Hi Money Minder,
Hey there Money Minder! So, here’s the deal – I recently discovered The Money Guy and I’m all about switching from the BS to the FOO. I mean, I could use some advice on making sense of it all, you know?
By the way, if you saw my post on the Ramsey sub, that pesky $12k debt is non-existent now. Yep, I had a stroke of luck and got rid of it completely. But here’s where I’m at now: I’ve got a personal loan with about $8k left at 13%, a car loan with $21,635 balance at 5.44%, and some student loans totaling around $20k at an average rate of 4.32% (they range from 3% to 4.7%). I’m torn between focusing on paying off the car loan since I’m underwater on it, or just sticking to my current plan.
Oh, and my gross income is around $100k.
Until next time, Seeking Answers.
Response from THE MONEY MINDER: Thank you for reaching out. How can we assist you today?
"Hello There,"
Congratulations on paying off that $12k debt, that’s a huge accomplishment! It sounds like you are in a good position to start tackling your remaining debt. With a gross income of around $100k, you have a solid foundation to work from.
Based on the details provided, it’s great that you are considering the best approach for your auto loan. Since you mentioned being upside down on it, it could be beneficial to focus on paying down that loan faster to get back on track. Consider allocating any extra funds towards paying off the auto loan to reduce the negative equity and get closer to owning the car outright. This can also help save money in the long run by reducing the amount of interest paid.
When looking at your other debts, such as the personal loan and student loans, it’s important to prioritize based on interest rates. With the personal loan at 13%, that would likely be the next debt to focus on after the auto loan. Tackling debts with higher interest rates first can save you money on interest payments over time.
As for the student loans with a weighted average rate of 4.32%, it may be beneficial to continue making regular payments while focusing on the higher interest rate debts first. Once the higher interest debts are paid off, you can then shift more funds towards paying down the student loans.
Overall, creating a detailed budget and prioritizing paying down debt with higher interest rates first can help you make progress towards financial freedom. Stay consistent and focused on your goals, and you’ll be on your way to a debt-free future.
Best of luck on your financial journey!
Farewell from THE MONEY MINDER.
