Ok I have been alluding to this post for a bit and I would like some of your comments/ideas about how you might handle this situation. As I have been on this financial independence journey I have shared with you how much debt that I have. I have not shared Mrs. ROB’s debts because she has asked me not too and I want to respect her wishes. However, I have no problem putting my stupidity out for the entire world to see because if it deters one person from taking out massive student loans or going into debt or inspire someone to pay it off quickly than this is well worth it.
Here is my conundrum. I have three major debts: a mortgage, student loans, and a personal loan I call my second mortgage. I have very low-interest rates on each one (mortgage–3.75%, student loans–4.5%, personal loan–2.39%). I have made no bones about the fact that I would like all of this debt gone as soon as possible. In my opinion there is no such thing as good debt. So I want this gone like tomorrow, but I realize that the mortgage and student loans will be around for a bit.
Yet I only have as of this writing only $10,995 left on my personal loan/second mortgage. You can read about this debt in this post. One of my financial goals for 2016 is pay it off and be done with it. My goal is the end of the year, but I have received a challenge from Even Steven Money about paying it off before my birthday in August. I think it is definitely doable. I mean I started this year with this debt at over $27000 and paid off $16000 of it in one year.
I would even like this debt gone sooner and this is my dilemma (actually two). If I want this debt gone sooner like by the end of the Spring semester I could suspend some of my retirement contributions and accelerate the process. I would only suspend them for up to six months, but I would pay the debt off in a faster period of time, but not saving as much for retirement.
I am going to be teaching an extra course during the spring semester, along with some help from Mrs. ROB, and I think I could have it paid off by the end of May. WOO HOO Right.
Well then there are two issues. First, I am giving up retirement savings for almost six months. Not all of it because I am mandated to save at a certain level so I don’t have a choice there, but I go above and beyond that. So I would lose those savings.
Secondly, should I even worry about this debt at all. I hate debt, but I am also not stupid when it comes to math. No matter what this debt will be paid within three years that is when the loan is due. If I reduce my payments I could save even more money into retirement and get more out of my money. I could invest more and get a better return. I mean my loan is at 2.39%. I mean that is inflation basically. It is REALLY cheap. I could add another $3-5000 to my investment portfolio per year if I just go down to a “normal” payment.
That would mean this debt is around for much longer, but it might pay off in the long-run. I still hate debt mind you, but I am getting to the point where making my money work harder is perhaps more important.
So I need your financial advice. What do you think I should do? Please comment it would be greatly appreciated.