Are y’all sick of hearing about my car loan? I’m sick of having it. I’ve blogged about how we’re sending extra money to the principal, so that we can have it paid off as soon as possible.
Change of plans!
My husband’s company is laying off 2,500 people worldwide. Crud.
Though we have a six-month emergency fund, that’s starting to feel like potentially not enough in the event of a layoff. It might make more sense to send extra money to savings, just in case we need it.
Once we have enough money to pay off the car in full, we can do it then or we can hold on to our savings and continue to make payments. It’s all about the cash flow right now.
What will this mean for our bottom line?
- If we make no additional payments on our car ever, we will have it paid off in December 2010, which is one year early. We will owe $370 in interest between now and then.
- Paying it off in full in December 2009 is $258 in total interest remaining, a difference of $112.
- Paying it off in full in June 2009 (a big stretch, but it was a goal of mine) would be $120 in interest paid.
When I look at interest alone, $370 max isn’t that much in the grand scheme of things. Sure, it’s money that I’d rather not pay, but if the alternative is having an extra 2 to 3 months of emergency fund saved, I think I’d rather take that option until things start to improve.
I still want to be on the path of getting out of debt, and I still want to be held accountable for it. I’m going to update my debt ticker in my left sidebar to reflect the balance remaining (plus the 1% fee we’ll be charged for paying it off early, so $115) and the amount in savings earmarked for the car, should we want to send the funds there.
Are you focusing on building up savings instead of reducing debt right now? Or are you working on both?