Keep saving or pay consumer debt?
Hello BP People,
I’m in a situation where I have approximately $8k in car debt & $20k in
school loans. I have about $6500 in my bank account and growing that by about $1000-$2000 a month.
Would it be best to focus on getting rid of that debt first before buying my first property or keep saving for my first property?
#1 Investor Mindset Contributor
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- Scottsdale, AZ
What is the interest rate on your auto loan and student loans?
#2 General Landlording & Rental Properties Contributor
What is the interest rate on your car loan and student loans? Can you get a better rate of return on a property? Will the $28K in loans prevent you from getting the mortgage you need to buy a house? If this house is for you to live in, will it reduce your living expenses compared to renting?
#1 Contractors Contributor
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- West Valley Phoenix
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#1 Contractors Contributor
- Contractor
- West Valley Phoenix
Without knowing all the details, I would keep saving.
Then buy a property (or two) that will cash flow as much as possible. Use that extra income to pay down your debt.....
My personal opinion would be to pay off the debt first. You're so close anyways. With the amount you're saving currently combined with the extra per month after you have the debt paid off, you'd have enough saved back up in no time to buy a decent property. Then you would be in a more stable position to learn the ropes. Owning rentals can be stressful. Cutting out the other debt first may help to alleviate that.
What is your monthly payment on your debt?
Interest rates and your DTI will be most important in my opinion. We all struggle this battle of balance. It's just a matter of priorities of importance to pay off. I would sit down with a lender to see their opinion, as your debt isn't always a limiting factor of being able to buy property. Too much debt though, can be.