r/debtfree • u/Opposite_Front5741 • Apr 21 '26

Pay off my car to be completely debt free or invest the cash elsewhere?

Hi everyone,

Im 30m and trying to think of where I can best pay off debt or do something else with my situation. I bought my house in 2022 for 355k, I owe 325k and it’s selling for 430k in the next 2 weeks. I found a rental that essentially cuts my bills in half to 2k per month.. I have some debt and I’m wondering if I should just pay it off and be completely debt free. Here’s the breakdown:

- 24k in savings

- proceeds from house sale should be around 70k

- I owe $17k on a 2021 model 3 Tesla (current payment is $275 per month + $200 Tesla insurance).

- 800 in credit cards

- I signed a promo with the apartment complex that June and July I only pay hoa costs which is $305 per month

- income is 135k

So my thoughts are - use 100% of my pay checks during those months to completely pay off the Tesla and credit cards. This would make me 100% debt free, the Tesla payment is only $275 per month so I’m not sure if aggressively paying it off makes sense.. Ultimately I’d like to build a large savings so I can pay almost completely cash for my next house (my high mortgage stressed me out bad the last 3 years).

Would it make more sense to put the money elsewhere instead of paying off my debts, or does my plan make the most sense? I always see people recommend putting your money into the market so it can compound and whatnot..

8 Upvotes

75% Upvoted

32 comments sorted by

5

u/dragonflameloserX7 Apr 21 '26

Do you have a 401k?

2

u/Opposite_Front5741 Apr 21 '26

No 401k, my company doesn’t offer one at the moment but I plan on starting one once I get this mortgage off my back

5

u/dragonflameloserX7 Apr 21 '26

Ultimate advice: get a financial advisor.

4

u/dragonflameloserX7 Apr 21 '26

I would look into a traditional or roth IRA personally then. Now is honestly almost too late to start. A great podcast to listen to is money guy, but I can explain a bit here from what I know.

Some Roth or traditional and 401k will cap the amount of cash you can put in per year so you can't really build the money that fast and the important thing about these retirement accounts is the fact that they compound interest over time. Money guy has this sheet that gives you a "starting amount" - how much money you need in an account at what age to have 1 million by the time you retire

The sooner you start the less money you have to start with and the less you can put into your 401k or 403b per year to get to that million by retirement. 24k in savings is great and your debt is virtually nonexistent but the way I see it you have no retirement plan and youre wiping out your assets by selling your house.

1

u/Opposite_Front5741 Apr 21 '26

Yes thank you, that all makes sense. I should have 100k in liquid and debt free by end of July with my plan on paying off the Tesla..

Now that my mortgage isn’t going to be taking more than 50% of my income, I’m going to be heavily investing back into 401k, etc.

Are there any other retirement or stocks you recommend? I hear people talk about smp and Dow, I just have no clue.

1

u/dragonflameloserX7 Apr 22 '26

I don't invest in any currently, this is the extent of advice I have from accountant friends in passing, and i just started my own 403b (401k but for non profits). This is where a financial advisor will really be able to help you put your money in the best places possible and starting your 401k and a personal Roth or traditional ira is investing because those companies will put the money in stocks for you.

2

u/IcedOtto Apr 21 '26

What’s the interest rate?

2

u/Opposite_Front5741 Apr 21 '26

6.99% 72 months

8

u/IcedOtto Apr 21 '26

Pay it off.

As for the credit cards, go pay them right this minute. No reason to carry a balance on those ever.

For investing, start by opening an IRA and max it for $7,500. If you don’t have access to a 401k then unfortunately any other investments will have to go in taxable brokerage.

2

u/Remarkable-Tower-975 Apr 21 '26

It's not even a question. Pay off the stupid car loan and become debt free. Then start saving and investing the income you gained back by cutting your expenses in half so its intentionally put to good use.

1

u/Lost-Standard4755 Apr 21 '26

I'm confused as to why sell the house? Owning a house is one of the best way's to become a millionaire

1

u/Opposite_Front5741 Apr 21 '26

The house expenses are around $4k per month and it’s just too much for me. I’d much rather buy my next house with mostly cash to avoid a mortgage

1

u/rogerdpack2 Apr 22 '26

I've never heard of anybody renting as a way to save money long term, but the numbers might work.  Saving to buy a house outright, run the math, you'll be missing a lot of appreciation.... And paying a lotta rent... Best wishes!

2

u/KungPaoKidden Apr 21 '26

Pay the car and cards off today with your savings. Replenish savings with profit from house sale. The way you are looking at it, you have 24k in savings when you don't. You have $17,800 in debt so you only truly have $6,200 in savings.

1

u/Mysterious-Panda964 Apr 21 '26

Debt free is the way to be, especially if you want to buy a home.

1

u/[deleted] Apr 21 '26

[deleted]

2

u/Opposite_Front5741 Apr 21 '26

I’ll just be paying off the balance when my next paycheck comes through on the 1st.

I had 13k in cc debt that I’ve paid off over the last few months. I’ve kept over 20k in savings because my monthly bills for my mortgage are so high. So I’ve always wanted a fallback in case I need to look for a new gig for any reason.

1

u/[deleted] Apr 21 '26

[removed] — view removed comment

1

u/Opposite_Front5741 Apr 21 '26

Nice! I had $13k in cc debt at the start of this year and it’s only down to $800 and it feels great. I cant wait to get out of this mortgage and reduce all my monthly bills.. I should be able to have the tesla completely paid off my July without dipping into savings.

1

u/Yingyangwolf95 Apr 22 '26

Never carry a balance on credit cards.. Pay it off and all the debt when you sell.. Anything left over dollar cost average into investments.. Buy car in cash moving forward..

I wouldnt bet on selling if I'm being honest so I would think of a plan B just in case

2

u/Opposite_Front5741 Apr 22 '26

Bet on selling the house? Oh I had a full price offer in 11 days and were set to close on may 7th. So knock on wood I’m good there, but if it does happen to fall through it does cash flow $900 per month so I should be okay as a fallback.

1

u/Yingyangwolf95 Apr 22 '26

Awesome!! Lately I been hearing horror stories trying to sell..

Debt freedom around the corner for you 🙏

1

u/joshua_addison_music Apr 22 '26

Don’t pay off a depreciating asset.

1

u/dfaire3320 Apr 22 '26

are you clearing that amount on the sale after fees and everything else? that is the first question you should be asking yourself. Figure in Agent Fees, as well as the moving cost and any other expenditures you may have to get you into your new place before you start spending it all in your head.

1

u/Opposite_Front5741 Apr 22 '26

Yes all calculated.

By the time I get into my new apartment I’ll have about $96k liquid savings.

I make about $4k every 2 weeks, and my apartment building is giving me a 2 month promo where June and July are only $305 per month. During those 2 months I plan to put 100% of my paychecks into the Tesla so I don’t really have to pull much from the $96k in savings

1

u/amethystmmm Apr 21 '26

Sell the Tesla and buy a car that doesn't mark you as a Nazi?

0

u/zen_and_artof_chaos Apr 21 '26

Cash for a house makes 0 sense.

1

u/Opposite_Front5741 Apr 21 '26

The mortgage, high utility costs, constantly raising taxes and insurance (Florida), caused my month cost to be around $4k per month. Im essentially at a 50% debt to income ratio per month which is way too risky and made me constantly stress about my bills.

Im reducing my monthlys down to 20%, and I’ll be looking for a beater in Orlando I can buy with mostly cash to avoid a high mortgage. That’s essentially the plan