some quick back ground:

I recently sold my shares in a company I started to accept a great position with a large company.

It was a cross country move for me and my family. Once my property sells back where I left I will be in a position to pay off almost all of my debt right away, and be able to pay the rest within 1.5 years with the new pay scale.

That being said, here is my hang up:

I have about the same amount of debt in a vehicle loan @ 0% as I do in a student loan @ about 6%. Cash flow is a bit of a concern at least initially while we settle into our new home.

The payment on the vehicle is $645/month and the student loans are $225/mo. The other thing to consider is the vehicle is far beyond what I need now and I have about $8500 in equity in it (but i kind of love the vehicle lol)

I am looking for some opinions on which loan i should satisfy now and which one I should wait to pay until 2017. or if I should dump the vehicle and regroup?


1 Answer 1


My two cents: focus on future cash flow. Paying down the interest-bearing debt will decrease future hits on your net worth. Paying down the zero-interest debt will improve your cash flow. So if you have $15K @ 5% and $15K @ 0%, paying down the fixed-rate debt means less interest in the future. Paying down the 0% debt means greater cash flow in the future. The convenience of owning a car should be weighed against the hits on future cash flow from renting/cab/uber costs. Hope this helps.

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