2.9% APR with $14k left on the note, but I could pay it off today. We live well within our means so the Dave Ramsey emergency fund has grown into what I’d just consider excess cash. I was ok with riding out the loan which has been fine until .fed lost control of inflation.

Was going to invest it earlier in the year before the market took a dump, which I’m glad I procrastinated on now. But, I’m not keen on just continuing to let the money sit there and inflate away.

Maybe I-bonds instead?

Personally I love paying off debts well ahead of time like this, but my suggestion is to park some of that cash somewhere (e.g. inflation-indexed I-Bonds currently yielding almost 10%) that it will offset the putin price hike biden buttfucking we're all currently experiencing.

Running the numbers and guessing the future is a good way to kill time.

Consider what it would be like to not have to owe money on something (or anything).

My vote goes to paying it off, but I could be biased. I haven't owed anyone since 2003.

I’m no guru but I’d pay it off as long as the your reserves, whatever you set, are still there.

Cash in hand or pad the the pantry.

quote:

Originally posted by Jimbo Jones:
Personally I love paying off debts well ahead of time like this, but my suggestion is to park some of that cash somewhere (e.g. inflation-indexed I-Bonds currently yielding almost 10%) that it will offset the putin price hike biden buttfucking we're all currently experiencing.

Yep.

I don't have a car note, but I've stopped paying extra towards my mortgage, because I can currently park that extra in 9.62% APR I-Bonds and make over 4x more than the 2.25% interest rate on my mortgage.

And I'll soon be able to do that with other no-risk vehicles like CDs too. Even 1-2 year CDs are creeping up slowly but surely. I saw 2.5% and 2.6% the other day, compared to more like 1% the last time I checked a while back.

Funny you should ask. I just paid mine off and it was only .99% through Honda. My main reason was the get the title though as I'm moving out of state and figured having the title would make things easier.

I have this conversation almost weekly with clients. Prepay debt and get A guaranteed x return (the rate of your debt, net rate is even less if tax favoured, ignoring inflation) Or save it in a cash vehicle or invest it. While I dislike debt I also like math. Or in the case of a 30 fixed mortgage paying it off with ever cheaper ( inflated) dollars.

If you lost your job this week would not having 14k extra crimp you? sounds like only a year or 2 remaining on the car

I agree. I would pay off especially on something that is depreciating like a vehicle.
I assume you are still working. The extra $ that was going to the car payment can now be put into something that will make you money in the long run.

Pay it off, take the $ you were paying and put it to something else…emergency fund, retirement, kids college

Good stuff, thanks guys as always.

I made my last car payment in January of 1979 and vowed I'd never have another car payment again.

I took the money I spent on the car payment and tucked it away and 21 years later I bought a new car for cash. Then another 3 years after that and my latest one 15 months ago, all cash deals.

Cars aren't an investment for the most part, they're a necessary depreciating expenditure.

Can't think of a single bill worth having vs not

What is the 2.9% interest going to cost you over the remainder of the loan?

I am in the "pay it off" line. (now lemme get my broad sloppy paint brush...

I often see people only look at the interest or amount of interest that will be paid over the life of the loan, but you owe 14k minus each payment until it is paid off.

Interest means your paying more for the item that it's actual value, and depreciating liabilities do not see a depreciation in that overpayment.

Either one believes taking on debt for something needed when funds are not available to pay cash, should retire them when cash is available, or one believes debt is fine to overspend for want.

If you have no debt, you can make more money of your spendable income faster buying items low, selling high, (properly anticipating markets) sound investing, or many other business practices.

And, in my opinion, taking on debt that is low interest, then and paying down high interest and such discussions, my mind always questions, "why you got so much debt that you are "calculating that you are saving money paying Paul instead of Peter?"

You should not be carrying either Paul or Peter's interest on your money.

(Suze Orman called Dave Ramsey and said I don't know nothing about money, because I won't buy their books or go to their seminars and learn how to save money...)

Oh, and don't touch the paint, it's wet...

quote:

Originally posted by asonie:
2.9% APR with $14k left on the note, but I could pay it off today. We live well within our means so the Dave Ramsey emergency fund has grown into what I’d just consider excess cash. I was ok with riding out the loan which has been fine until .fed lost control of inflation.

Was going to invest it earlier in the year before the market took a dump, which I’m glad I procrastinated on now. But, I’m not keen on just continuing to let the money sit there and inflate away.

Maybe I-bonds instead?

When the market has gone down is the best time to buy. (This is the "buy low" part of the adage.) Personally, I'd just dollar cost average into the market in diversified ETFs versus paying off a very low interest note.

Depends how long your time horizon is, in the long term equities are the only real way to protect against inflation.

Interest is front loaded so depending on how long you have had the loan you may get considerably less than a 2.9% return by paying off early.

Wednesday of last week, 6/22/22, I bought Phillip Morris, actually Altria (MO), at $41.50, a 52 wk low. Pays $3.60 per sh div. You could buy 300 shares and get 9% div, $1080 per yr, and potential for upside gain. Sin stocks generally do well in hard times. MO closed Friday at $43.69. Always some risk involved.

Lots of good advice here. You need to ask yourself what are my goals and proceed from there. Your age, tolerance for risk and tax bracket need to be in play.

There is no feeling in the world to compare to being debt-free. A sense of freedom that most people will never experience.

We built our last house in 1999. Drove every nail myself. Finished it out for $71K, appraised at $119K, took a 15-year fixed interest mortgage of $60K, paid it off in 7 years. What we were spending on house payments then went into a money market account. When we retired in 2015 we bought our retirement home for cash, then sold the last house and put the money into "laddered" certificates of deposit (one CD renewing every year for 7 years, each one renewed for 7-year period).

Bought two vehicles since retirement. One was 0.9% financing, the other was 1.5%, so no sense taking cash out of the bank, just double the payments and get rid of the debt in a couple of years.

No house payments. No car payments. No credit card debt. Life is pretty easy for us now, but it took a lot of years to get there.

Sin and Oil companies (including refinery co.) pay excellent dividends. Some Telcos do as well.

Paying off that Auto loan is worth it as long as you have the usual recommended fallback cash for a rainy day or some other drama that could occur that would take a chunk of cash to solve.

How does one access these 10% ibonds? Banks, or do you get them through a brokerage? If the latter, does Vanguard have them?