Paydown suggestions

[nidena]

It's crazy how much a situation can change in just eight months.  Back in the fall, I thought I'd be continuing school in my current location.  Early this year, that decision changed and I'm moving at the end of summer.

My September post

My current situation:

Received my Federal refund today (I filed late but knew they wouldn't have a fit since THEY owed ME money) and made another payment to the HVAC. That'll knock the balance down to just under $2100. In the next 17 days, I will receive enough income to pay it off.

After that, the remaining debts will be:

CC $7,550 11.15%
SL A (sub) $2,750 5.05%
SL B (unsub) $3,495 5.05%
HRV $28,030 4.34%

Mortgage $122,500 3.5% I'm selling the house this summer so this isn't even a factor any more.

My income for June, July, and August will be ~$4000/mo due to military pension, disability, and two (possibly three) part-time jobs. My living expenses cost ~$2000/mo. The SL website is showing payments begin August 2020 but I think that was based upon my enrollment in the Master's program. Whatever the case, payments will begin ASAP to avoid as much interest as possible.

What are your suggestions/thoughts?

$1000/mo to CC and $1000/mo to SLs?
Minimum to CC and the rest to SLs?
Something else?

[justme]

I always would say put money at the highest interest rate.

But since you're moving - do you have funds for all that covers? A safety net? A cushion if the house doesn't sell quickly? Money to cover if you don't find part time jobs soon upon moving? Money to pay for renting a place?

[nidena]

May 29, 2019 16:07:18 GMT -5 justme said:

I always would say put money at the highest interest rate.

But since you're moving - do you have funds for all that covers? A safety net? A cushion if the house doesn't sell quickly? Money to cover if you don't find part time jobs soon upon moving? Money to pay for renting a place?

I'm moving in with my best friend, rent free.  I don't *need* to work because my military pension and disability continue indefinitely. 

Once I move, paydown would be dependent upon just those two things so I'm really just looking at the next few months.

[Regis]

I'm a numbers guy (engineer)...so I'd put every extra dollar towards the highest interest rate.  There's no way you're going to make 11.15% on an investment so that CC is a loser every time.  I'd only pay the minimum on the others until they're completely gone because I can make more than 5% elsewhere, providing positive cash flow.

[busymom]

As much as I hate student loans, I agree with Regis to pay off that highest interest rate first.  If you apply $2,000 a month on that, it'll disappear in less than 4 months.  Then I'd attack the student loans next.  As has already been mentioned, make sure you have a safety net/emergency fund, in case life doesn't go according to plan.  Best wishes!

[hoops902]

May 30, 2019 6:40:05 GMT -5 Regis said:

I'm a numbers guy (engineer)...so I'd put every extra dollar towards the highest interest rate.  There's no way you're going to make 11.15% on an investment so that CC is a loser every time.  I'd only pay the minimum on the others until they're completely gone because I can make more than 5% elsewhere, providing positive cash flow.

I'm not sure there's "no way".  Good investment opportunities exist that will return more than 11.15%.  I'd still pay off the CC, because it's a more guaranteed "return" there.  But the way it is phrased to sound like nothing will return more than 11.15%?  Hard disagree.

[buystoys]

I would throw everything I could to the credit card as well.  I'd probably not pay down the student loan because the interest rate is fairly low.  I'd invest that money instead.

[nidena]

To add a bit more information in case you guys deem it relevant to suggestions:  The whole reason I'm moving is to:

1)  Get the eff out of Dodge because I have no family here  lol
2)  Redirect my money from paying home expenses (No rent, no utilities, only groceries, and $400-$500/mo to help out the friends I'll be living with)

So, once the house is sold, that will add another ~$1200-$1500 to the paydown mix.

[Deleted]

May 30, 2019 8:10:09 GMT -5 hoops902 said:

May 30, 2019 6:40:05 GMT -5 Regis said:

I'm a numbers guy (engineer)...so I'd put every extra dollar towards the highest interest rate.  There's no way you're going to make 11.15% on an investment so that CC is a loser every time.  I'd only pay the minimum on the others until they're completely gone because I can make more than 5% elsewhere, providing positive cash flow.

