My Personal Finance Story

Saving & investing, frugality & simple living. They're all part of the wealth equation.
Here's the place to discuss getting (and keeping!) your money.

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troygp
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My Personal Finance Story

Postby troygp » Mon Aug 13, 2012 3:53 am

Hi Everybody,

I am new to this site, however, I am not new to Personal Finance at all. I love reading Personal Finance articles, forums, etc. (nomoreharvarddebt.com, mr. money moustache, The Get Rich Slowly, etc. ) I am just fascinated with Finance. And I learn something new all the time by just reading through the forums. I wanted to share with you guys, how I manage my finances. Both my wife and I work. We both make a combined income of around $110,000 give or take, however, we are only living on 1 income which is my wife's income. My income goes directly to a savings account which is almost at $50,000. Of course, there were times where we had to do some dipping into our savings account, like for example, Daycare. Aside from this we have around $4-5,000 in credit debt, which we pay every month (not in full, but we pay in big chunks). We live in an apartment which is $1140/month (we have plans in buying a home, we are just trying to save up some more). And we have a student and car loan which is give or take $20,000 for both and we pay around $250 for both. What do you guys think? I was thinking of paying off the car and student loan in one big chunk? Thanks guys. I appreciate all your help :)

DoingHomework
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Re: My Personal Finance Story

Postby DoingHomework » Mon Aug 13, 2012 6:46 am

I'd pay off all the debt this week then build back up the savings.

Tightwad
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Re: My Personal Finance Story

Postby Tightwad » Mon Aug 13, 2012 7:04 am

DoingHomework wrote:I'd pay off all the debt this week then build back up the savings.

Yep, I concur. There's no reason to drag that debt around with you when you have the ability to just pay it off.

DoingHomework
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Re: My Personal Finance Story

Postby DoingHomework » Mon Aug 13, 2012 8:58 am

I was in hurry when I wrote my original suggestion so let me explain a bit more.

I'm not one who is rabidly anti-debt. When used properly debt can be a great tool. In your case it sounds like at least part of your debt was used to educate yourself and led to a return in the form of earnings. But continuing to hold that debt serves no purpose and costs you money. It also carries a cost in the form of having to keep track of it.

The only reason I can think of not to pay it off if you have adequate savings would be if you needed that savings as an emergency fund. With the level of expenses you imply, having two jobs, and still being left with a $20000 EF after paying everything off, I'd just do it and not think twice about it.

Assuming an average interest rate of 8%, the money is costing you $2400 per year, $200 per month. Every weekday you delay in paying it off is no different than taking a $10 bill out of your wallet and burning it.

stannius
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Re: My Personal Finance Story

Postby stannius » Mon Aug 13, 2012 3:24 pm

troygp wrote:Aside from this we have around $4-5,000 in credit debt, which we pay every month (not in full, but we pay in big chunks).


Especially pay off the credit card debt. That's low hanging fruit in your situation.

troygp
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Re: My Personal Finance Story

Postby troygp » Mon Aug 13, 2012 6:54 pm

Hi guys,

Thank you so much for the advices/suggestions. I will be paying off these debt by wednesday, our next pay period. :) Much appreciation. Thanks guys


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