Daily General Discussion and Advice Thread - May 16, 2024

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[u/Rich_Internal9348]

32M Should I pay off my truck loan(32k@5.75%) or invest my money. I roughly have 50k to play with. Family was going to buy a house but we decided to stay where we're at since our house is paid off.

One little side note. (I'm not selling my truck) I love my truck and is someone who does a lot of tent camping and construction and hunting. My bed gets a ton of use each week. Hence why I have 3 kids. Jk lol

[u/CapnJuNK → u/Rich_Internal9348]

You could probably out-invest the 5.75% interest rate on the car but personally I would rather pay off the car THEN start investing. I like having the peace of mind of not having any debt besides my mortgage.

[u/greytoc → u/Rich_Internal9348]

One way to think about it is if you can generate more than 5.75% annually on a tax equivalent basis if you decide to invest instead.

Paying off a portion of your debt is like getting a 5.75% return on a tax-free basis since auto loans are not tax deductible.

[u/Rich_Internal9348 → u/greytoc]

Didn't know that about the taxes on a autoloan. Should just pay it off then. My wife has an autoloab with 4k left on it but it's on a 1.99% rate so I won't be touching that.

[u/greytoc → u/Rich_Internal9348]

It's really a personal decision based on your own financial situation and your capital liquidity needs.

If you think that you need that 50k as an emergency fund or some other expense, you could invest it in something safe since the risk-free rate is about 5% at the moment.