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9/22/2017 12:11:25 AM
Posted: 4/3/2012 4:32:07 PM EDT
I am getting a gift of $6k from a relative and I am debating what to do with it.
I have about $8k left on my car (60 month, 3.9% loan - I've paying more than the minimum payment since I started), but I would also like to get a home in the next couple years...

So I am torn between sticking the $6k in an savings account and (not) earning interest on it (plus adding a few $100 to it every paycheck) or pairing the $6k with some extra money I have to just pay my car off and not have the $400 payment every month.

Thoughts?
Link Posted: 4/3/2012 4:45:42 PM EDT
IF you have some saving already set aside, i would go for an extra car payment..

paying down a 4% loan is better than drawing .000000001% in a savings acct LOL

Brian
Link Posted: 4/3/2012 4:48:37 PM EDT
Originally Posted By thatguy:
IF you have some saving already set aside, i would go for an extra car payment..

paying down a 4% loan is better than drawing .000000001% in a savings acct LOL

Brian


This


Link Posted: 4/3/2012 5:26:02 PM EDT
I paid off my SUV recently out of my savings. My savings account is pretty pitiful right now, but the joy of getting rid of a debt more than outweighs that
Link Posted: 4/3/2012 6:49:28 PM EDT
Scottrade..........Apple stock...........FTW.
Link Posted: 4/3/2012 6:52:10 PM EDT
How many months worth of expenses do you have in savings?
Link Posted: 4/3/2012 9:34:35 PM EDT

Originally Posted By sd_norske:
How many months worth of expenses do you have in savings?

I can survive 6 months on savings now, I'd prefer to leave that amount alone and not touch it, just to play it safe.

I do like the idea of eliminating the car debt now, if I pay it off I can push the $400 I am paying now plus a few extra $100 to savings and get back that "$6k" inside a year and keep contributing to it. At 24 my "stash" of money isn't super large, but other than the car I have no debts...
Link Posted: 4/4/2012 10:23:46 AM EDT
pay off car!

then take your car payment and put that plus other money you want to save.

better to paydown 4% loan then earn .0000001%.

plus you might get some interest money back.
Link Posted: 4/4/2012 11:21:13 AM EDT
In the same boat. I have this month and then 2 more payments on my car. I think I'm going to pay the whole off from my savings this month though. I will still have enough in savings for 4 months living expenses so I shouldn't notice anything. What's the point in earning 0.84% interest while I'm paying 3.49% interest on a loan? Doesn't make sense to not pay off the loan if you're able to.
Link Posted: 4/4/2012 12:41:32 PM EDT
with 3 more payments all of your interest has been paid. nothing to gain by paying it all off now.
Link Posted: 4/4/2012 1:38:27 PM EDT
Originally Posted By zutmeloda2003:
with 3 more payments all of your interest has been paid. nothing to gain by paying it all off now.


I'll save about $15 but it's more for the feel good aspect of having the title to my car in my hand.
Link Posted: 4/4/2012 4:09:11 PM EDT
Originally Posted By timbernet:

Originally Posted By sd_norske:
How many months worth of expenses do you have in savings?

I can survive 6 months on savings now, I'd prefer to leave that amount alone and not touch it, just to play it safe.

I do like the idea of eliminating the car debt now, if I pay it off I can push the $400 I am paying now plus a few extra $100 to savings and get back that "$6k" inside a year and keep contributing to it. At 24 my "stash" of money isn't super large, but other than the car I have no debts...


Have you thought about opening a Roth IRA? I kick myself for not taking retirement accounts more seriously in my 20's.
Link Posted: 4/4/2012 5:56:26 PM EDT
Unless you plan on putting the money to work in an account that will meet or beat the interest you are paying on the car loan (which involves risks), I would pay it off.
Link Posted: 4/12/2012 12:59:58 PM EDT
Buy a few gold coins of different weights. 1 oz .5 oz. .25 oz. If you stick with the american eagle type of gold it is considered currency so no reporting. If you need some cash go down to the local coin shop and sell it.

As far a paying off your car, you are problably paying mostly princilpal now so no real saving as far a interest is concerned.
Link Posted: 4/12/2012 2:26:52 PM EDT
[Last Edit: 4/12/2012 2:27:41 PM EDT by HighCaliber]
Roth IRA with the remainder to the car.
Link Posted: 4/12/2012 7:45:53 PM EDT
[Last Edit: 4/12/2012 7:46:57 PM EDT by jekbrown]
yeah, if you don't have one already, put some in a Roth and put the rest in savings. One great thing about a Roth is that it can be considered it's own emergency cash fund. You can take your contribs out with no penalty....so if the shit truly hits the fan (eg, you need a new liver or you're going to die) you can access that money. It may fawk up your retirement plans if you draw it out like that, but does retirement planning really matter if the alternative is an early death? Prolly not. That's how I look at my Roth. It's not huge. I'm 36 and it has about $35,000 in it. If I need $ in a life-or-death emergency, it's there....otherwise it's staying there until I retire. Much better this way than a 401(k), where taking out loans is frought with danger, penalties and the tendrils of the IRS.
Link Posted: 4/12/2012 7:51:37 PM EDT


10% for fun.

90% for debt.


Link Posted: 4/13/2012 5:37:35 AM EDT
IMHO, I'd half save, half pay off the car. It'll cut down the time and interest on that loan, and as you've said you're already making paying more than the minimum which is fantastic (our last car loan we would make double payments). If you're looking to buy a house in the future, having a nice healthy history of making those payments is a great thing in the creditor's eyes.

Do you have any other debts?

Otherwise, great job on thinking ahead with this windfall, and looking toward your future!
Link Posted: 4/13/2012 11:37:13 AM EDT
put $1000 down on the car, save the rest

I don't like depleting savings for big purchases like autos, I'd rather pay them off with future income and keep my current savings.
If I get into a jam I can sell the car and get rid of the payment that goes with it, and I'll still have my savings.

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