Just wanted some advice recently I bought a 24 Camry for $28k at a 7% interest rate,personally I think that rate is death but others have told me it’s not bad for being a first time car buyer. Anyways my note monthly is $490 + insurance which is $269. So my question for you all is should I stay putting the base match for my TSP, and contribute 10-15% of my take home into my Roth IRA with Charles schwab, or should I lower those contributions for the time being and try to pay a higher note?
I’m an E3 in the dorms still and have no other debt, also I have established my credit since I was 18 (now 21). Obviously it’s not from paying down debt but at least I have some history. I’m hoping to refi later on and by then I should have around a 750+ score.
Anyways I’ll be out of the dorms in roughly 9-10 months and I am hoping to purchase a home with my buddy to split living cost so I’m not sure if I should pay more on the car for when that time comes too. I have saved an “emergency fund” which is mainly catered to the new car if I was able to make payments for car note/insurance for a few months. I’m just kinda confused as I know people say pay off “high interest debt” first then contribute to other things but in this case where YTDboth my TSP/Roth IRA have earned a higher return than my only debt, so is it worth paying more on the debt?
Pay off car loan vs contributing to TSP.
byu/Kind_Buy3564 inMilitaryFinance
Posted by Kind_Buy3564
1 Comment
7% is in the grey area where you likely can beat it long term but there is risk. Given your age and lower income early in career loading up Roth might be the way to go. Paying off 7% loan isnt bad idea either but only if you invest the extra cashflow once its paid off.
More importantly, dont buy a house w your friend, especially first property and primary residence. One of you buy and the other pay rent. Later once more experienced w real estate and solid financial footing you might consider a partnership agreement to buy investment property but even that brings a lot of risk. There is so much that can go wrong and leave you holding the bag w costly legal fight your only recourse if partnership goes awry. Add to that youre both young, first property, not local to area can be moved quickly at whim of the Army it’s a bad idea risk outweighs reward.