money to put towards it if we don't tell her, and she has said she is content with the payments we are currently sending her. Hm...
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#9 of 10 Old 07-20-2014, 06:58 AM
 
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Thanks! I honestly don't know what she would prefer (the family loan). It's from my mom who I have a rocky relationship with (getting better over the years but will never be what I wish it was...) so I really think getting her paid off would help, though she would never know we have the extra money to put towards it if we don't tell her, and she has said she is content with the payments we are currently sending her. Hm...
If i owed my mother any amount of money I would never live it down! In fact, whenever I have any kind of financial success in general, I start hearing about her needs in general (even when she had a larger income than I did); but of course no all mothers are like that!! If it isn't really getting to you and she is not hounding you, it would certainly be of more financial benefit to pay off the interest bearing loan first.
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#10 of 10 Old 07-20-2014, 03:48 PM
 
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Is your student loan just ONE loan? Reason I ask is that I have student loans as well and while I make a monthly payment in one amount it is actually 2 separate loans. If your student loan is like that then I'd look at the details of the individual loans because you might could pay off one or the other of them sooner.

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