Advice on bad debt refi...

[Krysty Underwood]

This is actually a question for a friend of mine wanting to get into investing. I'm trying to explain what little I know, and I'll be recommending she join BP asap to get the best advice from the real experts in our community! Here's her dilemma:

She wants to start flipping houses (although I also recommended she get into buy and holds too at some point), but she wants to save up money to invest after she pays off a consumer loan she had on old debts. She has 13 months left on it and is paying $400 a month. Should she pay it off and then start saving for a down payment on whatever her first property is, or should she refi the bad debt into a longer-term note through her bank and start saving now? She's very cash flow rich if she can learn to control her spending habits every month, as her and her husband are both well-paid professionals in our area. But she's stuck in that middle-class cycle. She could very quickly come up with several thousand for a down payment on a small flip or buy and hold, and her credit I believe is decent enough to get her a good loan on something. But which should she do first? Wait a year and pay off the debt, then save for another six months? Or refi now and save for six-seven months and start her first investment?