I know the standard answer and understand that I will be losing out on that compound interest, but I am young and only need to borrow a few thousand. here are some more details:
- Need to borrow $6500 to pay off a car and two student loans ($300/month in payments combined)
- I am 22 and work full time, making about $70K annually
- I contribute 8% of my income with a 4% company match
- I increase that by 2% every year
- The loan would be over 48 months ($140/month)
- I live very frugally and have almost no discretionary spending that can be cut (don't eat out all the time, no gym membership/ Netflix/ Apple music etc.) I'm cash-poor: 90% of my salary is going to mortgage, groceries, students loans, car payment, newborn baby medical expenses, and commute.
- These are not my only debts, just the ones I am seeking to pay off in the short term. I work two jobs, one full and one part time. I started a business, and my wife has two jobs. Working more is not a good answer to the original question.
It seems to me that I would be reducing middle to high interest debt while also saving myself $150 per month.
Loans:
- Student loan 1: $1200 @ 5%
- Student loan 2: $1100 @ 4.25%
- Car Loan: $4000 @ 6%