Not sure what to do

3 Replies

hey Bp community, 

I'm a full time student and worker with a little debt and a little cash. I've cut back DRASTICALLY on my spending so my only real expense monthly would be my car payment. Sometimes I want to put all my money towards my car so I can get rid of that payment giving me better chances when getting a loan from a bank for my first rental property but, other times I feel like I'm putting no money towards my real estate dreams. It's extremely stressful. Now my question to you all is this, do I pay all my debt first? Or should I not worry about my car loan and just focus on putting all my money towards a down payment and begin investing in real estate now? I'm LOSING SLEEP over this because I don't really know which I should give more importance to right now. 

 If you were, have been in a situation like mine I URGEEE for some type of feedback. PLEASE help me in making the right decision or guiding me in the right path.. Any advice would be appreciated.

Thanks in advance,

Kewin

It depend on the interest of the loan you have.

Usually auto loans are pretty low interest so I wouldn't worry about it but you should do a cost/opportunity analysis.

  • How long was the original loan for? And how far are you through the loan?
  • What is the interest?
  • How much would you save if you paid it off as quick as possible? How long would it take?
  • If you saved instead of paid it off, how long would it take to invest?

When I was 22 I went out and bought a brand new 2002 Subaru WRX, borrowing about $20k. My net worth at that time I would guess was negative.

Now that I'm 38 and and have a substantial net worth I drive a 2002 Honda Civic with 140,000 miles that I paid for in cash for $3300.

Guess which version of me is smarter and happier?

What kind of car is it and how much do you owe? Can you sell the car and buy something completely paid off? It just needs to start and run, you can find that for $2k or less.

Also, don't lose sleep over this. If you have trouble with stress, you need to find an outlet. You will not make good decisions if stressed. I think rigorous exercise is hard to beat, your school probably has a jujitsu or running club. Reading is not bad either (and free at the library), I recommend 'Waking Up' by Sam Harris. 

Good luck

@Austin Youmans aahhhhh so i should calculate both and figure out which works best. ABSOLUTE GENIUS, I can't believe i didn't do that. Thank you!!

@Richard Redding its pretty funny how now that you're financially stable you CHOOSE a more affordable car and thats exactly what i will do. Its a 2011 sentra and i owe about 9500 on it. As far as finding an outlet i do tend to read a lot. Never read 'Waking Up' but will definetly put it on my reading list. Thanks again for the advice brotha!

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