[gilberjj]

This is more of philosophical question. The interest in question isn't a big deal, as you've stated. The implications are a big deal though. How will you choose to live your life? Some people are always in debt and think of it as some advantage that they hold over the banks and they'll somehow win in the end.
I think you'll find that most people who are older will recommend that you pay your car off and avoid debt. I have no debt other than my mortgage and I don't think I'll ever borrow again. Will 1.9% interest be a major burden? No. But it's undeniable that if you live debt free, and invest for your future, you'll retire wealthy. It works. It's always worked. So I giggle into my coffee when I overhear coworkers talking about their leases, credit card points, HELOCs... etc. They do so much gyration, but I seriously doubt it's effectiveness long term.
If you couldn't tell, I'm a Dave Ramsey truther.

[gilberjj]

Originally Posted by FuturPhil

I totally agree. With such a low interest rate and the fact that the payment is pretty much nothing to begin with. I would keep the loan and use your money elsewhere such as investments (stocks, bonds, real estate). And as you said, you will also be helping your credit score potentially.

Debt is good, in fact its one of the best products out there if used correctly so debt shouldn't be viewed as a bad thing. Go ask any rich man/woman and most probably leverage debt or used it to get rich.

That is a common misconception. Most rich people have used leverage for a mortgage, but not much more than that. In fact, recent studies about American millionaires found quite the opposite. See the books "The Millionaire Next Door" and "Baby Steps Millionaires."
The TOP 5 more likely careers for American millionaires: https://www.ramseysolutions.com/reti...aires-research
1.) Engineer
2.) Accountant
3.) Teacher
4.) Management
5.) Attorney

I think this alone proves that becoming wealthy is about habits, not about making a ton of money or using some fancy debt scheme. TEACHERS are number 3 on this list!

[Mosaud1998]

F it. I'm gonna pay it off in 1.5 year-2 years and call it a day. My balance in a year is going to be $5,000~.

[zx10guy]

Originally Posted by gilberjj

This is more of philosophical question. The interest in question isn't a big deal, as you've stated. The implications are a big deal though. How will you choose to live your life? Some people are always in debt and think of it as some advantage that they hold over the banks and they'll somehow win in the end.
I think you'll find that most people who are older will recommend that you pay your car off and avoid debt. I have no debt other than my mortgage and I don't think I'll ever borrow again. Will 1.9% interest be a major burden? No. But it's undeniable that if you live debt free, and invest for your future, you'll retire wealthy. It works. It's always worked. So I giggle into my coffee when I overhear coworkers talking about their leases, credit card points, HELOCs... etc. They do so much gyration, but I seriously doubt it's effectiveness long term.
If you couldn't tell, I'm a Dave Ramsey truther.

Originally Posted by gilberjj

That is a common misconception. Most rich people have used leverage for a mortgage, but not much more than that. In fact, recent studies about American millionaires found quite the opposite. See the books "The Millionaire Next Door" and "Baby Steps Millionaires."
The TOP 5 more likely careers for American millionaires: https://www.ramseysolutions.com/reti...aires-research
1.) Engineer
2.) Accountant
3.) Teacher
4.) Management
5.) Attorney

I think this alone proves that becoming wealthy is about habits, not about making a ton of money or using some fancy debt scheme. TEACHERS are number 3 on this list!

Using debt is like any tool. If used properly, it can be very beneficial. When used improperly can cause lots of harm.

I watch Ramsay partly to see how he views certain things and partly for the entertainment value. There are some things I agree with him on and there are things I totally disagree with him. He assumes many people are total blithering idiots with debt and can't control themselves. So his blanket no debt rule is many times causing people to leave money on the table.

He also incorrectly and never really discusses properly the time value of being in the market and compounding. Time in the market is what wins.

The better people I've found out there are the guys that do "The Money Guy Show" and Jaspreet Singh of the "Minority Mindset". Those two channels provide a very balanced and educated discussion on money management.

