What should I pay off first--HELOC or Car Loan?

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TheLethargicAge
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What should I pay off first--HELOC or Car Loan?

Postby TheLethargicAge » Sat Jun 15, 2013 9:32 pm

HELOC
Balance: $22.8K at 3.4%, with $200 monthly payment

Car Loan
Balance: $10.5K at 3.38%, with $284 monthly payment

I can have the loan paid off by late December by adding $1400 to my monthly payment (or by late October by paying $6.4K once, but I'd wipe out my meager savings).  What should I do?

PS: Did I mention it's my ex-wife's car?
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djrez4
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Postby djrez4 » Sun Jun 16, 2013 8:23 am

Are you court-ordered to pay for her car?
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TheLethargicAge
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Postby TheLethargicAge » Sun Jun 16, 2013 9:55 am

djrez4 wrote:Are you court-ordered to pay for her car?


Actually, I'm not, but it's on my credit.
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Postby MemberSince99 » Sun Jun 16, 2013 10:05 am

TheLethargicAge wrote:Actually, I'm not, but it's on my credit.


That sucks. Lesson in life learned.

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Postby TheLethargicAge » Sun Jun 16, 2013 11:08 am

MemberSince99 wrote:That sucks. Lesson in life learned.


Yup. She uses it to take our daughter to school. If it wasn't for that, I would've had it towed from her house a long time ago. I'm just thinking of putting it under her name since she's gonna keep it (I don't want to be liable in case she kills someone with it).
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Postby rockyrock » Mon Jun 17, 2013 4:57 am

I'm all for paying off loans early, it makes you feel good. Some numbers guy will look at it and say you're only getting 0.25% for your savings while you are paying 3.4% for this loan...blah, blah, blah. Many don't realize the importance of a savings account until it's too late. We are told to keep 6-12 months’ salary in savings but to be honest, not many can do this. Still having a $5k in savings just in case is a real smart idea. So as much as you want to get out from under those loans, the better idea may be to hold onto your savings for now. Now, adding to the payment each month without dipping into your savings is a great idea.

No matter what you do though, get that car out of your name.
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Postby MemberSince99 » Mon Jun 17, 2013 5:52 am

In these times, it's almost smart to keep 2 or 3 years salary in savings in case you lose your job. It might take you that long to get another one. Of course if it takes you longer than about 6 months, you will be labelled a loser and blamed for it and no one will hire you anyway so maybe then it's kind of a moot point, it's just longer that you are saved from being homeless. But few of us can afford to do even 6 months as you mentioned.

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Postby Daniel » Mon Jun 17, 2013 11:00 am

MemberSince99 wrote:In these times, it's almost smart to keep 2 or 3 years salary in savings in case you lose your job. It might take you that long to get another one. Of course if it takes you longer than about 6 months, you will be labelled a loser and blamed for it and no one will hire you anyway so maybe then it's kind of a moot point, it's just longer that you are saved from being homeless. But few of us can afford to do even 6 months as you mentioned.


As much as I think you are right about companies tending to discriminate against the currently unemployed, I do think this is a little morbid haha. +1 for candidness here may be deserved :) For real though, I know we human beings are bad at saving past a certain amount(myself included), but if one is disciplined enough to save 1 month's salary/wages, it should be possible to set a goal to save another month's salary. When you get there you could even say this next month I save nothing and spend what I would have saved this month as a reward. [/rant] I was totally off topic there.

Back On Topic:
With regards to what I personally would pay down first, in my opinion it comes down to what I would prefer to lose in the event I can only pay one of the two loans, my house, or a car. But that is just my opinion and it should be taken with a grain of salt :)

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Postby djrez4 » Mon Jun 17, 2013 3:56 pm

I guess I'm approaching this from left field -

It sounds like the separation agreement doesn't say you have to pay for the car. Make her take title and refinance it in her name only. Go to court if you have to. Then, you don't have to choose between the car and the HELOC.
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Daniel
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Postby Daniel » Mon Jun 17, 2013 7:30 pm

djrez4 wrote:I guess I'm approaching this from left field -

It sounds like the separation agreement doesn't say you have to pay for the car. Make her take title and refinance it in her name only. Go to court if you have to. Then, you don't have to choose between the car and the HELOC.


I like how you approach things logically. Here is a question I think is somewhat funny, what is a higher cost, Auto Loan or Court+Legal Fees :)



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