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  #11  
Old 09-23-2015, 11:20 AM
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Originally Posted by soyleche View Post
You'll pay it off a bit faster by applying the extra payments to the larger interest rate first (and still doing the snowball thing), but there is a psychological boost that comes with paying off debts, so starting with the lowest balance can be helpful in that regard.
Agree, fortunately in this case, both the higher interest and lowest balance are the same place so double whammy.
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  #12  
Old 09-23-2015, 11:30 AM
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Originally Posted by BruteForce View Post
Just pay down the smaller loan first, regardless of interest rate. Then snowball those payments into the bigger loan. Worked well for me to get out of debt.
It may work psychologically, but it would have been faster to do it the other way. Congrats on getting out of debt!

ETA - ninja'd by soyleche and Suze.
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  #13  
Old 09-23-2015, 11:43 AM
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Without giving the full detail, suppose I have two loans:

A: $10,000 balance, 12% APR
B: $3,000 balance, 24% APR

Conventional wisdom says you should pay off the 24% loan first, but why aren't you paying down the $10,000 loan until the interest accumulating is less than the 24% loan, then paying down the 24% loan until the interest on the 12% loan is more, etc.?
The interest rates are a % of outstanding balance. I'm assuming you're going to throw the same $ at the loan(s) regardless of how you allocate it. So say you want to pay down $1000 in addition to your required payments.

If you pay loan A, you save $120/yr in annual interest. For B, it's $240/yr. (Oversimplified but you get it.)

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  #14  
Old 09-23-2015, 12:02 PM
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Are we being trolled? Please tell me you are not an actuary and have no intentions of going into any math related field.
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  #15  
Old 09-30-2015, 03:44 AM
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And then the next point would be that I should start making all my payments on the 1st of the month and not the 30th so that I'm saving next to nothing in extra interest, which is better than saving nothing

I don't really see the practical point of this when it comes to a home - sure, I can rationalize putting extra money each month in my investments because in the long run I'm expecting to get 7% versus the pathetic 1.9% on my car loan, but I'm not going to be taking out a home loan until I'm out of debt 100%, which my debts all maturing at the planned month I'm going to buy which will maximize my credit

At that point, it's basically a mortgage, insurance, gas, and food, and I've already set aside my preferred amount in investments so I'd rather have a home over my head my kids can inherit when I drop dead at 41 from a sudden brain aneurysm just when I'm hitting my stride
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Old 09-30-2015, 09:18 AM
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Your children don't want to live in your old house. Just like they don't want your old car. So if it's just the equity they care about, for the purposes of inheritance your house is just a financial vehicle - and an incredibly poor one at that.
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  #17  
Old 09-30-2015, 09:28 AM
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Originally Posted by SyZ View Post
And then the next point would be that I should start making all my payments on the 1st of the month and not the 30th so that I'm saving next to nothing in extra interest, which is better than saving nothing

I don't really see the practical point of this when it comes to a home - sure, I can rationalize putting extra money each month in my investments because in the long run I'm expecting to get 7% versus the pathetic 1.9% on my car loan, but I'm not going to be taking out a home loan until I'm out of debt 100%, which my debts all maturing at the planned month I'm going to buy which will maximize my credit

At that point, it's basically a mortgage, insurance, gas, and food, and I've already set aside my preferred amount in investments so I'd rather have a home over my head my kids can inherit when I drop dead at 41 from a sudden brain aneurysm just when I'm hitting my stride
Get some Term life.
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  #18  
Old 09-30-2015, 10:23 AM
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Don't forget to invest the difference!
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  #19  
Old 09-30-2015, 01:43 PM
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Your children don't want to live in your old house. Just like they don't want your old car. So if it's just the equity they care about, for the purposes of inheritance your house is just a financial vehicle - and an incredibly poor one at that.
And if you get a better return in the stock market, if you gave your kids your well-funded investment accounts they could buy the house and have more left over. (assuming you even have that much, that is, I'm over 41 and my house won't likely be paid off for another 10 years)
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  #20  
Old 09-30-2015, 03:01 PM
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I'm over 41
42?
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