[gilberjj]

Originally Posted by zx10guy

Using debt is like any tool. If used properly, it can be very beneficial. When used improperly can cause lots of harm.

I watch Ramsay partly to see how he views certain things and partly for the entertainment value. There are some things I agree with him on and there are things I totally disagree with him. He assumes many people are total blithering idiots with debt and can't control themselves. So his blanket no debt rule is many times causing people to leave money on the table.

He also incorrectly and never really discusses properly the time value of being in the market and compounding. Time in the market is what wins.

The better people I've found out there are the guys that do "The Money Guy Show" and Jaspreet Singh of the "Minority Mindset". Those two channels provide a very balanced and educated discussion on money management.

Agreed, Ramsey is a black and white type of advice guy. I have a credit card but I've never had a balance. Ramsey has to have blanket advise because he knows that most people won't have the discipline to keep that zero balance. I still follow almost all of his advise though, because if you follow his plan, you'll end up wealthy every time.

[zx10guy]

Originally Posted by gilberjj

Agreed, Ramsey is a black and white type of advice guy. I have a credit card but I've never had a balance. Ramsey has to have blanket advise because he knows that most people won't have the discipline to keep that zero balance. I still follow almost all of his advise though, because if you follow his plan, you'll end up wealthy every time.

Which is my issue with him. It's not his place to provide blanket advise. He should be providing the right/appropriate information in a manner a person understands the various benefits, risks, and downfalls for themselves. His staunch push for paying off your home quickly and then investing is to me ridiculous advice. I'd say a good chunk of what he says will drive me into poverty and not being a millionaire I've done and I'm doing very well.

As I said the Money Guy Show and Minority Mindset provides much better advice with detailed explanations backing up their assertions to include working out the numbers so you can verify them for yourself.

[FuturPhil]

Originally Posted by gilberjj

That is a common misconception. Most rich people have used leverage for a mortgage, but not much more than that. In fact, recent studies about American millionaires found quite the opposite. See the books "The Millionaire Next Door" and "Baby Steps Millionaires."
The TOP 5 more likely careers for American millionaires: https://www.ramseysolutions.com/reti...aires-research
1.) Engineer
2.) Accountant
3.) Teacher
4.) Management
5.) Attorney

I think this alone proves that becoming wealthy is about habits, not about making a ton of money or using some fancy debt scheme. TEACHERS are number 3 on this list!

I agree. Debt doesn't simply make you rich and habits are definitely more important. You can make 250k a year and I can make 100k and be richer than you (not that money = happiness or success but that's a whole different topic).

With that said, debt is a great tool when used properly and can help those who are already smart and disciplined. You can and should use it for much more than just a primary mortgage - building a property portfolio for example and taking advantage of cash on cash return, rental/cash flow, appreciation, and tax benefits.

[gilberjj]

Originally Posted by zx10guy

Which is my issue with him. It's not his place to provide blanket advise. He should be providing the right/appropriate information in a manner a person understands the various benefits, risks, and downfalls for themselves. His staunch push for paying off your home quickly and then investing is to me ridiculous advice. I'd say a good chunk of what he says will drive me into poverty and not being a millionaire I've done and I'm doing very well.

As I said the Money Guy Show and Minority Mindset provides much better advice with detailed explanations backing up their assertions to include working out the numbers so you can verify them for yourself.

IDK how you can say that. Dave Ramsey is probably the most successful financial advisor of all time. Literally millions of people have done his system. Yeah, it's a little simple, but it works every single time.
How could aggressively paying off debt and investing at least 15% towards retirement "drive me into poverty?"

[XutvJet]

Originally Posted by Mosaud1998

I think my employer automatically invests in my retirement. I haven't gotten the chance to figure out how to pick my own investments. Been too damn busy

Please don't take this the wrong way, but you'd be very well served to learn investment basics NOW. You're not alone either, especially for someone at your age. Much of this stems from the US general public being told that investing is difficult and complicated and you should hire a financial planner. Total BS. Investing is not hard to do and manage yourself. All it takes a little research and reading.