I'm not sure there's "no way".  Good investment opportunities exist that will return more than 11.15%.  I'd still pay off the CC, because it's a more guaranteed "return" there.  But the way it is phrased to sound like nothing will return more than 11.15%?  Hard disagree.

Nothing without taking on a lot of risk. 

[Deleted]

What do you expect to pocket from the house sale? 

[hoops902]

May 30, 2019 8:55:17 GMT -5 minnesotapaintlady said:

May 30, 2019 8:10:09 GMT -5 hoops902 said:

I'm not sure there's "no way".  Good investment opportunities exist that will return more than 11.15%.  I'd still pay off the CC, because it's a more guaranteed "return" there.  But the way it is phrased to sound like nothing will return more than 11.15%?  Hard disagree.

Nothing without taking on a lot of risk. 

More risk than a guarantee of saving yourself 11.15% interest for sure.  But not insane levels of risk.  That's why I'd still pay off the CC, no risk on that savings of 11.15%.  But we're talking slightly more return than an average stock market return at 11.15% which means slightly more risk...I'm not sure I'd call investing in the overall stock market "a lot of risk", hence investing in something only slightly more risky wouldn't get that label in my eyes either.  

I don't mind the end recommendation, but the idea that there's "no way" you can get slightly above average returns seems like the wrong logic to get there.  To your point, it's the risk/reward ratio, not the impossibility of returning slightly more than average.

[justme]

May 30, 2019 8:31:58 GMT -5 nidena said:

To add a bit more information in case you guys deem it relevant to suggestions:  The whole reason I'm moving is to:

1)  Get the eff out of Dodge because I have no family here  lol
2)  Redirect my money from paying home expenses (No rent, no utilities, only groceries, and $400-$500/mo to help out the friends I'll be living with)

So, once the house is sold, that will add another ~$1200-$1500 to the paydown mix.

While it sounds like you have a decent amount of money coming in even without multiple part time jobs, especially once they house is gone, I would still make sure you have a pretty big safety net of a savings account.

Not sure what you mean by $400-500/mo to be helping out the friends when you say you won't be paying rent or utilities. I love my best friends to death and would do a lot to help them out...but letting them stay my house long term rent free? When I'm still paying all the associated expenses of the house? When there's no real reason for them to not pay rent? Yeah, I think resentment would start to build real damn quick. 

[The Walk of the Penguin Mich]

May 30, 2019 9:49:51 GMT -5 justme said:

May 30, 2019 8:31:58 GMT -5 nidena said:

To add a bit more information in case you guys deem it relevant to suggestions:  The whole reason I'm moving is to:

1)  Get the eff out of Dodge because I have no family here  lol
2)  Redirect my money from paying home expenses (No rent, no utilities, only groceries, and $400-$500/mo to help out the friends I'll be living with)

So, once the house is sold, that will add another ~$1200-$1500 to the paydown mix.

While it sounds like you have a decent amount of money coming in even without multiple part time jobs, especially once they house is gone, I would still make sure you have a pretty big safety net of a savings account.

Not sure what you mean by $400-500/mo to be helping out the friends when you say you won't be paying rent or utilities. I love my best friends to death and would do a lot to help them out...but letting them stay my house long term rent free? When I'm still paying all the associated expenses of the house? When there's no real reason for them to not pay rent? Yeah, I think resentment would start to build real damn quick. 

This is where I am at.  I moved in with TD,  I still had all of my living expenses in KY plus massive medical bills.  Once my bills were paid and apartment gone, while I didn’t pay him rent, I did cover our cell phones and our food costs.  Proportionately, from my income to his vs expenses, this worked out.   This amounted to roughly what my rent alone was in KY.

[Deleted]

May 30, 2019 13:13:56 GMT -5 The Walk of the Penguin Mich said:

May 30, 2019 9:49:51 GMT -5 justme said:

While it sounds like you have a decent amount of money coming in even without multiple part time jobs, especially once they house is gone, I would still make sure you have a pretty big safety net of a savings account.

