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Old 09-14-2017, 01:02 PM   #57
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Originally Posted by Yardjass View Post
See above. Always pay off your highest interest loans first, especially if you're talking a difference of 3% to 10%. If you go in the wrong order on something really expensive like a house, you will end up costing yourself thousands in the long run.
Yes, if you have the cash sitting around to pay off two loans and one of them has a higher interest rate, absolutely, no argument.

In the case where you have $1,000 to throw at your debt, I'm just saying my preference is to pay off what I can with the money rather than throwing it towards a higher interest loan and leaving the smaller debts in place.

Maybe it doesn't make math sense (never said it did, or at least didn't tend to) but math isn't always what matters to everyone. If math really mattered you probably wouldn't be in debt to begin with.

(Now starts the debate about using "someone else's money" when the rate is low enough)
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Old 09-14-2017, 01:30 PM   #58
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Am I missing something here? 10% APR on ten grand for a year is $1000. If you pay off $1000 at the beginning of the year and pay interest on the remaining $9000, you've saved yourself $100. For the 3% loan of $1,000, it is $30 for the year.
Sorry, I did do the math wrong (out of practice with my financial calculator ), but it's the other way around. It should be $30.42 and $1047 for the 1000/10000 loans. Because interest compounds monthly and not annually, you pay more than the straight 3% or 10%.

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No, what I'm saying is if I had $1,000 extra to throw at a loan I'm going to pay off the $1,000 loan and owe $0 in interest on it, rather than reduce the balance on the bigger loan and continue to pay interest on both.

In the end (in my simple way of looking at it) your debt is one big number with some composite interest rate against it. So in your example, you have $11,000 in debt with a combined interest payment of $566 a year. Anything you are comfortable in doing to reduce the overall amount owed quickly is a good thing, so there is not real bad answer. That was my primary point.
I gotcha. Yeah, the psychological value of getting rid of a debt entirely is valuable. That being said, sending the grand to the higher interest/higher amount loan will still save you more than the interest you lose on the lower/smaller loan.
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Old 09-14-2017, 02:03 PM   #59
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Sorry, I did do the math wrong (out of practice with my financial calculator ), but it's the other way around. It should be $30.42 and $1047 for the 1000/10000 loans. Because interest compounds monthly and not annually, you pay more than the straight 3% or 10%.



I gotcha. Yeah, the psychological value of getting rid of a debt entirely is valuable. That being said, sending the grand to the higher interest/higher amount loan will still save you more than the interest you lose on the lower/smaller loan.
Teach me your math you math wizard
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Old 09-14-2017, 02:19 PM   #60
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Switching to liability only "saves" you money if you don't consider risk. Drop collision, wreck your $15,000 car and it just cost you $15,000 in a few seconds.

I keep collision on all my vehicles (most of which were purchased for cash, and all of which are paid off) because I'd rather pay someone else to carry the risk.

The difference between a 3% and even a 10% loan isn't your problem, it's getting rid of the total debt. Pay off the lowest balance one first, then roll that payment into the other and pay it off early was well.

That's what I would tell my kids anyway.
This - more or less. I'd actually focus on the highest interest first, as that costs more long term.

Reducing insurance to the minimum required by law is fine.. if you have a $1,500 shitbox.

If you can't afford to pay off the car without hurting yourself financially, then pay the insurance company to carry that risk. Given the question, it's clear that you can NOT shoulder that risk. What would you do if the car was stolen? Or some truck did a hit and run and totalled it?
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Old 09-14-2017, 02:23 PM   #61
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Most car dealers wont even let you take a car from their lot without full coverage insurance. I'm only 18 and that was a huuuge factor in getting my car when i was in the market for it.
Unless you tow it. I've done it before without paying for registration or showing proof of insurance.
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Old 09-14-2017, 02:24 PM   #62
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Depends on who and where you are. I pay less for this than I did my Lancers. The wife's new Impreza cost more. I doubt that it is much ore that slightly above average for most people. It is individuals that cost more for insurance not the car.
Location kills me.. I have no accidents or tickets and pay a shitload. Stupid Florida.
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Old 09-14-2017, 02:38 PM   #63
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Originally Posted by NARFALICIOUS View Post
You may want to confirm with your insurance company.


I found this somewhere online, unverified but it's what I've always heard.

Each insurance company has its own methodology for deciding if a car is totaled and establishing its value. Many states also get into the act, further sharpening the total-loss definition.
Correct. Some just use KBB numbers, State Farm uses a company to try to find values of recently sold vehicles in similar condition in your area (I can tell you how much of a pain in the ass it is for them to find a 2005 Suburban 2500 with the 8.1L in very good to excellent condition).

