All Forum Posts by: Jared Cruz

TLTR: If you want a simple solution maybe look into Treasury Bills

Hey Jared!

If you want a simple, low risk, 5%ish return one opportunity is Treasury Bills.

You give a short term loan to the Federal Reserve and they are paying around 5% APY currently. (Sounds like you would take a 5% - 3% = 2% spread)

It's low risk because it's backed by the FED so it's extremely unlikely that they'd default and if they do we've got way bigger problems than the "cool new investment" not going well. Essentially the dollar would be loosing its value as a currency. I'm reminded of my bomb diffuser buddy over in EOD who's always so calm when he's working. He says, "Of course I always try my best, but the nice thing is if I'm wrong it very rapidly becomes someone else's problem 🤯." Same deal here.

I've been a lurker on here for years, but this is my first post because we're in a very similar situation. I have an account with 10K in it set aside to pay off my car (isn't that wild!). I didn't pay it off because we bought a house in Utah and I didn't want anything weird to happen with my credit as we go through that process. So here we are in our new house and I could pay off the car and not have to pay 3% interest, but I heard that T-Bills were paying 5% backed by the FED. I started out with just $100 because it was new to me and when that worked I put all but 6 months worth of payments in for a month and when that worked I built a 13 Week T-Bill ladder (I'll link the YT video I liked the best and used as a model). It's worked really well so far. I use my 2% spread to fix things on my road bike and other small hobbies to keep my mind occupied till the next deal comes along and I can go into "Sport Mode" again.

Normally T-Bills have dismal returns so it won't last forever, but as long as the FEDs continue to raise interest rates this will be a good investing strategy for people who want this car interest thing to just be taken care of so they don't have to think about it and can still have access to their money. I'm also looking to put part of my 6 months savings in due to the fact that I can still have access to most of it every month and all of it in 3 months (forgive me Daddy Ramsey for I have sinned)

So, if you want a simple, low risk, 5%ish return one opportunity is Treasury Bills.

Yes, a brand-new car paid off is an accomplishment. Congratulations! And hope you get that bonus soon and a pay raise :-). Buy real estate and get a lot of quality properties with quality tenants while you are young! Buy and hold is a great long-term strategy.

@Jared Cruz

Agree with @Luka Milicevic invest in Tbills and pick up 5%+ interest. You do not have to pay state or local taxes so that’s better than a savings account.

If you pay down $10k to save $80/mo it will take you 125months to get that money back. Going into a recession the last thing you want to be is short on cash.

@Jared Cruz

Can’t give financial advice but if peace of mind will cost you only a few hundred in missed interest then have peace of mind and pay it off.

@Jared Cruz

3% is cheap money. I’d put the money to pay it off in a money market account and make 5%+

Unless you need to pay it off for your DTI, I'd let it ride until the end. :)

@Jared Cruz Most if those responding are not taking income taxes into account. Yea you can earn more than 3% in a money market account but it is taxable income so depending on your situation your real return is less. Generally speaking, it isn’t a good idea to have debt in a depreciating asset.

@Jared Cruz

You can find regular savings at 4%; CD’s with no penalty at 4.35% with 11 month term, and CD’s with 5% with penalties that don’t hit your principle after a certain number of months deposited (and need to take take an early distribution of the CD. Read the fine print and the math on your net return after taxes with the savings and CD’s and compare it to 3%.

If you plan to buy a property and you need to decrease your debt to income ratio to qualify for a loan, then it’s a no brainer. But maybe you can find a seller-financing situation or another creative option like lease with contract to buy or option to buy 😊

3% is cheap money and easy ways to make more with little risk are available. If you sleep better with car debt off the books, then that has value as well.

Good luck 🍀

Both wealthfront and Ally are paying 4%+ interest right now. You can find others that are paying more. Even US treasuries are paying more than 3 right now!

I'm not so concerned about the rate as I am the fact that you would have 1k left and then you're banking on a bonus....

I wouldnt' do it. Just for that reason. I wouldn't feel comfortable with 1k in the bank. Wait until you actually get a bonus, and then decide if you want to pay down your loan. 

Get in writing that the loan is NOT simple interest. A teller has no idea. If you really save $2500 pay it down to remaining 18 payments and compromise. Having money in pocket is gold. 

Don't pay it off now. When you apply for a mortgage at closing pay it down to 10 remaining payments. 

MOST AUTO loans are simple interest which means you are stuck paying all the interest even if you pay it off early. Because your rate is low I'm betting it is this type and paying it off saves nothing.