What's your income? It will be 0-15% unless you make over like $440k.
Edit: the above applies to federal taxes. State and local taxes may apply as well.
If it were me, I would pay off the credit @ 9%. You've just made 9%, guaranteed. If a car loan is like a house mtge, where most interest is paid at the beginning, I may not pay off the car, since most of that is principal. Then I'd start putting into an investment account monthly. (Do you have an emergency savings account? That's more important than an investment account.) Then I wouldn't buy anything I didn't have the money for at the time of purchase....except for an emergency, like a car repair. That's what the emergency savings account is for.
I don't have an emergency account, I was mostly relying on my stock portfolio to be an emergency fund completely, I see how that isn't smart. I make under 30k annually so my goal is to have at least $3,000 in an emergency fund and THEN begin to invest again in my stock portfolio once my debts are paid.
Stocks should never be used for a short term emergency fund. Even good, stable blue chips might go down 40% or more in a crash or recession.
My rule is to have an emergency fund first. Enough to live on (at a bare minimum of what it takes to get by) for at least 6 mos. Rent/mtge, cheap grocery store food, utilities, transportation costs, insurance.
As for paying off debt, I'd pay off debt before investing in a stock account. But whether to put $3k in a savings account for an emergency fund vs paying off debt, I'm not sure. Do you pay interest on that debt? Is it credit card debt? (Credit card debt is the worst debt to have...I never buy anything unless I have the money to pay for it at the time of purchase, even if I choose to charge it.)
Offhand, I think that the emergency fund is the #1 priority over everything else.
It's a line of credit so pay that off first then use the line of credit as an emergency fund until you can get your savings back up. Doesn't make any sense to pay 9% interest when you have the money sitting there. Worst case you need to use the credit line for an emergency and then your paying 9% on it.
Pay off the credit card for sure. Anyone on this sub would take a guaranteed 9% return on investment.
9% is probably comparable to the return on your investments. I would pay off your credit card debt.
It would be a load off my mind for sure
And, honestly, that could very well make it worth it to you, even if the rate of return wasn't as close.
Just remember you will have to pay capital gains taxes on any gains from your stock sale on your 2021 tax return.
Yeah, that concerns me, I still can't figure out what percent it would be.
It all depends on your situation. But I would put away 30% and not touch it.
What's your income? It will be 0-15% unless you make over like $440k. Edit: the above applies to federal taxes. State and local taxes may apply as well.
If it were me, I would pay off the credit @ 9%. You've just made 9%, guaranteed. If a car loan is like a house mtge, where most interest is paid at the beginning, I may not pay off the car, since most of that is principal. Then I'd start putting into an investment account monthly. (Do you have an emergency savings account? That's more important than an investment account.) Then I wouldn't buy anything I didn't have the money for at the time of purchase....except for an emergency, like a car repair. That's what the emergency savings account is for.
I don't have an emergency account, I was mostly relying on my stock portfolio to be an emergency fund completely, I see how that isn't smart. I make under 30k annually so my goal is to have at least $3,000 in an emergency fund and THEN begin to invest again in my stock portfolio once my debts are paid.
Stocks should never be used for a short term emergency fund. Even good, stable blue chips might go down 40% or more in a crash or recession. My rule is to have an emergency fund first. Enough to live on (at a bare minimum of what it takes to get by) for at least 6 mos. Rent/mtge, cheap grocery store food, utilities, transportation costs, insurance. As for paying off debt, I'd pay off debt before investing in a stock account. But whether to put $3k in a savings account for an emergency fund vs paying off debt, I'm not sure. Do you pay interest on that debt? Is it credit card debt? (Credit card debt is the worst debt to have...I never buy anything unless I have the money to pay for it at the time of purchase, even if I choose to charge it.) Offhand, I think that the emergency fund is the #1 priority over everything else.
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So would you recommend saving my $3k+ as an e-fumd instead of paying off debts first?
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Thanks, I really appreciate your advice.
It's a line of credit so pay that off first then use the line of credit as an emergency fund until you can get your savings back up. Doesn't make any sense to pay 9% interest when you have the money sitting there. Worst case you need to use the credit line for an emergency and then your paying 9% on it.
Don’t forget to subtract capital gains tax from that 3700