Not sure what you mean by $400-500/mo to be helping out the friends when you say you won't be paying rent or utilities. I love my best friends to death and would do a lot to help them out...but letting them stay my house long term rent free? When I'm still paying all the associated expenses of the house? When there's no real reason for them to not pay rent? Yeah, I think resentment would start to build real damn quick. 

This is where I am at.  I moved in with TD,  I still had all of my living expenses in KY plus massive medical bills.  Once my bills were paid and apartment gone, while I didn’t pay him rent, I did cover our cell phones and our food costs.  Proportionately, from my income to his vs expenses, this worked out.   This amounted to roughly what my rent alone was in KY.

You weren't just a friend though.  You were a friend with benefits. 

[The Walk of the Penguin Mich]

May 30, 2019 13:33:45 GMT -5 minnesotapaintlady said:

May 30, 2019 13:13:56 GMT -5 The Walk of the Penguin Mich said:

This is where I am at.  I moved in with TD,  I still had all of my living expenses in KY plus massive medical bills.  Once my bills were paid and apartment gone, while I didn’t pay him rent, I did cover our cell phones and our food costs.  Proportionately, from my income to his vs expenses, this worked out.   This amounted to roughly what my rent alone was in KY.

You weren't just a friend though.  You were a friend with benefits. 

No benefits at that time!

[nidena]

May 30, 2019 9:49:51 GMT -5 justme said:

May 30, 2019 8:31:58 GMT -5 nidena said:

To add a bit more information in case you guys deem it relevant to suggestions:  The whole reason I'm moving is to:

1)  Get the eff out of Dodge because I have no family here  lol
2)  Redirect my money from paying home expenses (No rent, no utilities, only groceries, and $400-$500/mo to help out the friends I'll be living with)

So, once the house is sold, that will add another ~$1200-$1500 to the paydown mix.

While it sounds like you have a decent amount of money coming in even without multiple part time jobs, especially once they house is gone, I would still make sure you have a pretty big safety net of a savings account.

Not sure what you mean by $400-500/mo to be helping out the friends when you say you won't be paying rent or utilities. I love my best friends to death and would do a lot to help them out...but letting them stay my house long term rent free? When I'm still paying all the associated expenses of the house? When there's no real reason for them to not pay rent? Yeah, I think resentment would start to build real damn quick. 

They won't be charging me rent but I'll give them some money each month to offset what little bit of extra electricity I'd be using, as well as just having me in their guest room for eight or nine months.  I'm not moving there indefinitely.  Hell no!!  I'll be staying there while and until I find an apartment in a city that is only a few hours away from them.  Staying there is just an intermediate step to my permanent move.  

[nidena]

May 30, 2019 8:56:42 GMT -5 minnesotapaintlady said:

What do you expect to pocket from the house sale? 

I'm going to assume just a wash.  Anything extra is bonus and would be used towards paying off remaining debt and the next move.

[debthaven]

I would also put any extra towards the CC rather than the SLs. I'd probably pay 1K/mo towards the CC and bank the rest until I'd actually sold the house and moved.

8-9 months is a long time to be living rent free. I'd definitely pay 500/mo to "contribute", even if your friend doesn't want to call it "rent". Frankly for that long I'd be more comfortable saying I insist on paying rent ...

But I'd definitely prioritize the CC over the SLs.

[TheOtherMe]

May 30, 2019 14:20:46 GMT -5 debthaven said:

I would also put any extra towards the CC rather than the SLs. I'd probably pay 1K/mo towards the CC and bank the rest until I'd actually sold the house and moved.

8-9 months is a long time to be living rent free. I'd definitely pay 500/mo to "contribute", even if your friend doesn't want to call it "rent". Frankly for that long I'd be more comfortable saying I insist on paying rent ...

But I'd definitely prioritize the CC over the SLs.

This  

No matter how good of friends we are, I know I would be resentful of my friend staying with me rent free for 8 to 9 months and thinking covering the extra electricity you use and for putting up with you.  

