Feb 12, 2018
#116: Stacy and her boyfriend would like to downsize to one
vehicle. But they're collectively $14,500 underwater on their car
loans.
Stacy owes $11,000 on her car, but its trade-in value is $7,200.
She's paying a 12.74% interest rate and her payoff date is
2021.
Her boyfriend is in worse shape. He owes $18,500 on his vehicle,
but its trade-in value is $7,800. He's paying a 21.5%
interest rate and his payoff date is 2022.
Theoretically, they could sell Stacy's car to a private party, and
she could pay off the rest of her loan. But the
boyfriend's car is not in great shape, and probably won't
survive for the next couple of years. And neither of them have
found better refinancing deals.
What should Stacy and her boyfriend do?
_____
Rachel earns $65,000 per year. She’s 27 years old, contributes 20
percent to her retirement account, and holds $5,000 in
savings.
She owes $19,000 on a car loan, at a 4 percent interest rate,
and $170,000 on student loans, all with different interest rates,
but the highest at 7.9 percent.
She’s hesitant to consolidate her student loans, because she’s
currently on a government plan that gives her flexibility, and she
doesn’t want to switch into a plan that requires her to make a
fixed monthly payment.
She’d like to know if she should use her savings to invest, or
repay her loans.
_____
Misty is 40 and has no retirement savings. She lives overseas and
is able to save about $20,000 per year. She plans on living
overseas for a couple more years before returning to the United
States.
Her employer doesn’t offer any retirement benefits or match, and
her health insurance accounts are not HSA eligible.
She’d like to contribute to index funds. Is this a good strategy?
Does the fact that she lives overseas change her
considerations?
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Nicole is from New York and is living in Abu Dhabi. She’s been
living there for three-and-a-half years and makes good money. She’s
repaid her student loans and has a lot of cash saved. She’s
single.
She wants to become financially independent. What should she start
doing now?
_____
Karen is 32 and lives in Los Angeles. Her take-home pay is $4,300
per month. She supports her parents financially, which costs $1,200
per month; she also lives with them.
She paid off $60,000 in student loans in 5 years. She’s has $100k
in a high-yield savings account and $100k in 403b. She holds $12k
in student loan debt from graduate school.
She wants to make 20 percent downpayment on a home with the cash
that she’s saved. She’d like to live there, but also have the
potential to rent out this home if, at any point, she decides she
doesn’t want the burden of a mortgage anymore. She’d like to keep
her mortgage to $2,000 per month.
Given that the housing market is so high, should she buy a home? Or
should she wait for a market crash and keep saving in the
meantime?
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Former financial advisor Joe Saul-Sehy and I tackle these questions
in this episode. Enjoy!
For more information, visit the show notes at http://affordanything.com/episode116