"You just keep on trying until you run out of cake"
Unlike Ben, who likes to invest in fruit, I've been "reverse investing" in my debt. Which, right now, is Rachel's car, my Civic and my student loans. Rachel's car is giving the biggest payout. With every dollar I pay early, I "earn" about 7.9% a year. The civic is next, around 6%. And the student loans are the worst with about a 4% rate (that could fall to 3.5% by summer).
My NPV= -$2,000. My goal is to have a NPV>$0 by the end of the year. And then, in 18 months, to have all debts paid off, some cash, maybe some real estate assets and thus a much greater NPV.
Unfortunately, that's a year-and-a-half away. And right now most of my assets are in automobiles. Which is pretty much like saying I have all of my money in fruit. Sure, they have value and I could cash them out. But every day I don't they decrease in value until, eventually, they're worthless.
But that's something to worry about later. And, anyway, I'm planning on keeping both cars until they die. Considering that the Saturn has less than 60,000 miles and the Civic less than 30,000 miles, that shouldn't be anytime soon.
(My NPV is also skewed. It doesn't include any of my "things." CDs, DVDs, Wiis. I could probably clear another couple thousand dollars if I sold all of that. But it's unlikely that I would anytime soon. So I'm not including it. And I digress.)
My NPV= -$2,000. My goal is to have a NPV>$0 by the end of the year. And then, in 18 months, to have all debts paid off, some cash, maybe some real estate assets and thus a much greater NPV.
Unfortunately, that's a year-and-a-half away. And right now most of my assets are in automobiles. Which is pretty much like saying I have all of my money in fruit. Sure, they have value and I could cash them out. But every day I don't they decrease in value until, eventually, they're worthless.
But that's something to worry about later. And, anyway, I'm planning on keeping both cars until they die. Considering that the Saturn has less than 60,000 miles and the Civic less than 30,000 miles, that shouldn't be anytime soon.
(My NPV is also skewed. It doesn't include any of my "things." CDs, DVDs, Wiis. I could probably clear another couple thousand dollars if I sold all of that. But it's unlikely that I would anytime soon. So I'm not including it. And I digress.)
Labels: Mark
posted by M S Martinez at 11/21/2007 09:26:00 AM
2 Comments:
Very smart, Mark. But are you sure it makes the most sense to make the principal payments on your student loans? Since you can write off the interest on those, it probably makes more sense to put all your cash toward the cars. And once those are paid off, you might as well just keep making the payments on your student loans and put that cash into something that will grow. No?
That's true. But the savings would be insignificant enough to really not make any difference. I pay out about $480 in interest on the student loan a year, which would net me around a $120 tax savings each year. So while I could start building on that $120, I'd much rather be debt free and then put all of my money into something focused.
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