I have rented out rooms in my home and not to friends.  It worked long-term, probably because we weren't friends.  

I stayed with my sister when I moved here.  Closing on this house was not set in stone so we were not sure how long it would be.  I know we were both happy, along with her husband and kids still at home, that closing was only one day late.  Yes, I paid them all they would accept.

[debthaven]

If I've understood correctly, Nidena IS planning to pay, but it's not considered "rent", for whatever reason.

I'd just feel more comfortable if everyone just called it "rent" LOL.

[nidena]

Can y'all not project your own feelings on to the living arrangement that my friend and I have worked out?  She's not asking for money and I don't have to pay money nor do I feel obligated to do so.  I've done a ton for them and them letting me stay with them is the ROI.

I asked about the debts and provided the money amounts.  Work from that, if there's any further input.

[Deleted]

I would set an amount and call it rent too.  The whole "giving them money to help them out" thing would seem to wishy washy to me.  Like, you may or may not do it depending on the circumstances and it could be $400 or could be $500.   I mean, the friend might be fine with that, but I've had two "roomates" in my old house (at different times).  One gave me $100/month rent every month on the first and one would toss money at me every now and then (usually when I was complaining about a bill).  As the homeowner, I much preferred the first situation! 

eta:  Ok, I was writing when you posted, so don't bite my head off. 

I would just go down the line.  CC first.  I don't know why you'd want to put more on the student loans with half the interest rate first?  But, they're so small you should be able to knock them all out pretty quick if you have no living expenses. 

[hoops902]

May 30, 2019 15:34:56 GMT -5 nidena said:

Can y'all not project your own feelings on to the living arrangement that my friend and I have worked out?  She's not asking for money and I don't have to pay money nor do I feel obligated to do so.  I've done a ton for them and them letting me stay with them is the ROI.

I asked about the debts and provided the money amounts.  Work from that, if there's any further input.

Yes, and then you threw in all this irrelevant detail about your living arrangements...did you think that after YOU brought it up nobody would talk about it?  You derailed your own thread.  (Frankly, if all you cared about is the debt payment, there's literally no information needed other than the interest rates on them...your income is irrelevant, all that other stuff is irrelevant if the question is just "what do I pay off first?").  That's also probably why the thread turned to more about your living situation...you asked for help on a basic math problem and then included a lot more details that lead toward different opinions.

In terms of paying off debt there's really almost nothing to discuss.  This is a simple math problem.  All else equal, you pay off the highest interest rate first.  The only reason you wouldn't here is if you thought you might declare bankruptcy at which point you should pay off the SLs first since they aren't going to be discharged. 

[hoops902]

May 30, 2019 15:37:29 GMT -5 minnesotapaintlady said:

I would set an amount and call it rent too.  The whole "giving them money to help them out" thing would seem to wishy washy to me.  Like, you may or may not do it depending on the circumstances and it could be $400 or could be $500.   I mean, the friend might be fine with that, but I've had two "roomates" in my old house (at different times).  One gave me $100/month rent every month on the first and one would toss money at me every now and then (usually when I was complaining about a bill).  As the homeowner, I much preferred the first situation! 

eta:  Ok, I was writing when you posted, so don't bite my head off. 

I would just go down the line.  CC first.  I don't know why you'd want to put more on the student loans with half the interest rate first?  But, they're so small you should be able to knock them all out pretty quick if you have no living expenses. 

Right, only if you were going to do something like declare bankruptcy that wouldn't make them go away...but that certainly doesn't seem to be the case here.  

The only other thing I might mention is making sure there's an emergency fund somewhere that's also getting funded.  

[nidena]

May 30, 2019 15:44:12 GMT -5 hoops902 said:

May 30, 2019 15:34:56 GMT -5 nidena said:

Can y'all not project your own feelings on to the living arrangement that my friend and I have worked out?  She's not asking for money and I don't have to pay money nor do I feel obligated to do so.  I've done a ton for them and them letting me stay with them is the ROI.

