Pay off debt or keep saving

Submitted by Stinks23 t3_z7h9oh in personalfinance

My wife and are in the fortunate positions of being able to save around $7k/month. Due to just moving our saving are lower than normal but we have just enough to pay off our auto loans which are currently about $64k and cost ~$1k/month for both cars. We are currently contemplating using our saving the pay off the cars. Would you keep saving or use all of our current savings and free up the extra $1k so we can get closer to saving $8k/month? Rate is 3.25%

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InteriorAttack t1_iy6l7fn wrote

I would be in no rush to pay off 3.25% debt. Use the money to invest

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techietraveller84 t1_iy6mbli wrote

The real question is "Can you find investment opportunities that return better than 3.25%?" Yes, that is not hard. I wouldn't save, I would invest. The market is likely to go down a bit more, but many think it will start to creep up in the next 6 months. It is a good time to start watching the market.

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TyrconnellFL t1_iy6wm6b wrote

If you want to be completely safe, it’s trivial to get better than 3.25% APY in treasuries, CDs, or even some savings accounts.

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MikeWPhilly t1_iy6uvbg wrote

What are you investments? You mention saving but what are you doing with what you are saving? What investments accounts? Do you have eal estate? Do you own or rent currently at home?

3.25% is cheap and we won’t be seeing those kind of rates for awhile again. I would not be in a rush to pay it off.

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CQME t1_iy7069r wrote

> Would you keep saving or use all of our current savings and free up the extra $1k so we can get closer to saving $8k/month? Rate is 3.25%

You can currently invest in CDs yielding close to 5% at Fidelity.

https://fixedincome.fidelity.com/ftgw/fi/FILanding

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FckMitch t1_iy6kg19 wrote

What’s your federal tax rate? Calculate if better to invest in TBills after tax vs the rate you are paying

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