strategy for last 18 months?

[albireo13]

I'm 61o and planning to retire in mid-2019 so, I'm looking at the last 18 months.
We still have some short term debt (0%) and I go back and forth between going all out to clear these or maxing out retirement savings.
Some of the debt (car loan, furniture loan) are 0% so, haven't been in a rush.

What do you think?

 

[joeea]

I think you have no need to hurry to pay off 0% debt.

 

[bingybear]

financially you likely have no need to pay it off early if you are going to save /invest the $ anyway. However, if you would don't feel comfortable with debt, then pay it off. It is better to be able to sleep at night.

 

[OHjosh]

Emotionally, I am a nut about having no debt. But my logical mind says it doesn't make sense for me to rush to pay it off at a 3.25% interest rate. (not considering tax deduction). My minds compromised at paying it off no more than $3,000 a year.

 

[RunningBum]

I agree it's nice to be able to sleep at night, but IMO you should be able to think logically and be extremely secure knowing you've got the funds on hand able to pay those 0% or very low % loans off. This isn't a friend who loaned you money interest free as a favor, it's a business that gave you a low rate to sell their product.

 

[UnrealizedPotential]

I will offer you another alternative. You could pay the car loan and furniture off first, and then whatever time you have left up until retirement you could invest. Financially it might not make sense because of the rate, but psychologically knowing you have no debt going to the finish line could pay big dividends. Take away whatever stress is there first . Just a thought.

But since you seem to have low stress it makes sense to just invest and don't worry about it.

 

[Aerides]

If it's Max Retirement Savings... OR .. pay off debt, then max Ret first. (given you mention very low or no interest). I'm assuming you mean your 401k annual caps when you say "max" so at least get that in before the payoffs. Once you've done at least that, I'd personally then clear debts before adding to after-tax savings, just for housekeeping.

 

[Meadbh]

Some of the debt (car loan, furniture loan) are 0% so, haven't been in a rush.

Here’s what I think. There is no financial reason to repay an interest free loan early. (Unless there’s a balloon payment looming). Assuming that you use the money outstanding on the interest free loan to invest with a positive return, you are ahead. Just make sure that you account for the regular loan payment in your expenses. When the loan has been paid back in full, you will get a nice “raise” in disposable income!

I had this exact situation when I retired, except that it was a car loan at 0.99% APR.

 

[Honeyfill]

Obviously, make sure you know the end date of the 0% financing deals and schedule to pay them off before then. for example, if your CC debt goes from 0% to 23% at the end of the promotional offer. 2nd, you can compromise by paying extra each month on the other loans, but still investing each month. That way , you get the psychological satisfaction of paying down ahead of schedule and you still get to invest quite a bit in the interim. How fast you pay them down, can vary from month to month depending on your cash flow and mood.

 

[joylesshusband]

This isn't a friend who loaned you money interest free as a favor, it's a business that gave you a low rate to sell their product.

//snip

And what is the difference?

 

[OldShooter]

... or maxing out retirement savings. ... /QUOTE]What I think is that these are the most important words in the post. No brainer. Max out retirement savings as long as you can do it.

 

[RunningBum]

Originally Posted by RunningBum
This isn't a friend who loaned you money interest free as a favor, it's a business that gave you a low rate to sell their product.

//snip

And what is the difference?

If a friend loaned me money, I'd feel very obliged to repay it as soon as possible. I certainly wouldn't be investing it to squeeze out a little more money while they were getting nothing. I would have trouble sleeping if I did this.

If a business gave me a 0% rate on a car or some other product, they're probably doing it to sell me a slower-moving product, or not giving me the best discount. They certainly didn't give it to me out of the goodness of their heart to tide me through.