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Author: terminalwriter Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308562  
Subject: Thinking... Date: 12/8/2003 11:29 AM
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I've been caught up with things and gotten way behind, so now I'm trying to play catch up with the Fool message boards and attempting to slowly work my way back up to current.

Some boards that's gonna take a while.

Anyway, since I last left you the last of my student loans went active, along with the one I started paying, instead of having my mom pay, since it was putting an unnecessary burden on her. So here are my numbers:

Car Loan: $3,545.70 @ 9.9%
MCSE Loan: $9,041.14 @ 8.5% (Rate dropped because it's tied to an index or something.)
Student Loan 1: $380.38 @ 2.82%
Student Loan 2: $1,361.00 @ 2.82%
Student Loan 3: $2,405.54 @ 3.42%
Student Loan 4: $211.69 @ 3.42%

Grand Total: $16,945.45

So as I watch the car loan drop, I keep thinking more and more about jumping in on 0% intro cards and playing the balance transfer game. Is it worth it in this case? Also, all of the student loans and the MCSE loan qualify for taxable deductions on the interest, is that compelling enough not to try the balance transfers?
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Author: agg97 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174489 of 308562
Subject: Re: Thinking... Date: 12/8/2003 12:06 PM
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So as I watch the car loan drop, I keep thinking more and more about jumping in on 0% intro cards and playing the balance transfer game. Is it worth it in this case?

The only risk you're taking when doing this is your rate being jacked up if you ever miss a payment. Otherwise, it's a no-brainer.

Also, all of the student loans and the MCSE loan qualify for taxable deductions on the interest, is that compelling enough not to try the balance transfers?

Hmmmm. You can either have the government pay for 25% of your interest (you bear the other 75%), or you can go transfer to a 0% and not pay interest at all? Again, it's a no-brainer.

When comparing deductible interest rates versus non-deductible interest rates, simply multiply the deductible interest rate by (1-your income tax rate). So, if you're in the 25% bracket, 8.5%*(1-25%) = 8.5%*75% = 6.375% effective after-tax interest rate. Compare that interest rate with any credit cards you're being offered.

-Agg97

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Author: bleplatt Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174494 of 308562
Subject: Re: Thinking... Date: 12/8/2003 12:45 PM
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Also, all of the student loans and the MCSE loan qualify for taxable deductions on the interest, is that compelling enough not to try the balance transfers?
response from AGG97
Hmmmm. You can either have the government pay for 25% of your interest (you bear the other 75%), or you can go transfer to a 0% and not pay interest at all? Again, it's a no-brainer.


Agg97 and OP--

Agg97, I have to disagree with you about this being a no-brainer. Loans have all sorts of nice things attached to them, like deferrement or grace periods or forebearance or income-contingent repayments, that the credit cards don't.

It may be good to ask about the perks of student loans on the paying back student loans board...



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Author: windyelliott Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174496 of 308562
Subject: Re: Thinking... Date: 12/8/2003 1:16 PM
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I was curious why the OP hadn't take out a consolidation loan? The rates are really low right now and would be a great time to do it. And if you go thru Sallie Mae or another government affiliated agency, you still get to preserve your rights of deferment if needed.

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Author: agg97 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174498 of 308562
Subject: Re: Thinking... Date: 12/8/2003 1:45 PM
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blepatt: I have to disagree with you about this being a no-brainer. Loans have all sorts of nice things attached to them, like deferrement or grace periods or forebearance or income-contingent repayments, that the credit cards don't.

Good point.

Here was my logic for saying what I said: If we were talking about $90,000 in student loans instead of $9,000, I would definitely keep it as a student loan. However, $9,000 is not a great deal of money in the grand scheme of things, and it's highly doubtful that you'll be in financial ruin if "something happens to you" with that kind of consumer debt.

So, while I agree with you in principle, blepatt, the common sense in me says to minimize interest paid NOW rather than pay $2.10 per day in interest to marginally protect yourself from something that MIGHT happen.

-Agg97

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Author: W505a Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174573 of 308562
Subject: Re: Thinking... Date: 12/9/2003 7:50 PM
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Car Loan: $3,545.70 @ 9.9%
MCSE Loan: $9,041.14 @ 8.5% (Rate dropped because it's tied to an index or something.)
Student Loan 1: $380.38 @ 2.82%
Student Loan 2: $1,361.00 @ 2.82%
Student Loan 3: $2,405.54 @ 3.42%
Student Loan 4: $211.69 @ 3.42%


Yup. I see why: consolidate the four student loans and maybe the MCSE (if that is a federally backed medical loan?) into Direct Loans.

Don't play around with balance transfers. You can get one loan, with a relatively low payment, and a low-rate lock in for the next 10-15 years.


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Author: terminalwriter Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 174606 of 308562
Subject: Re: Thinking... Date: 12/10/2003 7:39 AM
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Car Loan: $3,545.70 @ 9.9%
MCSE Loan: $9,041.14 @ 8.5% (Rate dropped because it's tied to an index or something.)
Student Loan 1: $380.38 @ 2.82%
Student Loan 2: $1,361.00 @ 2.82%
Student Loan 3: $2,405.54 @ 3.42%
Student Loan 4: $211.69 @ 3.42%

Yup. I see why: consolidate the four student loans and maybe the MCSE (if that is a federally backed medical loan?) into Direct Loans.

Don't play around with balance transfers. You can get one loan, with a relatively low payment, and a low-rate lock in for the next 10-15 years.


My MCSE loan was to get my Microsoft Certification. It's considered a student loan for tax purposes, but I don't get the low rates of funding for college.

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