Anonymous
11/25/2014 21:50
Subject: Payoff Car Loan vs. Keep/build up savings?
I'm in the exact same situation as the OP. Recently bought house, had to buy a new roof that put a dent in our savings and I'm trying to build it back up as well.
I've got $4,000 left on a car loan at 0% interest. I hate paying bills monthly when there is so little left to pay, but at 0% I just tell myself that anything could still happen and it's best to have the cash available. If I had paid it off when there was $8k left, we'd be in an even tighter spot.
If it were 4-5% or more, I'd probably do it...but it's low enough where I would rather have the cash in the bank.
I've got $4,000 left on a car loan at 0% interest. I hate paying bills monthly when there is so little left to pay, but at 0% I just tell myself that anything could still happen and it's best to have the cash available. If I had paid it off when there was $8k left, we'd be in an even tighter spot.
If it were 4-5% or more, I'd probably do it...but it's low enough where I would rather have the cash in the bank.
Anonymous
11/25/2014 19:54
Subject: Payoff Car Loan vs. Keep/build up savings?
I would definitely not pay off the car loan. That rate is so low.
Anonymous
11/25/2014 18:06
Subject: Payoff Car Loan vs. Keep/build up savings?
No way would I pay it off.
You will never get a loan for a better interest rate than that to pay for anything for the house.
You will never get a loan for a better interest rate than that to pay for anything for the house.
Anonymous
11/25/2014 18:01
Subject: Payoff Car Loan vs. Keep/build up savings?
Pay it off since it bothers you. you got the new furnace, you good to go!
Anonymous
11/25/2014 17:54
Subject: Payoff Car Loan vs. Keep/build up savings?
Anonymous wrote:We are working to re-build our savings after buying a house this year. We have about 15k in the bank (separate, well funded retirement & college funds). That's a 3-4 month emergency fund (assuming we'd drop out of day care). We put in $250 a month, plus our FSA reimbursements (7500/year). This account is also used to fund unexpected things, like when we had to replace our heat pump.
We have a car loan of 8k, with 2.9% interest. I'm tempted to pay off the car note now, and then work to rebuild the savings. The monthly payment is 350, so that would help build it back up.
It would bring our emergency fund down below the "acceptable" range, but seeing the percent of our car payment that goes to interest makes me cringe!
Thoughts?
Don't pay off the car, that's a really low rate. You need a rainy day fund. Unless that car is a new acquisition - which would mean you are paying more towards interest than principal, I can't imagine that the actual dollars you're paying towards interest is that much - not at 2.9%. If it bothers you that much, double up on a few payments throughout the year but don't blow $8K. Wouldn't you rather have money in your account to pay for heating or roof repair, or car repair for that matter?
Anonymous
11/24/2014 13:40
Subject: Payoff Car Loan vs. Keep/build up savings?
Anonymous wrote:Anonymous wrote:This is more practical advice than financial advise but, IMO, it depends on how comfortable your mortgage payment currently is - are you able to save pretty easily and cover expenses now or do you find yourself regularly dipping into the emergency fund? Depending on your situation, I think I might pay that 8% loan off now and then set aside $350/month for house maintenance/repair/improvement fund.
If it was an 8% loan, she should pay it off as soon as possible. But it's a 2.9% loan.
Oops, I misread. But I would probably still lean towards paying it off - provided the right circumstances.
Anonymous
11/24/2014 08:43
Subject: Payoff Car Loan vs. Keep/build up savings?
Anonymous wrote:This is more practical advice than financial advise but, IMO, it depends on how comfortable your mortgage payment currently is - are you able to save pretty easily and cover expenses now or do you find yourself regularly dipping into the emergency fund? Depending on your situation, I think I might pay that 8% loan off now and then set aside $350/month for house maintenance/repair/improvement fund.
If it was an 8% loan, she should pay it off as soon as possible. But it's a 2.9% loan.
Anonymous
11/24/2014 08:38
Subject: Payoff Car Loan vs. Keep/build up savings?
