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which debt first?
We current have 2 debts. One is a home buyers plan repayment of $10, 000 which was taken out of retirment savings and we are on a plan to have paid off in 10 years ($75/mth). The second is a $15, 000 loan to my mom which have a 5% interest rate which we are playing $100/mth.
I was thinking of paying the home buyers plan back first so it can start making us money again for retirement. My dh thinks we should pay the loan back first so that we can stop paying the interest.
I am planning on cashing out a stock I have that's worth about $2500 and putting it towards one of the loans and then putting every spare penny we have towards one then the other to get them paid off fast. I figure we could get the home buyers paid off in 2 years if we focus on that first. But now I am second guessing my thoughts to pay that off first.
Wwyd?
Re: which debt first?
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ITA with all of this.
ditto PPs on focusing on the $10k first. Depending on where you've invested, you could be making better than 5% in retirement (we are, anyway), so with compounding over the decades, the money you're losing by not having that in your retirement right now is most likely much more than the interest you'll pay on the other loan.
As for the stock, I can't say whether or not you should sell - I think it depends on things you haven't mentioned, like where it's invested/what stock it is and when you bought it. Do you have a financial advisor you can ask about whether selling is a good idea right now?
"You know you're in love when you don't want to fall asleep because reality is finally better than your dreams." - Dr. SeussThank you for the replys. I was just at the bank talking to the investment advisor about the stocks and whether I should cash them in for the retirement debt etc. He gave me a bunch of ideas but mentioned that the tax benefits of paying the retirement back slowly for income tax purposes would be better then the interest I would make in the retirment fund. That his hime buyer plan he is paying slowly over the 15 years. Jow im even more confused.
I agree that I think I need to talk to investment advisor more about my full situation to see what would be the best thing to do. How do you go about finding someone? And do they even want to talk to you when you don't have money to invest?
I would really consider paying back the retirement account first. I have heard that if you leave your job and you still owe the money it is due immediately, or you have to pay the heavy early withdrawal taxes on whatever you haven't paid back. I'm not sure if using the money for a home makes any difference in this.
Just something else you may want to consider.
I would also go to a different investment adviser. My wife's last place had a "free" investment adviser that did not want to answer any of my questions, he was focused 100% on life insurance that he doesn't sell but has a great recommendation for us.
I don't like your bank's answer on slow paying your retirement loan especially since the stock market is averaging roughly 10% for the past few years. Also, if any thing happens you will have to pay full taxes and penalties on this money. This is actually your higher interest rate loan because of loss of earning potential.