- Put it in my savings account for my trip to Japan next September, or
- Pay off my 18TB HDD (900 bucks) and get rid of all the upcoming installments ($100/month), or
- Other
Either way, my monthly balance stays the same, I think. I’m really bad with money. 💀
High interest debt > 6mo Nest egg > 401k/Roth > post tax brokerage (VOO and chill)
This is not financial advice.
Pay off whatever you need to. It’s always a better feeling to clear debt, than buy something and regret.
Paid and done. 😊
Pay off debt for sure. And then use the money you were going to pay the debt with to put into savings.
Just paid it off a few moments ago. Thanks! 🫡😊
Good shit 😁
Pay off your debt
Sí.
Buying an HDD on credit is crazy … pay it off.
Especially for $900. My 16TB HDDs were like $150 each last year.
Yeah, I got 20tb drives for about $240 each a few years ago. Prices are NUTS.
Done and done.
Become debt free to start saving money
Pay off debt
Not a fun answer but it’s the most responsible one
Nah, I agree. The euphoria that comes with not having a debt is unparalleled. And responsible, yes. 😝
Whatever debt you pay off, continue “making payments” in the same amounts (to your savings account).
You guys have savings?!?
We did, until recent emergency vet bills and some wisdom teeth being extracted next week.
I have a water bottle that I put all of my spare change. 🤷♂️
But seriously, most banks (that I’m aware of) let you open a savings account for as little as $5 (minimum balance) with no extra fees. If you never withdrawal from it and drop a few spare bucks here and there, you may find yourself with “savings” too.
That’s a great way of reframing it, cognitively! 🤣 Nice!!!
You were making ends meet with the debt before. Put it towards your future: buy another 18tb hardrive. Spend the last 100$ on drugs.
I suspect paying off the installment loan is your best bet, unless it a 0% apr loan, or there are penalties for early repayment. If that is the case, your best bet is to put the $1k in a 12 month certificate of deposit (a CD), which will get you a higher interest rate and remove a lot of the temptation to spend it early.
Debt first but redirect the payments straight into your savings (possibly slightly lower to make it easier).
And treat yourself to something small (like $50 or so), as a reward for doing the sensible thing with most of it.
And then have a brilliant time in Japan 😁
Now THIS is a person who knows how to LIVE LIFE. NOICE. 😁 Thanks! 😊
Ha, I only noticed afterwards that someone else basically said the same thing. Still though 😁
Always pay off debt, the interest adds up
… but beware of any early repayment fees. Some companies really want all that interest whether you pay it as interest or not.
Do these really exist? I thought that practice was banned after the '08 recession, but perhaps it was only with certain loans like home and auto.
Fees by those specific names may have vanished in certain industries and jurisdictions, sure.
With traditional home and auto loans there is a mandated disclosure form that lists your APR, finance charges, fees, and specifically early payoff or extra payments and whether those have any sort of penalty. I’ve personally never seen one list a fee for this (I actually just financed a car two weeks ago and went through this) on our home loan or any other prior car loan and thought it was outlawed with the regulations that got passed after the great recession when everyone was facing foreclosure.
I wouldn’t be surprised to find out that that stuff like payday loans or Klarna payment plans included some sort of penalty since they’re designed to be as predatory as possible, but I’ve never used anything like that.
Good point
If the savings yield less % than the installments pay in %, pay off the hard drive. Otherwise… don’t? I dunno seems like a math question
Bad at money, bad at math, GREAT at linguistics… 🤓
There is a $100 difference/leftover: the disk is 900, the refund is 1000. And if I’m putting aside 100 per month anyway for savings, then it feels like I should pay off the drive. 🤔
You probably should, debt is only worth having if you are certain you can pay it and it’s below the inflation value. I financed a phone that I could pay because at 0% interest, the value of the monthly payment is less today than it was the month I bought it.
Moneys. Math.
Your take isn’t quite right. Debt is only worth having when the long term payments are less than the long term value. Value is not just money, but don’t lose sight of money. Dept is automatically paid off when you die, which is sometimes a consideration though only rarely. However in between the question is what could you do with the money going to payments instead.
Buying a house - most of your payment would go into rent anyway and you have to live someplace. As a general rule of thumb if you will live in the same place for at least 7 years buying is better, but YMMV. When the house is paid off you live there rent free.
Buying something for your business - check with an accountant, but you should be able to make enough money with it to pay it off and make a nice income.
Buying collectable art. I’m not against it, but it is common for art values to collapse as what is “in” changes. It is also common for tastes to change. Thus not a thing even if you can afford the payments.
The advice above is correct. If the rate payment is without extra cost, you got a loan at zero percent interest. Even if your money is just in a savings account, the payment loses in value each month at you pay infinitesimally less every month in terms of what you can buy with that. If you put the money into savings, assuming broad market index funds (etfs), that’s about 7 percent you earn on that per year while you pay off the rates. Well just 8/12 of that, but still…
I’m debt free and i prefer it that way, but I also know i pay a big price for that over thirty years.
The problem is the math is correct on paper. However in the real world people who do the math tend to not translate correctly to the real world - they see the math and they don’t save anything while also keeping the loan. People who hate debt are more likely to pay it off, and then put something into savings so they don’t have to get more debt later.
Lesson: hate debt.
Compare debt and savings. High debt should be paid off, otherwise pack your savings more. Boring but this was unexpected money anyways.
Boring is my middle name, so keep it coming! 😁 Thanks! 😊 I’ll pay off the debt.
Good luck!
Is there anything you pay interest on? That HDD is a likely case. Credit card or other stuff like that?
If you’re bad with money you should never buy anything that you’ll pay interest on except a house or apartment.
Thinking about a trip to Japan with credit card or consumer debt is like thinking about a trip while your hair is on fire.
Easy, which one has the highest interest rate. If you pay off your hdd now, do you save on loan interest? Then that 1000 is worth more because it’s 1000+ the Interest you now won’t have to pay. Same for savings. My savings rate is ~3.6% APY, so 1000 after a year is 1036, not much extra, but that’s a meal or two.
Or Yolo it into the stock market, and potentially make 20% ($200) on it by next year.
It depends what you think the future holds.
Boring answer is: can you put it in a Roth IRA or other post-tax advantaged account? That’s for if you think the world will be around when you retire.
If you think the price of ram is gonna double again, buy a 64 GB kit of DDR5 now and sell it on Craigslist next year
Or if you believe that memories now are worth more than memories in the future, just spend it on things that make you happy. This is free money, Noone can force you to be responsible
I wanted to make a joke/silly comment, but your last paragraph was so heartfelt I… No, no, here it goes:
That’s for if you think the world will be around when you retire. Only real answers, please?
Joke done. Thanks for all the great insights, as I literally have zero skill points in finances. 🤑