1) You need to learn the basics like what an employer match is and verify that they are doing it.

2) Learn what a Roth IRA is.

3) Learn about Warren Buffett's 15-minute retirement plan. https://www.fool.com/investing/gener...ment-plan.aspx

4) Learn about expense ratios (i.e., fund management fees) and the huge financial and performance advantage of having a majority of you money in S&P 500 index funds.

5) Read this simple and short book: The Little Book of Common Sense Investing

6) Learn to do your own taxes.

By investing and managing things yourself, your money will work way harder for you than some advisor/planner collecting 1%+ of your portfolio each year for doing next to nothing and significantly stuttering your portfolio's growth, year after year.

I am was where you are at 24. Not until I was in my late 30s did I really figure it all out and take full control of my investments. I'm 48 now and I wish I learned all of this in my mid-20s. I'd be a multi-millionaire now.

[XutvJet]

Originally Posted by gilberjj

Agreed, Ramsey is a black and white type of advice guy. I have a credit card but I've never had a balance. Ramsey has to have blanket advise because he knows that most people won't have the discipline to keep that zero balance. I still follow almost all of his advise though, because if you follow his plan, you'll end up wealthy every time.

Very true and totally agree. His overall point is to live within your means and to be financially prepared to live a long life as most of us will live well into our 70s. The YOLO lifestyle is a terrible choice.

My wife and I put everything on credit cards. The cards are also paid off every month. A true credit card is a great thing so as long as you're disciplined to pay off the balance every month. A credit card gives you full fraud protection and it is essentially free money when it comes to rewards. We typically get 4-5 free round trip flights every year with our Southwest card. You're not getting that with a debit card.

My wife and I also paid off our very modest home 10 years ago (we're 48 now). We were already contributing a good amount to our investments and we wanted to be debt free. It's worked out for us. By freeing up that mortgage money, we never worry about money now.

[zx10guy]

Originally Posted by gilberjj

IDK how you can say that. Dave Ramsey is probably the most successful financial advisor of all time. Literally millions of people have done his system. Yeah, it's a little simple, but it works every single time.
How could aggressively paying off debt and investing at least 15% towards retirement "drive me into poverty?"

Never said he would drive you into poverty. The statement you're referring to is in reference to me. I didn't word it well. I've done quite a few things he says not to do and I'm doing very well. Don't need to get into my personal situation but I'm in the class of people that he says will typically not get there without a paid off home.

Yes, following what he says will help you accumulate some wealth. But I'd venture to say, you'd be better off following the two guys I mentioned and do better than following Ramsey. Again, his "Baby Steps" and philosophy does not account for the power of time and compounding.

[Aus34]

Thanks for information.

[Sedan_Clan]

Originally Posted by Bonk!

I would guess there are two schools of thought here. I, personally, hate debt so I would pay it off. However, that's such a low rate that some would argue you're better off taking that extra $185 a month and investing it, particularly since the market is in decline. This is probably a better long term strategy.

I would pay it off. I plan to pay off the V4 and the commuter Corolla SE just because I want to lower my debt. I still carry some non-CC debt just to remain relevant to credit scoring algorithms.

[OkieSnuffBox]

The rate is well below inflation. Invest the extra and don't worry about paying off the car earlier. This is basic finance stuff.

The "all debt is bad, Dave Ramsey" is to help him sell books.

[terrybraswell]

Originally Posted by FuturPhil

I agree. Debt doesn't simply make you rich and habits are definitely more important. You can make 250k a year and I can make 100k and be richer than you (not that money = happiness or success but that's a whole different topic).

With that said, debt is a great tool when used properly and can help those who are already smart and disciplined. I use https://triceloans.com/100-dollar-loan/ for financial information and when to get financial help fast. You can and should use it for much more than just a primary mortgage - building a property portfolio for example and taking advantage of cash on cash return, rental/cash flow, appreciation, and tax benefits.

Possibly duty and may be a teacher. But without basic financial literacy, you just won't know what to do with it.