View Full Version : You be Suze Orman

3-26-11, 1:22pm

3-26-11, 3:42pm
unless you have somewhere where your money is earning more than the interest on that car loan, that's the first thing I would concentrate on, getting that sucker paid off, then putting the amount of the payment aside every month so when that car dies, you have the money for the next car already sitting there ready to pay for it.

if you're self employed, after getting out from under the car loan and starting to put aside for the next car, I'd certainly look at enlarging that emergency fund. I think the old numbers of what one needs in case of job or business downturns are less than what is needed today.

In a regular IRA, there are usually penalties if you must take money out before retirement age. Also, when you do reach that age, you pay income taxes on the money you take out. BUT, you do get that instant tax advantage of money off your taxes the year you make the contribution. I think that's poor payment as opposed to the long term benefits of a ROTH, but that's my opinion, and situations and tax positions of others might differ.

You can also, if you like, to take advantage of the tax benefits long term, open a ROTH IRA. you won't get an immediate tax writeoff, but a ROTH has the advantage of you always being able to take out of it for any emergency, the amount you put into it without penalty , and the added advantage of having the growth in that account protected from taxes if and when you take it out after reaching the age for withdrawal. You trade an immediate tax writeoff for your contribution (a regular IRA), for being able to access your money if you need to, and to be able to withdraw the hopefully greatly increased amount at retirement, free of income taxes at all (a ROTH).


3-26-11, 3:46pm
Car loan, car loan, car loan.

Oh, and I hate that part of the Suze Orman show--people will call in and have a 400,000 401k and 100,000 in cash investment and she will say things like, "No, you may not buy that thousand dollar guitar." I just don't get it.

3-26-11, 3:53pm
Car loan, unless it is at some insanely low rate of interest, in which case plow the money into fully funding your tax preferred retirement accounts.

3-27-11, 11:28am
Pay off the car loan as fast as possible; then start maximizing your SEP and Roth.


3-27-11, 12:58pm
while I agree that the most important thing (unless you've got a zero percent interest loan) is to pay off the car loan, but the second most important thing, to me, is to continue to put aside the amount of that car loan in your savings every month so that by the time this car dies, you can go in and write a check for the next one. And free yourself forever from interest payments on car loans.....you'll still be making the payments, but to your OWN savings and getting the interest for YOURSELF until time to buy the next car.

The Storyteller
3-27-11, 1:30pm

Great question.