I asked about the debts and provided the money amounts.  Work from that, if there's any further input.

Yes, and then you threw in all this irrelevant detail about your living arrangements...did you think that after YOU brought it up nobody would talk about it?  You derailed your own thread.  (Frankly, if all you cared about is the debt payment, there's literally no information needed other than the interest rates on them...your income is irrelevant, all that other stuff is irrelevant if the question is just "what do I pay off first?").  That's also probably why the thread turned to more about your living situation...you asked for help on a basic math problem and then included a lot more details that lead toward different opinions.

In terms of paying off debt there's really almost nothing to discuss.  This is a simple math problem.  All else equal, you pay off the highest interest rate first.  The only reason you wouldn't here is if you thought you might declare bankruptcy at which point you should pay off the SLs first since they aren't going to be discharged. 

I added the extra info because there would be a lack of home expenses by fall and I wasn't sure if there would be any suggestions regarding the vehicle.

[nidena]

May 30, 2019 15:46:06 GMT -5 hoops902 said:

May 30, 2019 15:37:29 GMT -5 minnesotapaintlady said:

I would set an amount and call it rent too.  The whole "giving them money to help them out" thing would seem to wishy washy to me.  Like, you may or may not do it depending on the circumstances and it could be $400 or could be $500.   I mean, the friend might be fine with that, but I've had two "roomates" in my old house (at different times).  One gave me $100/month rent every month on the first and one would toss money at me every now and then (usually when I was complaining about a bill).  As the homeowner, I much preferred the first situation! 

eta:  Ok, I was writing when you posted, so don't bite my head off. 

I would just go down the line.  CC first.  I don't know why you'd want to put more on the student loans with half the interest rate first?  But, they're so small you should be able to knock them all out pretty quick if you have no living expenses. 

Right, only if you were going to do something like declare bankruptcy that wouldn't make them go away...but that certainly doesn't seem to be the case here.  

The only other thing I might mention is making sure there's an emergency fund somewhere that's also getting funded.  

My current EF is $1000.

[hoops902]

May 30, 2019 15:49:02 GMT -5 nidena said:

May 30, 2019 15:46:06 GMT -5 hoops902 said:

Right, only if you were going to do something like declare bankruptcy that wouldn't make them go away...but that certainly doesn't seem to be the case here.  

The only other thing I might mention is making sure there's an emergency fund somewhere that's also getting funded.  

My current EF is $1000.

So while this might be considered breaking the rule, since it's not about the actual debts and which ones to pay off first...I'd increase that significantly.  Without worry for things like home maintenance, I'd still want at least 6 months of expenses saved up somewhere accessible (doesn't have to be cash, just easily accessible).

[The Walk of the Penguin Mich]

May 30, 2019 15:49:02 GMT -5 nidena said:

May 30, 2019 15:46:06 GMT -5 hoops902 said:

Right, only if you were going to do something like declare bankruptcy that wouldn't make them go away...but that certainly doesn't seem to be the case here.  

The only other thing I might mention is making sure there's an emergency fund somewhere that's also getting funded.  

My current EF is $1000.

Depending upon where you live, your current EF wouldn’t get you into an apartment if you had to move quickly in many places.

[nidena]

May 30, 2019 17:36:17 GMT -5 The Walk of the Penguin Mich said:

May 30, 2019 15:49:02 GMT -5 nidena said:

My current EF is $1000.

Depending upon where you live, your current EF wouldn’t get you into an apartment if you had to move quickly in many places.

I don't have to move quickly.  Hell, I don't even have to move at all.  lol.  I could easily stay put and continue as I am.  

[The Walk of the Penguin Mich]

May 30, 2019 17:57:32 GMT -5 nidena said:

May 30, 2019 17:36:17 GMT -5 The Walk of the Penguin Mich said:

Depending upon where you live, your current EF wouldn’t get you into an apartment if you had to move quickly in many places.

I don't have to move quickly.  Hell, I don't even have to move at all.  lol.  I could easily stay put and continue as I am.  

You missed my point.