WHY YOU SHOULD PAY OFF YOUR CAR FIRST
Most people do this backwards.
They get a little extra money each month and they say I’m gonna throw it at my mortgage so I can pay the house off faster.
Sounds smart. Sometimes it’s not.
Here’s the example.
You’ve got a 30,000 car loan at 7 percent.
You’ve got a 400,000 mortgage at 6.5 percent.
Everyone wants to attack the mortgage because it’s the big scary number.
But the car payment is crushing your monthly cash flow and the car is dropping in value every year.
So you’re paying interest on something that is worth less next month than it is today.
Now look at the mortgage.
Extra principal can shave years off the loan but it usually does not reduce your required monthly payment and that money is locked up in the house.
So here’s the smarter play a lot of the time.
Kill the car first.
Now you just freed up 600 bucks a month.
From there you can do whatever fits your goal.
Invest it, stack savings, or then attack the mortgage even harder with way more flexibility.
Cash flow gives you options. Options create wealth.
Send this to your spouse or a friend because not all debt should be treated the same.
Like and follow me for more real estate tips and I’m Chris Graves and that’s your mortgage minute.
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