All my debt in the world…

Last month I shared that I decided to refinance my auto loan with PenFed. While I still love PenFed, the process for refinancing my auto loan was a bit cumbersome and seemed to take forever. However, US Bank, my previous auto loan holder, finally processed the payoff payment…

And, on the PenFed side of things…

…all my debt in the world is now located in one place. While I like the simplicity this adds to my life (one less place to log in each month) a part of me now feels “itchy” about seeing that relatively low auto loan balance in the same portal as my much larger student loan*. Perhaps I should not change my financial goal from “less than $60K in student loan debt” to “less than $50K student loan debt” this year and should instead keep the under $60k goal and add paying off my auto loan? While my auto loan is only at 2.39% compared to my student loan’s 3.50% interest rate, it would eliminate a $300.00 payment each month. In addition to further reducing my fixed expenses, it would also lower my debt-to-income ratio… Thoughts?



*I used Paint3D to delete my account numbers and student loan balance from this photo. I feel like my student loan balance, and how much I have been able to pay off, is the only thing that keeps my blog interesting from month to month.

8 thoughts on “All my debt in the world…

  1. First of all: “I feel like my student loan balance, and how much I have been able to pay off, is the only thing that keeps my blog interesting from month to month.” — UNTRUE. Yes, the student loan is why I started reading your blog but I enjoy reading all your posts whether or not they’re student loan related! I’m sure your other readers will agree too!

    Congrats on having all your loans in one place! I personally care more about interest rate than amount so I would stay aggressive on the student loans.

    But I definitely see the allure of getting rid of the auto loan as that can be paid off in one year and be gone once and for all.

    I’ve had my car payments paid off for a couple of years now and it’s definitely nice to have one less thing to worry about.

    Ahhh I’m pretty evenly split on this. But final answer for me is to still go aggressive with student loans. You can’t go wrong with either choices though!

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    • Awe…thank you for your kind words Avery.

      Thank you for the feedback. It makes sense…even if the student loans had the lower interest rate because they are at such a significantly higher amount, they still generate the most cost each month.

      That being said, I wouldn’t turn to the auto loan until I made it below $60K in student loans… I have recently started to begin thinking about future goals and debt-to-income seems to be important if I, for example, wanted to own a home prior to my student loans being paid off…or open a business…

      I’ll admit there is also the small psychological boost of not having to pay out $300.00 each month.

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  2. I personally don’t care as much about the student loan updates as I do the other, more personal, posts. I don’t agree that once the auto loan is gone it’s gone. On the contrary, once the student loans are paid, they are gone forever. You will at some point need another car and if you want to avoid debt, you should put aside your previous monthly payment to have the cash on hand when the time comes. Wouldn’ t either loan balance decreasing improve your debt to income ratio? Or the student loans don’t count for this? If you are not upside down on your auto loan and don’t have concerns about your employment, I would probably concentrate on the student loan.
    Let us know what you decide.

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    • Really? This is…not what I would have expected at all. I often don’t post if I can’t somehow tie it back to my finances because I feel like it is “off-topic.” As I know at least one person might be interested in hearing the less financial, personal stuff, I’ll perhaps write about that even when there is no clear financial link.

      This is a really good point. Only the student loans are truly gone forever…

      “Wouldn’t either loan balance decreasing improve your debt to income ratio…” Not quite. Your debt-to-income (DTI) ratio is calculated based on how many monthly financial obligations you have as a ratio of your income. If I put $10K towards my student loan, I still have a monthly minimum payment on my student loan and my auto loan which means my ratio is only marginally affected. If I paid off my auto loan, then I no longer have that monthly minimum payment which more significantly improves my DTI. Again, the only real benefit of paying off the auto loan is getting rid of its associated minimum payment.

      I think getting below $50K in student loans would do far more for my battered financial self-esteem than paying off my auto loan so at the moment I am leaning towards staying the course. In any instances, I will of course update you as to what I do.

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      • That makes sense, it’s the payments, not the total debt, that is used for this. If you think you will want to apply for a mortgage, then you should get rid of the auto loan before, which I believe is your implied point. I think we all like to read all your posts 😊

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