One of my hobbies involves working on my classic car – basically swapping corvette suspension under it. during the initial phases of this project I bought a CNC milling machine to make a bunch of parts for it. But, for the last year, I’ve had other priorities and haven’t worked on the car much, nor will I need the CNC machine alot from here on out… So, I sold it. Long story short I got $4500 for it. I’m trying to determine the most mustachian thing to do with the spoils…
Current debt is as follows:
3950 @ 6.9% student loans, 56/mo
4250 @ 7.4% student loans, 72/mo
4930 @ 3.4%, Motorcycle, 140/month
192,000 @ 4.5%, house, 30 year fixed. House value is ~220K
2200 @ 0% for another 16 months, I’m using this to build an addition on my house.
I have $4700 in a 1% APY savings account.
I currently put $620 a month into a stock purchase program that returns, at a minimum, 15%, and at best, 15%+ stock appreciation. I won’t have access to this until jan 1, 2014. The plan was to use that to pay off the student loans. I am using the 0% card to build an addition on the house. (Doing 99% of the work myself.) I would hang onto the $4700 in cash ’till the project was done, then pay it all off. I add $800 a month (rent income) plus ~1200 quarterly (bonus) to the wad of cash for the addition, so by october, I’ll have enough cash on hand to pay for all but a few thousand of the addition.
So, should I hang onto this cash as an emergency fund (1% APY return)
Kill the motorcycle loan (3.24% return, and frees up $140/month), roll than $140 a month into the other student loan…
Kill one of the student loans (7% return, but only frees up 72 a month) and put that extra money against the other student loan? It doesn’t free up the cashflow as much, but does eliminate a higher interest loan. And in 7 months I’d get that money back anyway to finish paying it all off…
Or, should I use it to start a vangard index fund? Seems like the debt I have is the same as average returns on one of these, and is gauranteed… so this isn’t as attractive.
switch2richnow 