Monday, May 12, 2008

Rethinking my payment plan...

to my parents. What do you all think of this? I was going to start paying them back $2100 every 3 months. They are expecting payment once a year of $2100 for the next 10 years. But due to the misunderstanding of the payment terms, I want to get this paid back to them ASAP. As in, by April 2010, I want this debt to them paid off. But I was thinking about it this weekend and since they aren't expecting another payment from me until next April, why don't I wait and make my next payment then? Now, I could make them a payment then of $10,000 and pay the balance the following April. OR, I could just pay the $2100 as expected and the following April (2010) pay the balance in full. The reason I started thinking about this was that if I left the money in my savings longer, rather than paying the $2100 every 3 months, I could take advantage of earning more interest on my money while it sits there. So, what would you do? Either way, I am going to have this paid off to them in April 2010, making the length of the loan 3 years instead of 11 (10 years of payments of $2100, 1 year after the loan was made.) Help! I really need some feedback on this one! What to do, what to do.....Thanks!

8 comments:

Twiggers said...

I would collect interest on it! Can you throw it into a high yield account? Or maybe even into a 6 or 12 month CD?

change is a good thing said...

Twiggers:
I could put it into a CD, I hadn't thought of that. Right now it is in my ING account. Thanks for the great idea.

Sharon said...

I would pay off the loan asap. The interest isn't worth the angst that you will have until it is paid off. Are they charging you interest? If not, then you should probably not make the interest. Just a thought, I think you would feel better too! :)

budgets are sexy said...

oooooh toughy for sure. you know what though, as much as i'd like to save some $ on the interest and all, there's something to be said about paying loans off early.

if it were me, i'd pay it off to a) impress them (and myself!), and b) to get rid of the $ before something "comes up" where it might be needed.

i always feel MUCH better paying something off than waiting to do so later, whether it's "financially smarter" or not.

either way though, you'll be totally fine - you HAVE the money ;)

asgreen said...

I would collect interest on it.

Escape Brooklyn said...

At first I was going to say just pay it off for the reasons Sharon and Budgets Are Sexy mentioned.

But then I calculated the interest, assuming 3% for ING, and after one year you'd make $63 on $2,100 or $300 on $10,000. That's definitely some extra pocket change! And a CD could potentially yield even more.

L@SpillingBuckets said...

I would pay off the loan or put it in an "untouchable" CD, only because having a lot of cash around sitting in an account is easier to spend.

I know you are a PF blogger, so have more willpower to save than most people, but still, if you are serious about getting this done I would remove the option of spending. It avoids this thought process: "I already paid $2100 this month/year, and I know I said I was going to do it every three months, but we really need a new lawn mower/car/pair of pants/whatever"

SavingDiva said...

I agree with sharon and budgets are sexy. The comments that you might have to endure by waiting until next April to pay them might not be worth the interest.