I know exactly who the "radio guy" is, because I listened to the show on podcast yesterday afternoon on his website. (wink). Plus the advice is about what you'd expect from this radio personality... Since you chose to keep his name secret so will I. Sorta.

I agree with what the radio personality said: pay off the truck, and for the same reason: Risk mitigation. I know that is not a popular answer here, but thankfully the popularity of an idea is not always a good measure of its validity.

Here's on angle the radio personality didn't address, which is also a good point. $15,000 if invested will likely not change the course of someone's life. Even if we take a hypothetical, steady growth rate of 10% per year compounded (fake example, but for the sake of argument...) for 20 years, the balance at the end if only $110,000 and change. I say "only" realizing that this is six figures....sure I'll cash the check if you send it to me. But am I going to think this somehow changes my life? No, and here's why.

Factoring inflation into the mix....we are looking at a total gain in purchasing power of maybe $50K-$60K? Sure, again I'll cash the check if you send it to me, but overall it does not "move the needle" much in my life. Whereas if the person ends up in a bad situation and the truck gets repo'd, that would be a black mark on his record for a long time and could end up costing him a lot down the road. Or he could have to "cash out" his investment at the wrong time to make the payment on the truck.

It's just not worth fiddling with a for a relatively small additional gain, in my view.

The important part is this: people who call into a radio show to ask about how to handle their money are often not that great with their money. His advice for them is to pay it off because they know how bad they tend to be with debt. He knows that if they don't pay it off, they aren't going to "invest" it in some reasonable fund that beats the truck interest -- they are much more likely to put it into a new snowmobile or boat -- and be just as much in debt as when they started (or worse).

THAT is the key to radio show host advice. It is for a target audience that most of us are not in.

- John...

The caller had a 2.5% car loan? Those are pretty rare and people who are not great with money often have 8% or even 20% car loans.

$15,000 car loan, I'd pay it off. $15,000 isn't much to invest, interest rates are low, that's not enough to buy real estate where I'm at. It's a good feeling to be out from under debt.

Sure, I'd take 2 million dollars of debt at 2.5% interest because I can do something with 2 million dollars that would pay the interest and generate profits.

2 million is not $15,000. With $15,000, I'd could put it in a money market for 1% interest, or into a CD for 1.5% interest. Or put it into a vastly overheated stock market and maybe lose it all. Not to mention, it is a fool's move to borrow money to invest in the stock market.

I've got a car, all paid off, and I sure wouldn't borrow $15,000 against it to invest elsewhere.

To me the argument isn't so much the $15,000 as the monthly truck payment compared to the return from the investment during the same period. If the investment, less taxes, less the monthly truck payment. Produced an income higher than my truck payment, I'd consider it. Of course I'd only use this comparison on money larger than $100k.

Pay off the vehicle. You have just saved yourself all the years of interest and you have a paid off vehicle. Open an Ameritrade or similar stock acct. Take the payment ($400+?) that no longer goes to the finance co and have your bank send it to the stock acct. Buy several DIVIDEND-PAYING stocks. Every quarter (and some monthly) you will get paid dividends. YOUR VEHICLE PAYMENT IS NOW PAYING YOU instead of someone else. You will be *SURPRISED* how fast it builds up! Put the stock into the DRIP program, and even the dividends buy more stock that increases the dividends.

Even if HE could buy a house that produces income, it means he has to manage that house, repair, etc. All work involved that many people don't want or are not capable of.

Personally, I like the no debt idea. That truck would be mine no matter what happened to my job. Each payment that I would have had to make, I can save (2.5%) and invest that. Then I have a paid off vehicle and some emergency money if something happens. Don't forget that truck is worth less and less each year.

Unless the car loan is at a crazy interest rate that person would be better off keeping and cash flowing the car loan. Keep the $15k in the bank, if something happens its a good reserve, once its committed to the car loan its gone.

I'm looking at buying a CPO SL550, which will be right around $60k OTD. I have the $60k and could write a check for the car and be done with it. I'd rather put $20k on the car, borrow the rest at 2% which is the rate of inflation and keep the other $40k nice and safe in the bank. I can pay the car off anytime, but I rather cash flow it and let the $40k sit.

Now if your an idiot and you will run right out and spend the $40k than yeah put it in the car and be done with it.

Pay it off.

Without Money Discipline,

the Caller would (most likely) blow it on,

Smoking, Drinking and Gambling.