Announcement

Collapse
No announcement yet.

Any financial advisors on here : Question for you

Collapse
X
Collapse
 
  • Page of 1
  • Filter
  • Time
  • Show
Clear All
new posts
Previous template Next
    #1

    Any financial advisors on here : Question for you

    I am going to come into a lump sum of money here within the next week. I was hoping someone could tell me what would be the best idea to do with it to 1.) save the most interest and 2.) be the best idea with the money.

    Currently, I am paying $500 more on the principal of the car note. So, I am paying around $1000 every month. I have 22 payments left at this rate. Should I take the lump sum and pay off the wife's car that is at 2.15% interest rate or should I continue to make the payments and add another $1200 to each payment and keep a buffer with the remaining part of the lump sum?

    Which is the smarter choice? Have a car that is mine and paid off or to keep a buffer and have a lump sum in the bank in case of emergency?
    Tags: None
    #2
    It depends on how much money you are getting and what kind of return you can get from investing it. If you can make more after taxes from investing than the 2.15% interest rate you are paying, then just keep making payments

    Comment

      #3
      In for answers from experts.

      My semi functioning brain would say, put the new lump sum in the bank or on other stuff, keep doing what you are doing and paying extra on the car note. At the rate you are already so far ahead, and only 2.15% on the car you are not spending much extra on the loan.

      Comment

        #4
        Paying off the car note is a guaranteed risk free return of 2.15%.

        To compare apples to apples you'd need to look at the return you'd generate on similar risk investment (risk free in this case) net of taxes. So in this case I'd look at FDIC insured savings and money market rates. You can easily beat 2.15% by investing in a savings account right now (I use Ally Bank) however, after taxes you are going to end up south of the 2.15% you are paying on the car note. So the math says to pay off the car note.

        Now some guys are going to come along here and say that you can trounce a 2.15% return by investing in stocks. This is most likely true but investing in equities isn't an equal risk investment than the risk free return of debt retirement.

        If you sleep better at night having more cash in the bank then get an online savings account at Ally Bank at 2.20% or get a 12 month CD at 2.75% and park the cash there and continue doing what you're doing with the car note. The interest earned less interest paid between the two will be next to nothing.

        Comment

          #5
          I mis-typed. I am at 2.85% on the car note, not 2.15%. Does that change anything? I will be coming into about $28k, enough to pay off the car note and another bill that we have.

          Comment

            #6
            My first question--Do you have enough readily available cash/savings to cover 6 months' expenses if one of you gets laid off? Do you have an emergency fund?

            Comment

              #7
              I would suggest you go to an Investment Firm such as Edwards Jones and sit down, talk to them. They will look at your entire financial situation and make recommendations.

              Comment

                #8
                Originally posted by dustoffer View Post
                My first question--Do you have enough readily available cash/savings to cover 6 months' expenses if one of you gets laid off? Do you have an emergency fund?
                We have an emergency fund and other accounts that we could pull from if we needed to get some money, in case my wife or I got laid off. I dont know if our emergency fund has 6 months worth of gross pay in it, but there is a nice little bit. It is a little more difficult for me to lose my job, but her losing hers would be more of a punch in the face. We dont have any other expenses other than the car, the mortgage, and about $15k in other debt.

                Originally posted by texan4ut View Post
                I would suggest you go to an Investment Firm such as Edwards Jones and sit down, talk to them. They will look at your entire financial situation and make recommendations.
                I am in contact with a financial advisor, but I thought I would get a faster answer on here. I dont think I will go to Edward Jones though. It seems like those are on every street corner and even the most po-dunk town has an Edward Jones. LOL! I hope you dont take offense to my comment.

                Comment

                  #9
                  Originally posted by COACH_EM_UP View Post
                  We have an emergency fund and other accounts that we could pull from if we needed to get some money, in case my wife or I got laid off. I dont know if our emergency fund has 6 months worth of gross pay in it, but there is a nice little bit. It is a little more difficult for me to lose my job, but her losing hers would be more of a punch in the face. We dont have any other expenses other than the car, the mortgage, and about $15k in other debt.



                  I am in contact with a financial advisor, but I thought I would get a faster answer on here. I dont think I will go to Edward Jones though. It seems like those are on every street corner and even the most po-dunk town has an Edward Jones. LOL! I hope you dont take offense to my comment.
                  No offense, my Edward Jones guy made me a 20% return in 2017 and a 7% return in 2018. Up 16% so far this year. I am sure some are better than others.

                  Comment

                    #10
                    .

                    Comment

                      #11
                      Pay off the car note and pay yourself that car payment every month into your savings

                      Sent from my SM-G935T using Tapatalk

                      Comment

                      Previous template Next
                      Working...
                      X