Thanks to all who have responded. 8)
dave2 said:
The idea would to pay the least amount of interest as possible.
If you'd inheritance is making let's say 10% and your paying less than 10% on your debt then do nothing and just work towards paying it off.
4% is really not that bad just to continue making payments. If it was 18-24% on a credit card let's say, then you should look at paying it off asap.
I personally would rather sit on a lump sum of money in the bank, and then just continue to make payments on the debt while it's paid off.
The way I look at it, if something where to happen where I lost my job, I always have access to the money saved. I could really care less at that point about paying anything towards the loans, in other words screw everyone I owe money to. You pay everything off with the money you have saved, and something catistrophic happens, you always risk the chance of not having access to your credit line.
I had a friend who paid $10,000 to pay off a credit card, then the bank sends a letter and reduces the credit card limit to $2,000.
If the interest rate is right, sometimes it makes sense to pay a little extra to have that extra cushion available if you need it.
The other thing is once you take money from your inheritance to pay a debt, you will never put the money back in that you borrowed.
Luckily, I am at 0% Interest on these debts. So, it's just a matter of deciding what to do.
In one way, it would be great not to have to worry about making any payments, other than my monthly credit card, which I pay in full each month.
In another way, it's nice to see the investments going up (most of the time). But, I don't see how people can check their investments every hour, or so. I usually do it once a week, and it gives me heart palpitations (especially, when I loose $1K one day, but make $3 K the next week.
With regards to your friend paying off $10 K and the bank reduced the limit to $2 K. Been in a similar situation. Had a D******* card with about a $8 K limit. Got it paid off, and they reduced my limit to $1.5 K. :evil: So, I cut the card up and never used it again. :lol: Then, about 3 years later, they sent me another card with a $14 K limit. 8) :shock: And, so far, it's been going well for the last 4 years. And, I pay it off every month.
Luckily, the cushion is there. But, based on previous experience, one can burn through $30 to $40 K pretty quickly.
SteveLover said:
dcdccdcd said:
Pay off the debt in full. The peace of mind is priceless. Pay by cash thereafter. My rule is that if I can't/won't pay in full upfront, then I can't afford it.
I too agree with this. Keep everything square.
Should any unknown future debt arise you're not adding it to the pile but rather coping with it on it's own.
You never know when the next crash is going to be (either market, income or huge expenses)!
I've finally started doing this. But, I do use a Cash Back credit card and pay it off every month. So, for me, that's working well.
In addition to what I stated in my response to dave2, that's too has been my concern. But luckily, and except for one time in 12 years, the one investment has always shown a positive return. 8) The other one lost a bit. But overall, it too has done pretty damn good.
AmoLudare said:
If you have 0% interest on some kind of debt, it doesn't make sense to make payments in it until the principal is due. Even keeping that money in the bank at 3% return is better than paying in the present. Future money is worth less than present day money. Just don't get fucked when the rates spike. If you arent good with that kind of thing. Pay it off now.
:? No payments until the principal is due? Kind of defeats the purpose of having 0% interest for X amount of months and then get stuck with all that back interest (my home improvement loan, started 2/17 is 0% for 12 months.
But, at 17.99% :evil: , there's already over $500.00 in interest that I would have to pay (actually, I have to pay at least the interest every month). And, if I wait until 2/18, then I'll have nearly $1,700.00 more to pay on top of the initial loan.
Also, paying just the minimum would result in over $7 K in interest.
eattre said:
Cash it ousside, how bow dat?
Sorry. But, my ghetto speak is rusty. :lol:
Hroller said:
Pay off ALL your debt.
The way I look at things.
You have to pay taxes.
You have to have insurance.
You have to have utilities, electric, gas, water, etc.
Those things will never go away, and will always be there.
Why would you want to add more bills to your life?
Personally I live a debt free lifestyle.
No mortgage, no car payment, no lease payments, etc.
When I get my paycheck....except for the above mentioned bills and food, the rest of the money is MINE. To spend, invest or do with as I please.
What a great feeling.
You forgot one thing... You have to dye (sometime). :lol:
Yeah, I knew what it's like to be "foot loose and fancy free". But, it always seems like something comes along and f's it up. Just paid nearly $1 K to have my A/C fixed.