This is more practical advice than financial advise but, IMO, it depends on how comfortable your mortgage payment currently is - are you able to save pretty easily and cover expenses now or do you find yourself regularly dipping into the emergency fund? Depending on your situation, I think I might pay that 8% loan off now and then set aside $350/month for house maintenance/repair/improvement fund.
Anonymous
11/24/2014 07:53
Subject: Payoff Car Loan vs. Keep/build up savings?
At 2.9%, that is still fairly low . I would still pay off half and make double paymenta from savings to leave enough of a cushion if you need cash
Anonymous
11/24/2014 07:52
Subject: Payoff Car Loan vs. Keep/build up savings?
I'd pay off the loan. No question about it.
Anonymous
11/24/2014 07:32
Subject: Re:Payoff Car Loan vs. Keep/build up savings?
We bought our house about 14 months ago, survived last winter. This is our third home that we've owned, so are familiar with expected & unexpected house expenses. Of course there may be things that come up, but it seems pretty stable.
Anonymous
11/24/2014 07:28
Subject: Payoff Car Loan vs. Keep/build up savings?
Unless you are 100% sure nothing big will break and have the warrantee for every single possible big ticket purchase in your house, I would not do this. Home ownership is a wonderful test of finances and budgeting. You always have to plan ahead for an expense you never saw coming and suddenly are facing. I would not feel comfortable going that low in an emergency fund.
Singed, a home owner of 6 years who has spent $2-5k annually on unexpected repairs, with $6000 in student loans that started at 100k+, and $30k in our savings account.
Singed, a home owner of 6 years who has spent $2-5k annually on unexpected repairs, with $6000 in student loans that started at 100k+, and $30k in our savings account.
Anonymous
11/24/2014 07:22
Subject: Payoff Car Loan vs. Keep/build up savings?
Soinle=double
Anonymous
11/24/2014 07:21
Subject: Payoff Car Loan vs. Keep/build up savings?
Did you just buy the house or did you buy it in January 2014 or something farther out?
I only ask because if you just bought the house you may have not detected some issues with it yet , like the heating when it gets really cold , roof leaks with melting snow etc. We just bought a house 3 months ago and found a leaking toilet that damages the floor underneath and had to pull up and replace floori g and subfloor , around 4k.
Also , how secure are your jobs ?
It may be a better idea to pay down half the car loan, eliminating a lot of interest , and sounle your monthly payments from the savings. Then, if something comes up and you have savings to pay cash and would only pay the normal monthly payment
I only ask because if you just bought the house you may have not detected some issues with it yet , like the heating when it gets really cold , roof leaks with melting snow etc. We just bought a house 3 months ago and found a leaking toilet that damages the floor underneath and had to pull up and replace floori g and subfloor , around 4k.
Also , how secure are your jobs ?
It may be a better idea to pay down half the car loan, eliminating a lot of interest , and sounle your monthly payments from the savings. Then, if something comes up and you have savings to pay cash and would only pay the normal monthly payment
Anonymous
11/24/2014 07:10
Subject: Payoff Car Loan vs. Keep/build up savings?
We are working to re-build our savings after buying a house this year. We have about 15k in the bank (separate, well funded retirement & college funds). That's a 3-4 month emergency fund (assuming we'd drop out of day care). We put in $250 a month, plus our FSA reimbursements (7500/year). This account is also used to fund unexpected things, like when we had to replace our heat pump.
We have a car loan of 8k, with 2.9% interest. I'm tempted to pay off the car note now, and then work to rebuild the savings. The monthly payment is 350, so that would help build it back up.
It would bring our emergency fund down below the "acceptable" range, but seeing the percent of our car payment that goes to interest makes me cringe!
Thoughts?
We have a car loan of 8k, with 2.9% interest. I'm tempted to pay off the car note now, and then work to rebuild the savings. The monthly payment is 350, so that would help build it back up.
It would bring our emergency fund down below the "acceptable" range, but seeing the percent of our car payment that goes to interest makes me cringe!
Thoughts?