Question

Third edit: we have almost $4000 a month extra right now and looking to throw that at debt. Not asking for opinions on my car payments, just asking for where to start. Thank you Second edit: I’m not asking for advice on my vehicles. We now make just over $150k a year so money is flowing in to pay down debt. I’m simply asking for advice on where to start as in which to go at first. We drive a 2016 ford truck and a 2018 VW Tiguan. Nothing crazy fancy. Both just have negative equity rolled in etc etc not anyone’s business. Just asking for direction on which to hit first. Thank you My husband and I have 4 pieces of debt: - his truck ($32k owing) we pay $750 a month ($347 bi weekly) - my new suv ($42k owing) we pay $625 a month (300 biweekly) - my student loan ($9k owing) we pay $130 a month (upped it to $200 tho) - his student line of credit ($55, 175 owing) we pay $375 a month - $277 of that just interest My question - in what order would you pay these off? The truck we pay the most a month but we’re legit basically paying off interest for his loan every month and it’s like throwing money at the wind. We’re lost and just saving the money at this point to be able to put a lump sum on whichever one makes sense to pay off first. Please help! With reasoning why Edit to add: I’m aware our car payments are large. As explained in the comment below, I drove a small coupe (not conducive to life w a baby) and had to trade it in but it had 3 accident claims on it (none at fault) which destroyed the value of the vehicle. So I rolled the negative equity over to our truck which we bought when our daughter was on the way. It sucks and we’re working our way out of it. But I’m just asking for advice on what to pay off first, I understand the vehicles are expensive. Thank you.  

Answer 1

Can you sell or return the vehicles ? That’s a crazy amount of money for vehicles .  

Comments

@plagiarism I know, both have negative equity rolled in, my last car (a coupe, so wasnt going to work out for our baby) had been hit 3 times and the value of my car plummeted. It was only 3 years old and given that it had so many accidents (none at fault) there wasn’t anyway out of it other then rolling the debt over due to lack of funds to pay it off prior to the trade in. My other vehicle, similar situation. We will never buy new cars again if I can help it lol

Answer 2

Smallest to largest. I agree with the previous comment. That amount of money on vehicles is a lot.  

Answer 3

I would do smallest to largest orrrrr which ever has the highest interest rate. Since those are such big payments what are the interest rates?  

Comments

@donegan the suv interest rate is 0. 99 and the truck maybe 3%?  

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@cocainism that’s actually not too bad! Just work your way down based on interest rate or do the snowball method. It’s really whatever you’re more comfortable doing.  

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@donegan they both just had negative equity rolled in to the cars. We were in a desperate situation with the truck so took what we could get back then. Lol.  

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@cocainism I get it! Ours are 708 and 551. Lol. We had the same situation. Not everyone realizes it’s not feasible to just get rid of your cars. And I wouldn’t sacrifice a safe car with my baby vs a beater car.  

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@donegan  exactly.  

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@cocainism  

Answer 4

I’d say refinance your vehicles if you can. That’s ridiculously high for car payments. Is there anyway you could get maybe a PT job to help you save money how you want too? I hope you can figure it out

Comments

@featherbrain we make a good income now, like $150k a year - we are just organizing how to pay everything off now that money is flowing in.  

Answer 5

You could sell both cars and buy two others at a very low price. You could try to refinance both cars if the credit is better.  

Comments

@cocainism Sorry, I forgot to finish it. Smallest debt to large debt. Dave Ramsey snowball method.  

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@declare thank you

Answer 6

I'd see if you could get rid of the vehicles. You don't need cars that are that expensive. I bet you could find a great truck and a great suv for 1/4 of what your paying. If that is HONESTLY not an option (Like the vehciles are only work half of what you owe. NOT you don't want to get rid of them) then I'd look at your terms again. Figure out how long the loan itself is and how much each month right now is going to the principle and then at least double that. So I pay 375 a month for one car right now. around 200 a month goes to the principle and then 175 goes to interest. If I want to pay it off sooner then instead of just straight doubling the whole payment I"m going to just double the part that goes to the principle. However just make sure you call and say "I want this applied to the principle" otherwise they'll use it as an advance payment on your next bill. But seriously tho I'd get rid of the vehicles and get cheaper ones. Seriously 1400 a month on car payments alone is just ridiculous.  

Answer 7

I’ll echo everyone and say find a way out of the vehicles. Depending on interest rates I would be focusing on the student loans before anything else.  

Answer 8

I agree with everyone that has said get rid of the vehicles, and find something cheaper. You can get your dream cars/trucks when you’re out of debt.  

Answer 9

That’s student line of credit is where to start - throw as much as you can at that. However if you want to give yourself a feel good feeling then hit your student loan and get rid of that so you have sense of achievement and then put that money as into the other line of credit. I’d just let your cars keep paying off on their own until those other 2 are taken care of

Comments

This might be a choice for you. . Hope you figure it out.  

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@contrary10 thank you for actually being helpful  appreciate it

Answer 10

Dump both vehicles and get something you can afford that's cheap to get you by for a year while you blast through the rest of that debt. Then get new vehicles once you save up a lump sum cash

Answer 11

I’d pay off your student loan and then go after his line of credit.  

