y'all know y'all are allowed to post too, right? this comm isn't just ellie wants finance advice.

[alexseanchai]

I am getting a more substantial federal tax refund than I expected. MUCH more substantial. To the tune of, once I subtract what I'll need to put in savings to get that account over a grand, I can pay off my car. Or I can pay off my highest-interest-lowest-balance credit card and a substantial fraction of the next-highest-interest card.

I very badly want my dad's name off my car title, which I can't ask him for until I can prove his name's off my car loan. My last payment, if I don't lump-sum it when the refund shows, is in May. That payment is twice my next biggest loan payment, so the sooner I can use that part of the budget for other things, the better. On the other hand, the credit cards I'll pay if I don't pay off the car are the same ones I'd be paying with the ex-car-payment money if I do pay off the car, and the interest rates on those cards are about twice the rate on the car loan.

Opinions?

(It would be bad of me to buy the learn-to-piano software I want and the learn-to-sing software I want and the cute fannish denim jacket I want with some of the refund money, yes? It would be okay of me to buy one of these things, or a couple books adding up to the same dollar figure, with some of the refund money, yes?)

ETA: I asked my mother, she asked my father, and he says if he's not on the title, I can't be on the family insurance. Solo auto insurance is probably more expensive. I'll have the money for it, given the reduction in monthly total loan payments, but.

ETA2: Looks like a solo policy through my family's insurance company, assuming the same level of coverage as now and no loan on the car, will cost two-thirds my share of the family policy. The difference in a month's premium comes very nearly as high as what I'd save on interest by paying the credit cards; two months, I'm making money. Sold.

Comments

[jamethiel]

Paying off any kind of debt is all good. At this stage, it's what's going to make you feel better. It sounds like just being able to have that security of the car in your name will do that.

[alexseanchai]

Yeah, but I asked my mom her opinion, and she didn't have one so she asked my dad, and seems the company insures our cars won't keep me on the family insurance after he's off my title. That complicates the decision a bit.

[beatrice_otter]

I would keep the "buy something fun" purchase as small as possible, which you already know. As for car-vs.-credit cards, hm. There is financial benefit to paying more off credit cards with higher interest, but there is peace-of-mind value in having the car actually paid off and in your own name so that nothing hinky can happen there. Don't discount the psychological value of having something paid off, and rolling over the normal payment amount from that will help pay off the other debts faster. OTOH, saving on interest for the credit card may be more valuable to you than the psych value of paying off the car. (This is, of course, assuming you trust your dad not to do anything hinky that will cause you problems with the car. If there's any doubt there, get it in your name ASAP.)

Not much help there, I guess.

[alexseanchai]

I don't distrust him, though that's not quite the same thing, and I have now been informed that my being on the family auto insurance, which is very likely half the cost to me that solo insurance would be, requires him being on my title.

[vass]

It sounds to me like what you're weighing is how badly you want the car paid off, as measured in the amount of extra interest you'd pay by not paying the cards off first. If you want the car paid off badly enough that you're prepared to pay more in credit card interest, that's a valid decision provided you're making it consciously. Either way, this is a good problem to have!

[alexseanchai]

Something like that, I think.

Definitely good problem to have! Less good problem: the hell am I going to do for auto insurance if I'm no longer on my parents' policy? Because Dad says I can't be on the family insurance if he's not on my title, the company won't have it, and he expects my auto insurance payment to double if I go off on my own.

[lassarina]

The "can't be on the family insurance" thing seems a bit hinky to me, given I stayed on my parents' insurance for years after I sold the car in my mother's name (with her full knowledge and blessing as confirmed by a signature on a limited power of attorney) and bought one in my own, solo, nobody else on the loan or the title.

[alexseanchai]

...hm. It makes sense that the only people on an auto policy are people whose cars are [co-]owned by the policy holder, but that doesn't mean it's true. I can't email USAA through their site without a logon ID, but they have a Facebook, I have now asked there. Thanks.

[silveraspen]

I would pay off the credit cards, do a small "something for yourself" purchase, and spend the time between now and May investigating independent car insurance options.

[scheherezhad]

This is pretty much what I was thinking.

[alexseanchai]

*nods* Thanks for the advice.

[drunkoffthestars]

late to the party, but if you can keep a bit of the money behind and pay your new car insurance in 6-month lump-sums instead of monthly installments, you can save a little bit of money on that one.

[alexseanchai]

Hm. Okay. I will have to get actual numbers, but since I'm looking at $40 a month, $60ish if I get better coverage, that's only $240, $300, thereabouts, and my car payment is $252, so if you are right (not that I doubt you! but, hard numbers) then I should not put so much in savings straight away in order to save on premium.

Thanks!