Help! I need people's wisdom

[Donald Longo]

Hi Everyone!

Merry Christmas! I need people's help. I would Like to hear what people think I should do. I just did a refi cash out and have cash on hand and trying to do the smartest thing with it.

My current non mortgage situation:

2 auto loans. 3.7% -we pay 1000 per car. 2k total (paying extra and have 28 months left of this)

1 student loan - 5% 150 a month and 17k total left.

That's our total debt situation. So the question is, should we wipe out all debt and have just the mortgage (700 a month total all in). Or should we search for a cash flow positive property and spread out the new cash on hand?

Side facts- we can carry the current monthly payments with the new mortgage on our current employment income but the thought of no debt is appealing.

All creative ideas are welcomed. Fire away!

Thank you all!!

[Greg Scott]

Focusing only on your debts is a one-sided look at your finances.  Typically focusing on debt has a very poor return on investment.  Just look at the examples you gave.  If you are paying 3% on your mortgage, and you use the proceeds to pay of student loans, your return is quite poor.  (5% minus 3%)  You are earning 2% on your money.  You will get nowhere fast with that kind of return.  Do you know how long it takes to double your net worth at a 2% compounded return? Just over 35 years.

Instead, you could focus on growing your income.   With simple, safe, buy & hold real estate, I've averaged over 25% annualized return across dozens of properties.  Do you know how long it takes to double your net worth at a 25% compounded return?  Just over 3 years.