Originally Posted by
Led Zep
T.D.,
Personally, I would absolutely pay it off. Once you do it is 100% yours! It is only transportation, so if it is reliable then pay it off and plan on keeping it for a long, long time. Take the equivalent of your ex-car payment and save it in an interest-bearing account. When the time comes to replace the car, then take some of that money (notice I said some) and pay cash for your next one. You'll never have a car payment again. Also, it's much easier to negotiate a price when you are a cash buyer.
Thing is I pay about 6.5% on the car meanwhile I'm at about 608%, as of this morning, on investments in my savings. If I paid the rest of the $12k off on the vehicle that would be $12k less that I have to invest with. Today I purchased 450 shares of Bank of America at $27.40 and picked up a few OCT. Call options for
[email protected]. I purchased a thousand of those(so $2860+fees). Last I checked they were trading around $3.30(were at $4 earlier) so even if I sold now they'd pull15% or $3300(of course before fees). After the trade fees plus the $1 per contract I purchased that would be roughly $400 which is already more than my car payment. I haven't checked what the new rates are at but with the feds down at 2%, still eyeballing 1.75% or less I don't care what you read, I could possibly refinance it with my same credit union for another 5yrs from current date at the lower rate. By doing this I can pay the same payment I currently am, pay lower in interest, and pay the car off quicker because more of the payment amount would be going towards the principal of the car. IE if you pay $300 now, refinance to $250 but still pay $300 that's an extra $50 going to the princ. each time thus paying it off faster.
The real pain here is that I don't make much as an FO. Because of this I've used investing as more of a money maker than a value builder. Like I said I've manage to rival my FO pay with it. I've probably cashed about 1/3rd out to help with the QOL I'm use to then put the rest aside. Once I upgrade, if ever, I won't actually need the money as much then I can build a half decent portfolio with %'s spread across multiple funds and let them grow instead of this buying and selling I do all the time. I'm actually thinking about changing brokers since I'm paying $9.99 per trade + $1 per contract. I figure I've given them about $25k or so in transaction fees this year lol. Would be nice if I could have kept some of that.
***EDIT*** While sharebuilder has been an easy way to get the ball rolling I've been reading reviews and it appears tradeking.com is the best online brokerage. I'm going to move my assets over that way. $4.95 a trade and $.65per contract is a lot better than the 9.95 and 1.0 I pay at sharebuilder.