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Help me prioritize

December 8th, 2011 at 09:17 am

I can't believe 2012 is right around the corner. Now that it's time to think about next year's financial goals, I wonder if you guys might help me think some things through.

My old plans don't really work anymore, because now we have a car loan and a mortgage, as opposed to being debt free for the five years before 2011.

Right now, I send $500 extra each month to the mortgage, with the goal of having it paid off in about 5 years. This isn't too big of a burden, but...

--We're putting $200/ month into savings now. I was thinking of bumping that amount up. And, although I don't like to count chickens, so to speak, hubby usually gets a bonus of about $10,000 every February, which usually goes to savings or some other investment goal.

Anyway, we do have a car loan, at .9 percent interest. It's not a burden, but it's a waste. So, I was wondering what you thought about temporarily stopping paying extra on the mortgage and send that to the car loan. I pay about $40 extra a month on it now. If I used the mortgage extra, I could have it paid off in about 10 months, freeing us of both a $250 monthly payment AND the added expense of full-coverage insurance. (savings of another $200 a year?)

I'd actually save more in the long term paying down the mortgage, which ash a 4.678 interest rate than the car, but it's always nice to eliminate monthly payments.

Any thoughts?

6 Responses to “Help me prioritize”

  1. MonkeyMama Says:

    I'd pay off the car. Maybe even sooner than that. I just don't like unecessary commitments, nor payments in my budget. Mortgage interest rate may be larger, but you can not eliminate the mortgage in just a few months, so I believe in eliminating what you can. (I personally don't do car payments - I just don't see the point. IT really has nothing to do with the interest rate. From a math standpoint, sure, the low interest rate is nice. But as you mentioned - then you are answering to both the lender and the insurance company. I Say, screw that!).

  2. ThriftoRama Says:

    That's kind of what I'm thinking. I hate loans, but if y'all recall, hubby lent $5,000 of our car money to his best friend, who never paid a dime of it back, hence necessitating a loan.

  3. North Georgia Gal Says:

    I would pay off the car too. Then I would put the $250 you were making to the car payment as well as the extra $400 a month to the mortgage.

  4. creditcardfree Says:

    I too would pay off that auto loan asap, and then redirect the rest towards the mortgage after that. Great job TR!

  5. patientsaver Says:

    I guess i agree with the others. It's important of course to have am ample stash of cash for emergencies, but once you've got that, any extra cash should go toward eliminating the car loan and toward the mortgage. Savings rats are so low you might as well focus on getting rid of higher-cost debt.

  6. Jerry Says:

    I agree with freeing up the payment as soon as possible, it will lead to fewer headaches over the immediate period of time and offer you some insurance that you will only be answering to the mortgage company. As monkeymama astutely pointed out, that one will not likely be going away anytime soon, anyway, right? Good luck!
    (Oh, and that guy STILL hasn't paid anything back? Is it time to make a phone call?)
    Jerry

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