Financial Planners: What shoudl I do with $500.00 extra cash per month?
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Financial Planners: I have the following...
28 years old.
Car note: 13,000 @ 6.15%
Student Loans 33,000@ 3.5%
Mortgage 87,000 @ 5.25%
10,000 in 401K at Money Market Interest Rate
No savings account.
I have about $500.00 per month unacounted for (even after my monthly allowance for discretionary spending and monthly allotments for emergency car or home repairs). What would you advise me to do, pay towards one of the above mentioned debts or start a savings account? Which one and why. Thanks.
Financial Planners: What shoudl I do with $500.00 extra cash per month?I believe that you need to pack that savings account. That is not extra cash! It's self-preservation. You need to put that $500 a month into your savings until you have saved enough to have one years worth of expenses covered, in case of unpredictable disaster. This is a very basic element of financial stability.
After that, pay off your car note, which has the highest interest rate. Student loans have the lowest interest rate, so keep paying on that over time -it's great for your credit rating. Next, every year be sure to put as much as is allowed into your 401K.
With your financial security in mind, pay ahead on the principal of your mortgage, if allowed. That makes a big impact on how much you owe on it, and how quickly you can pay it off. What I have said so far is straight from the lips of Suze Orman. You can find her on line at: http://www.suzeorman.com
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