My coworker said I was 'budgeting wrong' and it actually helped

I always put extra money toward my car payment first because I figured debt was the enemy. Then my coworker at the warehouse said I was missing out on compound interest by not funding my Roth IRA first. I ran the numbers and realized she was right. So I switched my strategy and now I put $150 a month into my IRA before anything extra on the car. After 6 months, my investment grew by $45 while my car loan barely moved. Anyone else ever had someone point out a blind spot in your budget that actually made sense?

2 comments

2 Comments

logan_white5923d ago

$45 in six months is great and all but that's like 7.50 a month... which is basically nothing when you think about it. Meanwhile that car loan is ticking away at whatever interest rate you got, probably 4-7% depending on your credit. I'd rather kill the debt fast and then have that extra cash flow to dump into investments later. Guaranteed return from paying off debt beats market speculation every time in my book. Plus that IRA money is locked away till retirement while the car payment freedom helps you right now.

victor_lane6023d ago

Paying off debt first is just common sense.