Which would you pay off first?

[kamik86]

I just finished paying off DVC and then my car died. We weren't planning to replace it for a few more months.

Well I got another car so I have a bit over $7000 in a loan. However the interest rate is only 4.99%.

I also have student loans for my husband and I.
My husband has around $4000 at 5.75%
Then I have 2 loans:
$15800 at 6.8%
$5500 at 2%

Oh and my student loans are on deferment until next year with all but $200 of the 6.8% one interest free since I'm in grad school.

Before I bought the car the plan was to pay off the car then split half my money towards savings for a home down payment and half towards the student loans. But with the car rate being lower would it be better to work on the student loans first?

Then again most the 6.8% is really 0 for another year, so maybe do just my husbands first?

If it matters I can pay at least $700 a month to these. Possibly more but DH works retail so that is just what I know I'll have.

 

[RachaelA]

Pay the car. You can deduct the student loan interest on your taxes.

 

[Tink-aholic]

Honestly? I'd sell the DVC and put that money on your debt, too. And I LOVE my DVC, so I know how hard that would be to do. But it seems backward that you would have a free-and-clear vacation before you even have a house and have loans in deferment.

I know that you may have purchased it when times were different, but DVC will always be there.

Whatever you choose, good luck.

 

[ssawka]

Honestly? I'd sell the DVC and put that money on your debt, too. And I LOVE my DVC, so I know how hard that would be to do. But it seems backward that you would have a free-and-clear vacation before you even have a house and have loans in deferment.

I know that you may have purchased it when times were different, but DVC will always be there.

Whatever you choose, good luck.

I was just going to disagree with Tink-aholic, because I am not necessarily anti-debt if you can afford the payments, but then I saw that you did not own your own home yet. So, I will give you the same advice I gave to a guy at work. You should not even consider DVC until you own a home, unless you did not intend to own a home.

 

[kamik86]

I was just going to disagree with Tink-aholic, because I am not necessarily anti-debt if you can afford the payments, but then I saw that you did not own your own home yet. So, I will give you the same advice I gave to a guy at work. You should not even consider DVC until you own a home, unless you did not intend to own a home.

I don't intend to own a home yet. Not for a few more years. Never intended to until I was ready to have kids so that I would actually want a yard etc. I just figured I should probably start saving for it.

Oh and the student loans in deferment comment from the poster above. They aren't in deferment for financial reasons I could make the payments easily (they would only be $250 a month with the standard plan and I have at least $700 to pay per month, even with still taking vacations) However you automatically get a deferment when in grad school at least half time and since the bulk of the loans are subsidized that makes them 0 interest.

As for the DVC there is no way I am selling I would end up selling at a loss, would still be taking vacations while paying off this debt but they would now end up costing me more and then if I choose by it back for even more. Financially that would be stupid.

 

[dex08]

Pay the car. You can deduct the student loan interest on your taxes.

Ditto this!

 

[disneyofcourse]

No way I would sell my DVC is I were you and really there isn't a rule about not being able to own DVC before a home. It's a persons personal choice and I'll leave it at that. Selling it and losing a bunch of money is pretty dumb imo unless you absolutely need the money.

Now for the money...
Pay off that car loan first and then start chipping away at those other loans. But that's just what **I**would do.

 

[Shelly F - Ohio]

I would not sell the DVC because you can deduct the property tax on your taxes. I say start widdleing down your high loan. Even though it has a 0% interest rate for another 12 months as soon as that ends you don't want to pay 6.8% on a high balance I would start paying it down.

 

[Tink-aholic]

I would not sell the DVC because you can deduct the property tax on your taxes. I say start widdleing down your high loan. Even though it has a 0% interest rate for another 12 months as soon as that ends you don't want to pay 6.8% on a high balance I would start paying it down.

You can't deduct DVC on your taxes. Not Federal, anyway. Not sure if you can on your state taxes in your particular state (my state doesn't have state tax).

I just don't want people to think that DVC is some sort of deduction on their Federal tax because they saw it written here.

ETA: I went back and read my contract and it seems that DVC releases themselves from liability by telling members to have all attempts to write off any portion of DVC or DVC dues if you meet certain criteria go through tax professionals, in case of audit and the IRS rules against you for tax fraud.

