What to do with 30K?

knock out that loan dude. thats 317 a month you could put towards the car, have that paid off in 2 years, then the only other "obligation" you would have to really worry about is the mortgage... Thats what i would do.

I would probably do the following if I were you:

1. Set aside enough of the $30K to cover whatever taxes (if any) you're going to incur next April on it.

2. Make sure you have enough in savings to cover 6 months of expenses. Depending on your expenses, you may already have 6 months' worth. If so, go with your gut if you need more (how secure is your job, and how quickly could you find another one if you lost your job?). I wouldn't sleep as well with only 6 months, but other people are fine. Get your wife's input on the "sleep well" amount. Plan on the economy getting worse, then you'll be pleasantly surprised if it improves.

3. Car Loan. Kill it. You may be able to reduce your insurance coverage/cost once the car loan is paid off.

4. Student Loan. Put the rest here. If you didn't increase your savings account, then you'll only have $4,500 left on the student loan. Add the $400/month from the paid-off car loan to your $317/month payment (and any car insurance savings) and kill the student loan in the next 7 months.

5. Once the student loan is paid off, put the extra $717/mo toward your mortgage. Actually, probably better to split it between your mortgage and a ROTH IRA if you prefer.

Buy American Eagles and Krugerrands, or add some Silver Eagles if you want. Wait 5-10 years, then when gold is $7000 and silver is $250, pay off the remaining mortgage, student loans, and buy a rental house or cheap stocks with the leftover coins.

Thanks for the response. You know, I've read Dave Ramsey, too. This seems like something he'd recommend. I've considered it, and it may be what I end up doing, but the interest rates on these things are quite low (car - 5.5%, student loan - 4.75%, mortgage - 4.5%), that I just wonder if I'd be missing an investment opportunity if I used all of that 30K to pay down these debts.

I remember awhile back reading something about "good" and "bad" debt. My car would be only thing that falls into that category. The student loan and mortgage (low, deductable interest, "investment" debt) would be "good" debt.

I don't know. I love the idea of having no debt but the mortgage, but I'm not sure I'll ever have 30K to invest or "do something with" in the near future.

So it kinda comes down to this (put simply). What's better? 25K of student loan debt AND 25K invested in something? Or... zero of both.

I know that's a very specific question, and of course there's a lot of other scenarios possible. But at the core of my confusion is determining whether or not this is a great time to buy (invest) - despite the debt I have - or whether the safer, smarter move is to eliminate all debt entirely, forgetting about investment altogether (for now, anyway).

Thanks for your thoughts.

It's a legitimate question. My opinion is that this is only a good time to invest if one really knows what the hell they're doing.I have spent a lot of time studying investing the past 10 years, and I am convinced that we are in for some rough times. There is a much bigger chance of losing money than making it for most folks. I do not belive that someone following the standard investing rules of stock and bond mutual funds will see the kind of returns they have seen the past 30 years. Some very smart people (from Warren Buffett to Jeremy Grantham to Seth Klarman, etc..) have suggested that they only expect market returns of 6% or so for the next 15-20 years. There is no guarantee that you will even get that 6%, as most underperform the market. That's pre-tax 6%.So, if you're a typical investor, you're looking at a best-case 6% pre-tax, or a guaranteed 4.75-5.5% by paying off the loans.Good debt vs. bad debt: This is probably only useful when deciding what debt to take on. Student loan debt is hopefully to increase one's earning potential. Mortgage debt is often necessary to get into a house. But once you have it, debt is costing you money. It's not exciting, but it makes a lot of sense to pay it down as quickly as you can.If anybody tells you that now is a great time to invest or that stocks are "cheap" now, they need a little historical perspective. Big picture things like this chart are why most people "investing" today are going to get burned. http://www.multpl.com/ (they have only been this expensive 3 other periods in the past century)Another advantage to paying down the loan, and then starting your investment fund from ground zero (with the $717 per month) is that your early investing mistakes (and you will make early investing mistakes) will not be nearly as expensive. Let's say you lose 50%, which is always a great way to learn a valuable lesson. With a $3,000 portfolio, it is a $1500 lesson... not a big deal. With a $30,000 portfolio, it's a $15,000 lesson. Also, with no experience and $30,000 you become a target for those in the financial industry looking to take advantage of you. So-called "financial advisors" are really slick at putting you in mutual funds with 5% front loads without your knowledge. Once you sign the paperwork, that 5% ($1500) is gone. Best to learn these early lessons when small dollar amounts are involved.Final thought you probably won't like - if you can't save up $30k over a few years on a $90k salary, or whatever you're making, you probably have no business running a mini hedge fund, which is basically what you'd be doing by investing the $30k and trying to make more than you're paying in interest on the debt. Good luck.

Thanks dude... I appreciate you taking the time to offer your thoughts.

Once you pay down that car loan and even maybe the student loan, make sure you actually start saving the money that currently goes that. Most people would just take on new debt/buy moar stuffs when the old debt(s) are paid off.

Man, the financial freedom you would have at that point....I dream of a day when I can just start straight banking 1k a month into savings. You have the opportunity to have that and more.

Good luck!

its not a lot but wrote:Thanks for the response. You know, I've read Dave Ramsey, too. This seems like something he'd recommend. I've considered it, and it may be what I end up doing, but the interest rates on these things are quite low (car - 5.5%, student loan - 4.75%, mortgage - 4.5%), that I just wonder if I'd be missing an investment opportunity if I used all of that 30K to pay down these debts.

To use more Ramsey thought experiments: If you had zero debt, other than the house, would you take out a 30k 5% loan to go make investments because now is a good time to buy? I could understand (maybe) pouring some of the money into your house, if it REALLY needs it, or into more schooling especially to make you or the wife more competitive in a tough job market. Those would be "investments" I might consider, but even then I'd still have a hard time turning down being debt free in 6-7 months.

[/quote]I don't know. I love the idea of having no debt but the mortgage, but I'm not sure I'll ever have 30K to invest or "do something with" in the near future. [/quote]

Seems like someone is telling you to due something with the money because you'll "never have another opportunity like this again." That's crap. If you apply the 30k toward the debt you'll start banking some serious money in seven months. That is, if you show some discipline and bank the extra $717/month.

[/quote]So it kinda comes down to this (put simply). What's better? 25K of student loan debt AND 25K invested in something? Or... zero of both.[/quote]

Again, if you show some discipline, in 40 months you could have both. Or in seven months you could have $700/month to invest however you want. Including putting away some college money for your kids (so they're like in 20 years they aren't facing the same choice), paying down your house, moving up in housing, or occasionally taking the family on a *really* nice vacation.

[/quote]I know that's a very specific question, and of course there's a lot of other scenarios possible. But at the core of my confusion is determining whether or not this is a great time to buy (invest) - despite the debt I have - or whether the safer, smarter move is to eliminate all debt entirely, forgetting about investment altogether (for now, anyway).[/quote] I like the advice about shoring up your savings if needed. How secure is your job? How easily could your wife go back to work if needed? Is your car in good shape, is hers? Is your house in need of repair? (And I mean actual needs like a roof or plumbing, not I "need" a new kitchen.) Sounds like you feel pretty secure in regards to these things. Bottom line, pay down the debt. You'll sleep easier the next five years not worrying about days like this past Monday ravaging the 30k you invested because it was a great time to buy. (Yes trolls I know we've gained back all the losses)