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Old 04-20-2007, 07:52 AM   #1
Casull

 
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So, what would you do....?

My wife and I are looking to buy a house in the next few months and were calculating up our expenses, income, etc, etc. The topic then switched from once we buy the house, she wants to devote as much of our disposable income towards paying off her car. After that, the student loans.

I told her I didn't care as long as I still get to buy a Camaro in the next 2 years. Then she brought up a good point. If I held off on buying the Camaro for 5 years we could devote that payment to paying off the student loans and we would be completely debt free (less the mortgage) in 5 years (Between the two of us we have about $65,000 in student loans).

The financially responsible side of me is saying... yeah, I really SHOULD do that. But the other side of me that has wanted a Camaro since I saw it in February of 2006 is saying SHUT THE HELL UP!

I already know what I am going to do, so i am not asking what you think I should do, but was just curious as to what you would do if you were/are in this sitution as well... So what would you do?
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Old 04-20-2007, 08:20 AM   #2
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Not to be a downer but I would have to opt for the debt free option. In 5 years you could be looking at new and improved camaro with more options and a larger amount of bolt ons available to play with. Besides not having to deal with the unavoidable bugs that the first few years of camaros will have.
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Old 04-20-2007, 08:37 AM   #3
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I am already waiting a few years untill im out of college so I can pay off my student loans and have more free cash for the top dog Camaro. That is unless I win the powerball then all bets are off.
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Old 04-20-2007, 11:32 AM   #4
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When the Camaro comes out I will be in my last year of college and getting ready to graduate from Nursing school, PLUS I'll be getting ready to get married...soo needless to say I dont know what I am going to do yet either lol. I want to be the first person in my town with a new camaro so everybody can drool over it, but I dont want to go so far in debt that I can't get out. So I understand where you're coming from Casull. My only thinking is if the Camaro comes out and doesn't sell as anticipated or it is priced too high, the years might be numbered like the GTO.
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Old 04-20-2007, 11:53 AM   #5
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Getting items such as a car payed off by making extra payments saves the buyer thousands of dollars over the span of the loan. One extra car payment a year for 6 years supposedly saves something like one years payments. It is very wise to get the car payed off quickly. Depending on how much you are spending a month for the regular payment, that's a lot of money back in the bank or towards student loans...$401 a month for us. Again, the more you pay off now, the more you save in interest in the long run...which could mean the more goodies you get on the 5th Gen. My opinion.
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Old 04-20-2007, 01:50 PM   #6
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Five years is an eternity when your watching others have fun… Further more, there might be a 6th GEN by then with a totally different design??? I’d find a way to have the best of both worlds…

Last edited by KILLER74Z28; 04-20-2007 at 04:24 PM.
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Old 04-20-2007, 02:21 PM   #7
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What I plan on doing is paying off the wife's car first. We should be able to do that within a year pretty easily since there is only $11k to pay off.

I don't plan on paying off the student loans right away though, primarily because the interest is tax deductible, so it doesn't make a whole lot of sense to rush to pay it off too early.

I figure what I will do is, like I said, pay off the Civic, then take an extra year to save up for a larger down payment so that i can keep my new car payment at around $300/mo.

I was just curious as to what others would do in the same situation...

And Killer.... I agree 100%. Life is too short.
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Old 04-21-2007, 04:06 AM   #8
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One thing to consider when paying off an auto loan early.

How much time is left in the loan? The amortization rate for a loan is setup so all the interest for the loan is paid mostly up front. You might already know that, but it bears stating.

So the longer you wait to start making extra payments the less and less you can really expect to save on interest. If you have less than a year left on the loan you might consider letting it ride out. You already paid the lender a large majority of the interest. In a situation like that the money you would use to make extra payments could potentially grow more in a savings, CD, or money market account. Or be better put to use paying down high interest debt like credit card debt if you have any.

Here try this link and play with it. It will show you how much money you can expect to save based on all kinds of factors. Then you can really decide if it is really worth paying of car loan early.

http://www.bankrate.com/brm/auto-loan-calculator.asp


Generally speaking though it is a decent idea to get rid of your debt. You may just find that the getting rid of the burden of a car payment early is worth more in peace of mind than actually saving on paying a lot of interest.
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Old 04-21-2007, 07:44 AM   #9
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Your wife is a smart woman!

Waiting may be the smarter move. Besides being out of debt, you'll have more disposable income to use towards the new Camaro. I also prefer to wait about a year after a new cars introduction for two reasons; all the "bugs" are worked out, and you get a better idea of what models are available, (ie; "special" dealer models, etc.)

I understand your excitement. Once I see the new Camaro out on the streets, I'm going to have to practice patience, something I'm not always good at.
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