Wednesday, February 4

A milestone & a question.

The milestone... At 6:30am today my car hit that magic number... 100,000 miles. I have never drive a car this long. (Well, mostly 'cause they all fell apart long before I drove that many miles. haha) We bought this car brand new in the middle of 2004 & every mile (other than what the dealership put on it) is mine - all mine! Wow.
So, my question is... should I get a new one? hahaha, I'm just kidding. ;)
My question is actually about what makes sense to pay off next (Luke's car is almost paid off - woohoo!). The plan was to pay off my student loans. However, we could pay off the 2nd mortgage instead.
Our 2nd mortgage is at 7.25%.
Student loan 1 (which is the bigger of the 2) is at 3.75%.
Student loan 2 is at 3.5/4.5, so let's call it 4%.
(Student loans are soooo confusing!)
I don't want to talk numbers, so I'll just say our 2nd mJustify Fullortgage is about 25% more debt than the student loans. We could definitely have the student loans paid off by the end of the year, or we'd at least get close to having the 2nd mortgage paid off. So, which is the smarter to pay off first? ...Maybe I need to call my good friend Dave and ask. haha!


J said...

Dave Ramsey normally says to pay off everything but the mortgage first. Given your interest rates, I'd probably pay off the bigger SL first, then reevaluate at that point.

Melanie said...

I agree with Jackie. If you keep your student loan do you get any discounts? Like after 3 years of paying my student loan on time my interest rate drops and they then credit me like I've had that interest rate the entire time, does that make since?

Helen said...

Well, we already got the reduction (I've been paying on these for 6 years now I think). It's such a hard call. I understand Dave's philosophy of seeing the progress (that's why he says start with the smallest debt first), but I don't know that it makes that much of a difference 'cause we;ll see the total amount shrinking & be satisified.