Early this month I had a different plan of how to reduce my debt. Research after research I was overwhelmed with ideas and how to’s. Pay that mortgage early or pay it slow! Buy a car with cash, avoid the loan! Interest rates are low, take a loan and build credit… you get the idea. I do want to get rid of debt, but I also don’t want to drive myself up the wall and eat dry ramen noodles all day. I prioritized and this is my game plan.
Do I like owing money? No
Does it help my credit? Yes
Case for mortgage – keep making regular payments
I found an ability to move and rent it my townhouse. Now I live with my boyfriend splitting the rent. Being a first-time landlord I managed to find great tenants and after all house and renting expenses I have some passive income coming my way. As a bonus it lets me build my credit history.
Case for car loan – make extra payments
Last years unexpected death of my car pushed me into a car loan and additional parents loan. My choice fell on used Subaru Legacy. It’s 4WD( winters are brutal here) it will run for years and has a good trade in value if I ever want to sell it. Although the interest rate is low due to shorter loan period of 42 months, I plan on making extra payments. If my math is right it will be 6 months sooner than expected.
Case for education – save, save and save
This one is simple. I don’t want another loan, especially school loan. Savings, scholarships, grants, side hustle and whatever else I can do to graduate with zero debt.
Case for parents loan – give back ASAP
I was able to borrow $5,000 from parents in 2015 and $6,000 last year. That is the loan I hate to have the most. I’m grateful for it and I want to give it back to them ASAP.
Mortgage aside I will concentrate on paying off the car, saving for school and left over will go to paying back parents. I’m still in the making for the perfect plan, but it’s a good start.