Originated from
AOL Coaches
Asked about “Money on AOL Coaches

Paying off debt

I really want to get out of debt but also make good use of my money. I have a loan for 57,000 at 7.75%. Should I put my $100 a month discretionary income towards that or my 401


Would you like to answer or comment?

Sign up for a free account, or sign in (if you're already a member).
  • 290 views
Share Send to a friend Watch Report
 
 

Posted Answers

Order by
 

If you are saying that you only have a choice of investing in your retirement or making payment on this debt, I'm not sure how you could really do either.

Let's look at the debt first.  If you put $100 a month towards it, that is $1200.  Considering that on 57000 the interest you are charged right now is over $4000 if doing nothing.  You are not making a dent in the interest, let alone the principle.

Not investing in your retirement is not a great idea either.  There will come a time when you will need that money at the end of your life when you aren't working.  Compound interest works in your favour, especially if investing in anything that average 10% over the lifecycle of your retirement investment.  $1200 a year is better than nothing though, if you were eliminating your debt.  But you aren't.

Realistically, and depending on how the interest on your debt is calculated, you should be putting $350-$600 a month down on that debt to even get into the principle each year. And your 401k should be your first payment to yourself.

So my advice is you better get some more do-ray-me going by making more money and cutting expenses. 


Posted 9 months ago ( permalink )
In reply to becmn65's question
JtotheA was invited by Yedda to answer this question.

Rated as
#1 out of 8
0
0

Helpful?

line
line
line



 

Thank you for your answer. So your saying put the $100 towards the 401K?  I know 401k's are a great deal but I really really hate this debt. Concerning the loan, Why do say I'm not eliminating it? It is going down slowly. Your right, the $100 is not much, however it's all I have right now. The $100 would be extra money. My payment is $434 per month. The amoritazation says that the extra $100 a month would mean it would be payed off in 13 yrs as opposed to 30.  To me that's big.  I am on a super strict budge and I am working as much as I can as I have a small child at home. The loan was a hugh mistake that I have lost sleep over and can't get out of.


Posted 9 months ago ( permalink )
In reply to becmn65's question
Rated as
#2 out of 8
0
0

Helpful?

line
line
line



 

govt stock 10yr 5yr 2yr 6%


Posted 2 months ago ( permalink )
In reply to becmn65's question
Rated as
#3 out of 8
0
0

Helpful?

line
line
line



 

govt stock 10yr 5yr 2yr 6%


Posted 2 months ago ( permalink )
In reply to becmn65's question
Rated as
#4 out of 8
0
0

Helpful?

line
line
line



 

now 401ks pasted stink


Posted 2 months ago ( permalink )
In reply to becmn65's question
Rated as
#5 out of 8
0
0

Helpful?

line
line
line



 

stocks in walmart?

 


Posted 2 months ago ( permalink )
In reply to becmn65's question