(Closed) pay down mortgage or student loans?

posted 7 years ago in Married Life
  • poll: Which should we pay down first?
    mortgage : (18 votes)
    19 %
    student loans : (67 votes)
    72 %
    neither, put it in savings (even at lower interest rate) : (8 votes)
    9 %
  • Post # 3
    Member
    610 posts
    Busy bee
    • Wedding: May 2011

    Why don’t you do a combined loan with the mortgage and student loan and that way it gets paid down together?

    Just a thought.  🙂

    Post # 4
    Hostess
    18643 posts
    Honey Beekeeper
    • Wedding: June 2009

    Student loans.  There is basically no way that you can get rid of them if something were to happen but if worse comes to worst, you can have the home foreclosed on.  Are you planning on staying in this home for a long time?  If you aren’t planning on staying for a while, it might not even be worth paying it down.

    Post # 5
    Member
    1014 posts
    Bumble bee
    • Wedding: May 2011

    IMO, I think you should do all of the above!  You need to have an emergency fund, and you need to start saving for retirement, immediately if you’re not doing so already.  I would put some cash every month toward savings/retirement, then put an equal amount towards paying down both your student loans, and your mortgage.  You mentioned having PMI, and paying down your loan so you can get rid of that will save you a lot long term.

    Post # 6
    Member
    6892 posts
    Busy Beekeeper
    • Wedding: March 2012

    I’d say student loans for the same reasoning you used – they’ll be done faster. Then you’ll only have one big thing to deal with. Also, like @MissAsB: said, you can’t get rid of student loans unless you do some sort of government writeoff program (i.e. work for them) and I’d imagine if you had that option you would already have done it. I’m sure he’s looking at the house as the “bigger picture” but really, the only one that can FOLLOW you anywhere is the students loans if you don’t lose value in your house.

    Post # 7
    Member
    3255 posts
    Sugar bee
    • Wedding: October 2011

     I would focus on whichever has the higher interest rate because that will accrue more fees in the long run. I would vote to take care of the loans and the mortgage rather than put the money away…

    Post # 8
    Member
    4824 posts
    Honey bee

    @MrsSaltWaterTaffy: I agree with this…

    What do you mean you will lose money if you sell it? Are you underwater? In which case you will lose money no matter how much you have paid into it. (or not be able to sell it unless a short sale is approved)

    Also dont forget interest on a mortgage is tax deductible so its not as high as it seems in “real” terms. You get something for it technically.

    EDIT- wait is this excess money? Savings… definately.

    Post # 10
    Hostess
    18643 posts
    Honey Beekeeper
    • Wedding: June 2009

    I forgot to mention that you should also try to put some money into savings in case something happens.  The amount really depends your own situation, my husband and I don’t have a ton of money in emergency savings because his job is pretty secure and we have investments we can sell if needed.  Also, try to start funding your retirement as soon as you can!

    Post # 11
    Member
    13099 posts
    Honey Beekeeper
    • Wedding: July 2010

    Student loans – for all of the reasons the PPs have stated.

    Post # 12
    Member
    853 posts
    Busy bee
    • Wedding: May 2011

    I agree with you on paying down your student loans first. I was watching a financial advisor on CNN when I was trying to strategize paying down my credit cards; his advice was to pay off the smallest amount first, then use the money you save from that toward paying the higher amount off. Like if you had 3 cards, one with a 200 balance, one with a 1k balance, and the other with a 3k balance, pay off the 200 first. Then, that extra $35 you save each month from not having to pay the $200 card off, you should put toward the card with the 1k balance to pay that down faster. Once you pay that down, take the money you would normally be putting toward that toward the 3k balance to pay that down faster. So it’s like a rollover effect. I used it that strategy, and it worked!

    Post # 14
    Member
    1876 posts
    Buzzing bee
    • Wedding: October 2014

    I too would say student loans.

    But also – considering investing. You could definetly make more than 5% over the long term with stable investments. I know investing scares a lot of people, but if you do stable investments you’ll be fine. I’d say split it up. Put some towards the loans and then invest the rest. This way you have it on hand incase an emergency arrises. But more importantly – it’ll earn good interest. I put some money into the QLD and SSO, pretty much the most basic stable investments you can make, and my money has increased by 50%. I’m not a stock trader (my fi is haha) but just my 2 cents. Look into it!

    Post # 15
    Member
    4824 posts
    Honey bee

    @marjojo: I am still confused on the losing money piece

    If you have paid 50K on a 100K loan and sell the house for 75K, you still own the bank 25K,  

    If you sell the house for 25K, you still own the bank 75K…

    If you sell it for 125K you owe the bank 50K left on your loan and you make 25K

    either way you owe the bank 100K.  

    the only way you “make” money is if you sell if for more than 100K.

    So I am clear, you think its not a large chance, but a chance that you will sell it less than your total loan on the house? and that is where you are afraid you will lose money?  You owe the bank no matter how much equity you have in it.

    Post # 16
    Member
    1129 posts
    Bumble bee

    @bunnyfoofoo: Ah yes.  Snowballing.  It’s a great strategy!  Google for Dave Ramsey and Snowball for more info.

    As for the OP, I’m voting also for student loans.  They can’t garnish your wages for a house – but you can be darn sure the government will come after you for that money regardless.

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