Paying off my debt

21 12 2012

Current loan debt: 27,908.84

Currently I am debating how to handle my finances over the next year.  If I put all my extra money towards my loan debt, I will easily pay it off by next Christmas, ideally by August, or as late as September.  The earliest I can pay it off is June, assuming I stick to my  budget (minus 50% for travel), travel 50%, and put all my extra money toward my debt.  However, recently I’ve been thinking of purchasing a condo or house next year, living in the smallest room, and renting out the other room(s).  This would mean I need all that loan money for a down payment instead putting it toward my loans.

Buying a house, I never really wanted to once I learned more about personal finance, but I can see the benefits of renting out the extra rooms.  I currently pay about 550$ a month for rent and utilities.  That money could go instead toward a house.  Rent money from renters would be doing the same.  And of course, if I continue budgeting and saving a lot, the house would be paid off in a few years, at which point I would have my very own rental property, earning money to pay off taxes/miscellaneous costs on itself, and some pocket money for myself.  Assuming I could rent the house out for 2k and it was worth 400k, that’d mean I earn 6% a year, not bad considering.

However, I think I want to pay off my loans first, so I can be FREE!!!!  I also will be more liquid, so I can start my own company, and more mobile, not having to worry about selling my house or finding full time tenants if I move.

In the short term, I have enough time to think more about it.  I am currently saving up a 10k emergency fund, just in case I lose my job or some such, that should take about another month.  After that, I can think more about where to put my money.  I wish I could find an even cheaper place to live so that I can save faster, lol, but I guess we’ll see.



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