Extra cash...invest or pay off loans?

Discussion in 'The Club House' started by Poink88, Jan 26, 2011.

  1. Invest 100%

    1 vote(s)
    3.6%
  2. Invest 75% + Pay loans 25%

    0 vote(s)
    0.0%
  3. Invest 50% + Pay loans 50%

    3 vote(s)
    10.7%
  4. Invest 25% + Pay loans 75%

    3 vote(s)
    10.7%
  5. Pay loans 100%

    21 vote(s)
    75.0%
  1. Poink88

    Poink88 New Member

    1,116
    0
    0
    This is hypothetical.

    Your credit cards are all paid off, have a car & mortgage loan. If you have extra $1,000 (monthly, after you bought your "toys"), how would you use it?

    EDIT IN: Assume interest for both car loan and home mortgage is 5%. Also lump savings and ROTH/IRA with investment for simplicity.
     
    Last edited: Jan 26, 2011
  2. cpttango30

    cpttango30 New Member

    13,934
    3
    0
    hookers


    10 characters
     

  3. LightArtisan

    LightArtisan New Member

    16
    0
    0
    I'd find a way to blow it on something...
     
  4. NGIB

    NGIB New Member

    7,143
    1
    0
    No debt is a good thing. Other than home mortgages, I haven't had any consumer debt in over 20 years...
     
  5. winds-of-change

    winds-of-change The Balota's Staff Member

    29,442
    296
    83
    I agree here. Usually the interest you are paying on a debt is higher than any money you'd make investing. Pay off debt first, then invest.
     
    Last edited: Jan 26, 2011
  6. dog2000tj

    dog2000tj New Member

    8,176
    2
    0
    Put half in a retirement account and half in the bank. After 1yr you will have a nice savings and plenty of "fun" money if something tickles your fancy. ;)

    You may be surprised at how much you can actually save when disciplined to do so.
     
  7. cpttango30

    cpttango30 New Member

    13,934
    3
    0
    Am I the only one that likes hookers?
     
  8. DrJason

    DrJason New Member

    518
    0
    0
    I would say it depends on the interest rate on the car and home loans. Mortgages are usually "good" debt but that is even debatable these days. If the car loan were one of those 0.9 or 1.9 loans you might still be better investing or paying more on the mortgage if it were a higher rate.
     
  9. falseharmonix

    falseharmonix New Member

    1,728
    0
    0
    Tango, we all like hookers. But I think paying for a hooker is like investing in your twig and berries eventually turning black and falling off......
     
  10. dog2000tj

    dog2000tj New Member

    8,176
    2
    0
    If that's your thing go for it. Personally I would rather head to a bar, scope out a lonely gal and talk her up, liquor her up and then take her home and fu ... have some fun with her. ;)
     
  11. cpttango30

    cpttango30 New Member

    13,934
    3
    0
    Thats too much work and then OMG after 6 or 8 beers. You never know what she is going to look like in the morning.
     
  12. dog2000tj

    dog2000tj New Member

    8,176
    2
    0
    Who cares what she looks like in the morning ... after 6-8 beers as long as she looks like Victoria Silvstedt it's all good. ;)

    images.jpg

    :D
     
  13. Jpyle

    Jpyle New Member

    4,828
    0
    0
    Didn't read all the posts so forgive me if I am being redundant but, aside from hookers, the wise choice is to look at opportunitÿ costs. As a CPA my advice would be to pay off any debt that carries interest higher than what you can earn by investing. Be sure to look at the after-tax cost if you can deduct the interest, e.g. Home mortgage, student loan. After all the debt is gone then invest or spend as you like.
     
  14. Poink88

    Poink88 New Member

    1,116
    0
    0
    I agree and I wish it is that simple. However, most investment are a "gamble" and have risks associated with it and the return is unknown.
     
  15. dog2000tj

    dog2000tj New Member

    8,176
    2
    0
    Oh sure just come along and ruin all the fun by posting good solid advice. :( Kill joy! :p
     
  16. amoroque

    amoroque New Member

    1,229
    0
    0
    I would invest half of it, and I would put the other half of it towards the principal on my mortgage.
     
  17. c3shooter

    c3shooter Administrator Staff Member

    21,328
    174
    63
    Not owing anything to anybody has increased my KMA factor tremendously.
    (for the uninitiated, that's Kiss My Ass)
    You SHOULD have some savings- but paying down debt as quickly as you reasonably can gets you more savings.

    For anyone in the early years of a mortgage that does not already know this- Say your payment is $1000 a month. At the start of the mortgage, of that $1000, around $980 is interest, and only $20 goes to pay off what you owe (principal). So send them an extra $100 when you have it, marked as principal payment. You just saved yourself 5 mortgage payments. You get the best leverage in the first 6 years of a 30 yr mortgage. If one month you DON'T have a spare $100, don't send it. We paid off a 30 yr mortgage in 9 years like that. At the END of the mortgage, $20 is interest, $980 principal. You want to do this as early as you can.

    THEN you can start throwing money in savings. When I bought my last car (used one, in good shape) when the question of financing came up, took out checkbook, said "Simple. I write you a check." No car payment. No balance on credit card. And I have the money to buy toys.
     
  18. c3shooter

    c3shooter Administrator Staff Member

    21,328
    174
    63
    And I was always embarassed by the whole "sex for money" thing.


    But the ladies kept giving me money.................:p
     
  19. Poink88

    Poink88 New Member

    1,116
    0
    0
    LOL...major MOJO right there :D
     
  20. NGIB

    NGIB New Member

    7,143
    1
    0
    When I bought my new Ford Ranger in 98, my wife was sitting there with the checkbook just waiting for them to give us the total for the check. The fella looks at us and asks if we'd like to finance any of the purchase and we said no. He said if we financed any of the purchase, we'd get an immediate discount of $1000 on the truck. We financed the minimum which I think was $2500, got a grand knocked off the price, and paid the financed amount with the first payment...