 

[dfchelbay]

Pay the car. You can deduct the student loan interest on your taxes.

Ditto this!

Double ditto this from me. Also, don't forget to write off the taxes you paid when you bought the car on your next tax return.

 

[MrsPete]

I'm with the others: The DVC was a bad choice. DVC is a luxury, and you don't finance luxuries while you have other debt and a car that was going to need replacing within a few months. BUT, since you already have it, I suggest renting out your points for the next few years to recoup some of that money, which will help you pay off the student debt faster.

Which to pay off first -- the student loans or the car? It doesn't really matter; just pay as much as you can 'til they're gone. Then work on saving for the house; it makes sense rid yourself of the money-sucking debt before starting to build up a downpayment for a house.

 

[ceecee]

I'm with the others: The DVC was a bad choice. DVC is a luxury, and you don't finance luxuries while you have other debt and a car that was going to need replacing within a few months. BUT, since you already have it, I suggest renting out your points for the next few years to recoup some of that money, which will help you pay off the student debt faster.

Which to pay off first -- the student loans or the car? It doesn't really matter; just pay as much as you can 'til they're gone. Then work on saving for the house; it makes sense rid yourself of the money-sucking debt before starting to build up a downpayment for a house.

 

[RachaelA]

You can't deduct DVC on your taxes. Not Federal, anyway. Not sure if you can on your state taxes in your particular state (my state doesn't have state tax).

I just don't want people to think that DVC is some sort of deduction on their Federal tax because they saw it written here.

ETA: I went back and read my contract and it seems that DVC releases themselves from liability by telling members to have all attempts to write off any portion of DVC or DVC dues if you meet certain criteria go through tax professionals, in case of audit and the IRS rules against you for tax fraud.

I've been told you can deduct a portion of your annual dues each year. I think its less than a dollar per point. We just bought DVC a week ago so I'm not positive on the details.

I do agree that you should not have bought DVC if you do not have an emergency fund (and other savings such as a car fund). What's done is done though so all you can do if keep paying everything else off.

 

[kamik86]

I've been told you can deduct a portion of your annual dues each year. I think its less than a dollar per point. We just bought DVC a week ago so I'm not positive on the details.

I do agree that you should not have bought DVC if you do not have an emergency fund (and other savings such as a car fund). What's done is done though so all you can do if keep paying everything else off.

Now did I say I didn't have an emergency fund? You know I can't find that, probably because I actually DO have an emergency fund. I just didn't want to completely drain it to not have to finance the car.

As I said above selling or even renting the DVC isn't going to happen I have at least $700 a month to send to these and that is after my retirement savings, vacation fund, gift budget, and a few other things.

I don't need all this debt to be gone before I do anything else. I guess that was my mistake in coming to this board. As it seems everyone is adverse to having any type of debt. I'm not like that I don't feel the need to pay off my student loans immediately and not be able to take vacations and do fun stuff with it first. DVC goes towards our vacation fund. We did finance it but we paid it off in less then a year. The money we spent on interest was LESS then the money we saved on just one trip down, and we already took 2 and have the third booked so no that wasn't a waste either.

The car if paid off first will be paid off in 10 months at most since as I said $700 is a conservative estimate of how much we have to pay these off in a month based on DH getting very few hours at work. So that will probably be faster. I won't be checking in here again as it seems the consensus is the car first even if the interest rate is less. That is all I needed to know.

 

[DVCLiz]

Now did I say I didn't have an emergency fund? You know I can't find that, probably because I actually DO have an emergency fund. I just didn't want to completely drain it to not have to finance the car.

As I said above selling or even renting the DVC isn't going to happen I have at least $700 a month to send to these and that is after my retirement savings, vacation fund, gift budget, and a few other things.

I don't need all this debt to be gone before I do anything else. I guess that was my mistake in coming to this board. As it seems everyone is adverse to having any type of debt. I'm not like that I don't feel the need to pay off my student loans immediately and not be able to take vacations and do fun stuff with it first. DVC goes towards our vacation fund. We did finance it but we paid it off in less then a year. The money we spent on interest was LESS then the money we saved on just one trip down, and we already took 2 and have the third booked so no that wasn't a waste either.