Answer 12

If you sell one of the vehicles, it will probably lower the insurance too. Figure out the highest resale value, and if there are any repercussions of the loan.  

Answer 13

Sell both cars and get something cheaper. Those are both incredibly expensive and large loans!  

Answer 14

I think I would do a combo of the snowball and avalanche method. I would pay off your student loan first. After that I would go after the one with the highest interest. High interest rates make me crazy.  

Comments

@berryberryhill thank you

Answer 15

Those car payments are so painful. I don’t know the rest of your monthly payments for other bills (rent, utilities, etc) a but IF you could get rid of the cars and drive something cheaper/more inexpensive, I would do that first. The payment amount for the cars is like an extra mortgage/rent payment. Getting rid of those or getting smaller payment terms would free up your monthly debt payments and could help alleviate your other debts. Good luck!  

Answer 16

I would pay the smallest debt off first then roll all that money you were putting on the first debt on to the next smallest one. Then when that’s paid off put all that money on the next one. I would also get rid of both your cars and get older ones for now. That would free up over $1000 to pay the other debts.  

Comments

@carlcarla7061 we have over $4000 extra a month to throw at debt with leaving my cars alone. I’m simply asking for where to start. Thanks

Answer 17

Goodbye vehicles - get something cheaper or smaller - 1375 is way too much - you could defo kill your student loan

Answer 18

Trade in those cars and get something inexpensive for the time being until debt free. Because his line of credit is pretty horrendous too- less towards car payments means you can throw money at that much quicker.  

Answer 19

Get rid of the expensive cars and get used ones. You pay in cars what we do in rent. Def get rid of them, trade them in or sell. You’ll save so much and can basically pay off all the other debt with that

Answer 20

I would pay off debt that you don’t plan on coming back. Student loans and line of credit. The vehicles are crazy expensive. Maybe try to only have one vehicle payment at a time.  

Answer 21

The order has to do with interest rates! Start with highest interest to pay the least amount!  

Comments

@mauser @jugulate Pastor Adams thank you  

Answer 22

We pay $712 and $960/mth on our 2 vehicles. Just so you don’t feel alone with all the car payment comments! Haha. We have the same amount owed on each as well.  

Comments

Girl, we bought both of our vehicles before we started this budget life. It’s not like we made the decision after we were in trouble! Haha

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@cocainism same here. We make a lot more than we should for the shape we are in. ‍♀️

Answer 23

Without the interest rates, hard to give a good answer. In my experience, you need to get rid of whatever drives you the craziest first. I highly recommend watching this video Miko did and then running the calculations so you know the actual numbers that this debt is costing you and how much it’ll cost/save depending on the order you attack them.  
https://youtu.be/xyVm4aP3GXY

Answer 24

I choose to do the avalanche method. I order my payoffs by highest interest first. Then I play with the amortization chart I use to make sure my “zero interest if paid by” are all taken care of second. It sucks to see my lower interest cards sitting there not going much lower, but after having paid off 25K last year using this method and down to two years left, I’m super happy with it. I know they’ll have their turn and when they do, they’ll be done quicker bc my snowball will be huge. Good luck!  

Comments

@capitulum thank you!  

Answer 25

Just so you won’t feel alone about the vehicles thing. We have a new vehicle and we pay a high amount every month. We love our SUV and don’t want to give it up. We are able to pay down our other debt even with our SUV payment. If you want to keep them both and you feel you can still pay down debt that is ultimately your decision and don’t feel bad. Yes you can get smaller payments and all that to pay debt off faster. That may not be the best advice but you know your own finances and you know what you can do. So honestly I would get rid of that student loan $9k something smaller and easier to tackle and will feel rewarding that something is gone. Next I would take care of that student line of credit. That’s a lot of interest. After that the truck then the SUV. Someone mentioned above watching Miko’s video and then running the calculations. You can always do that. We are doing the Avalanche method but our own customized version. Good luck and go with your gut!  

Comments

@raffin Gonzalez thank you, some relief haha

Answer 26

We had a Durango that was $670 ish a month + $100 of insurance so $800 a month. We sold it in the spring of 2019 and it was the BEST decision we ever made. It was WAY too much money a month

Comments

That being said my fiancé switched between his truck and durango to drive so we just sold the durango outright

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@woodland1536 yeah we are working on getting our truck down to sell it by December but wanted to see if we were on track. My car isn’t going anywhere lol I just got it and I love it. We have a few thousand extra a month to put towards debt and I was just looking for which debt to start with. Thanks

Answer 27

I commented about the cars but now seeing the edit about your income and that you are absolutely keeping the cars I would just get really intense about it and knock out your student loan. Then I would focus hard on the cars starting with his to bring down the balance so at least you aren’t upside down on them and the. You have more options if you were to need to get rid of them later. Do you have gap insurance on them? If you don’t and you total them you will be left with a car and a very large loan for all the negative equity left. Good luck!