In terms of insurance, I agree that they exist because they make money. I'm OK with that as it's a risk that I don't want to shoulder, especially on my cars with collector insurance as the cost makes it a lot more attractive to keep coverage on the vehicles.

Additionally another benefit to insurance that I used recently.... I recently lost the Suburban to a drunk driver.. he was cited (and arrested). His insurance company refused to pay more than 20% of my loss. Sure, I would have won that lawsuit, but going through my insurance was an easy button that easily saved me a shitload of time and $$ up front.

Time vs money/risk.. so like lots of people I'll be a sheep for the insurance companies
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Old 09-14-2017, 02:55 PM   #64
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This is incorrect information as to how interest is calculated, it's not quite as simple as that. It's more like a month to month percentage on what is remaining annually. I can't remember the exact calculations, I just know it's not super simple.

Go to a car website, Subaru for example and attempt to replicate the way the calculate interest on a vehicle. It works something like the first few months of payment, the amount of interest that is being paid is visibly lower, but then as the months go on, the payments to the actual car get smaller and the payments to interest begin to grow. It's kind of why you can save money by putting lump sums down on a car, at least, this is how I understand it, I could be wrong though, someone much more intelligent should correct me :P
While true, his example is still an accurate portrayal of the concept.

Min $ comes into play clearly to determine a more detailed result as principal balance is required to calculate each month. IE, that 3% loan could be a $350/month car payment - or it could be a fresh 3 year loan (ok no one would do that I hope, but still).

However, it still doesn't matter.

For easy numbers, if it's the tail end of a 5 year car loan for $20k at 3%, that remaining $1,073 of principal costs him $3 of interest. If it's the fresh 3y $1k loan scenario, the interest over that lifetime of the loan is a whole $47.

There is simply no way that paying that off will ever beat that higher interest loan. Period.

Now, there's a gratification factor in paying off a loan. I get it, and have done so before even knowing it was the worse financial option.
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Old 09-14-2017, 03:24 PM   #65
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Originally Posted by Dave-ROR View Post
While true, his example is still an accurate portrayal of the concept.

Min $ comes into play clearly to determine a more detailed result as principal balance is required to calculate each month. IE, that 3% loan could be a $350/month car payment - or it could be a fresh 3 year loan (ok no one would do that I hope, but still).

However, it still doesn't matter.

For easy numbers, if it's the tail end of a 5 year car loan for $20k at 3%, that remaining $1,073 of principal costs him $3 of interest. If it's the fresh 3y $1k loan scenario, the interest over that lifetime of the loan is a whole $47.

There is simply no way that paying that off will ever beat that higher interest loan. Period.

Now, there's a gratification factor in paying off a loan. I get it, and have done so before even knowing it was the worse financial option.
I was in total agreement that paying off the higher percentage loan first was the better option, so I'm not sure if you response was entirely meant for me, but his/her basic calculation on interest I knew was incorrect... too many smart people on here, I do more thinking here than I do for my job lol.... Being dumb is more fun, I'M GOING TO MUSTANG FORUMS!
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Old 09-14-2017, 03:31 PM   #66
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Can someone tell me how to pass commuter cars? Give gas or downshift. Sorry ... couldn't help myself. Alright ..... back to economics 101.
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Old 09-14-2017, 03:41 PM   #67
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Yes, if you have the cash sitting around to pay off two loans and one of them has a higher interest rate, absolutely, no argument.

In the case where you have $1,000 to throw at your debt, I'm just saying my preference is to pay off what I can with the money rather than throwing it towards a higher interest loan and leaving the smaller debts in place.

Maybe it doesn't make math sense (never said it did, or at least didn't tend to) but math isn't always what matters to everyone. If math really mattered you probably wouldn't be in debt to begin with.

(Now starts the debate about using "someone else's money" when the rate is low enough)


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Old 09-14-2017, 04:06 PM   #68
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Location kills me.. I have no accidents or tickets and pay a shitload. Stupid Florida.
Probably not going to be approved after this week..hope you survived relatively unscathed but those of us in Georgia appreciate you all taking one for the team.
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Old 09-14-2017, 04:07 PM   #69
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Moosegirl, Dadhawk's Financial Discussion Cryptonite
Thanks @Tcoat, actually I had already moosegirled myself with the last posting...
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Old 09-14-2017, 04:19 PM   #70
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fuck tcoat, this is my type of woman too. STOP POSTING THIS SHIT I CAN'T OPEN THESE THREADS NO MORE. I had to double take ffs
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