The car if paid off first will be paid off in 10 months at most since as I said $700 is a conservative estimate of how much we have to pay these off in a month based on DH getting very few hours at work. So that will probably be faster. I won't be checking in here again as it seems the consensus is the car first even if the interest rate is less. That is all I needed to know.

Please don't worry about a few posters on a Disney budget board. They are either used to answering questions from people who are in serious, one step away from being homeless but buying consumer goods, financial trouble, or they have a standard line of advice they apply to every single person, no matter what the circumstances are.

Here's the bottom line, pay the car before the student loan.

Here's the other bottom line - you and your husband are only 24 and 26 and already you own DVC, have a financial life that is comfortable enough to allow you to make $700 payments per month easily, and have two college educations to rely on? GOOD FOR YOU!!!!! You are WAAAAAAAYYYYYY ahead of most people your age, and I'd bet a fair number of people much older than you.

You have years and years to make your financial future secure. Good for you for having an emergency fund in place. Go ahead and live your life and enjoy your DVC!!!!!

 

[DVCLiz]

I can deduct the property tax portion of my DVC dues and do so each year. I don't know if that is federal or state, but my accountant does it every year.

 

[JoiseyMom]

Please don't worry about a few posters on a Disney budget board. They are either used to answering questions from people who are in serious, one step away from being homeless but buying consumer goods, financial trouble, or they have a standard line of advice they apply to every single person, no matter what the circumstances are.

Here's the bottom line, pay the car before the student loan.

Here's the other bottom line - you and your husband are only 24 and 26 and already you own DVC, have a financial life that is comfortable enough to allow you to make $700 payments per month easily, and have two college educations to rely on? GOOD FOR YOU!!!!! You are WAAAAAAAYYYYYY ahead of most people your age, and I'd bet a fair number of people much older than you.

You have years and years to make your financial future secure. Good for you for having an emergency fund in place. Go ahead and live your life and enjoy your DVC!!!!!

 

[DVCLiz]

Thanks for the support, JoiseyMom!! I have a young adult post-college grad in her first job and I spend a lot of time talking to her and helping her (at her request) think through the various savings she should have in place, goals to save for, etc. She is just starting out and she has a nice emergency fund saved up. When she recently had a job change she said, "Mom, I'm so glad you helped me understand about having savings - if I didn't know I could afford to take my time and really look for my next job I would be in a panic. Most of my friends don't have any savings."

So I understand the typical person that age as DD22 has many friends who are still in the live paycheck to paycheck or count on mom and dad mindset.

To see a young couple saving and planning, even if they dared to buy and finance something fun, is very encouraging to me and I say good for them!!!!

 

[JoiseyMom]

Thanks for the support, JoiseyMom!! I have a young adult post-college grad in her first job and I spend a lot of time talking to her and helping her (at her request) think through the various savings she should have in place, goals to save for, etc. She is just starting out and she has a nice emergency fund saved up. When she recently had a job change she said, "Mom, I'm so glad you helped me understand about having savings - if I didn't know I could afford to take my time and really look for my next job I would be in a panic. Most of my friends don't have any savings."

So I understand the typical person that age as DD22 has many friends who are still in the live paycheck to paycheck or count on mom and dad mindset.

To see a young couple saving and planning, even if they dared to buy and finance something fun, is very encouraging to me and I say good for them!!!!

Yup, I agree with you. I have 2 young adult sons (in their mid 20's). They are both doing very financially, especially the single one!

 

[arthur06]

I just finished paying off DVC and then my car died. We weren't planning to replace it for a few more months.

Well I got another car so I have a bit over $7000 in a loan. However the interest rate is only 4.99%.

I also have student loans for my husband and I.
My husband has around $4000 at 5.75%
Then I have 2 loans:
$15800 at 6.8%
$5500 at 2%

I would pay your husbands student loan first. It's the smallest of all the loans, so it can be paid of the fastest. After that I would go for the car. The $5,500 student loan at 2% is the last I would worry about, but if I read correctly it is in deference.

Also, since you can deduct student loan interest, do you itemize on your taxes. Many times you will find that if you don't owe on a house, you can't always beat the standard deduction. If you are not itemizing, I don't think it is in your best interest to hold out for the tax credit on student loan interest. Others are more familiar with the tax situations than I am though.

Also, I would not sell the DVC.