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Crimsonsaint24 
Alabama Fan
Alabama
Member since Jul 2011
456 posts
| Paying Car Off (Posted on 2/11/13 at 12:05 pm)
I currently owe about $9,266.00 on my car and I will have everything paid off except my house. My question is I have about $8,000.00 saved in my savings account should I take this and put it towards paying the car off? I also have a emergency account but I don't touch that account unless of a emergency.
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WikiTiger 
LSU Fan
Member since Sep 2007
38300 posts
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If you really want to attack the debt but are unsure of parting with that much cash that quickly, then why not just pay double on it until it's paid off? That way you still have some cash on hand but you are making the debt disappear quicker.
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Crimsonsaint24
Alabama Fan
Alabama
Member since Jul 2011
456 posts
| re: Paying Car Off (Posted on 2/11/13 at 12:10 pm to WikiTiger)
Yes its kind of hard just dumping that much cash at one time and its gone
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dallastiger55
LSU Fan
Fort Worth, TX
Member since Jan 2010
1878 posts
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whats the interest rate?
if i were you id either pay about 4-5k at one time or pay a few hundred more each month
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foshizzle
LSU Fan
Member since Mar 2008
25135 posts
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Much depends on the interest rate. If it's 3% or below I wouldn't bother paying more than the minimum no matter what since the rate of inflation is about that.
If it's more, then it would depend on how much more. For just a percent or two I still might not bother and look into investing the money instead. If you're paying a lot more then I'd consider dipping into emergency cash - the amount would depend a lot on the interest rate.
BTW, I hope your emergency account is in a Roth. You can withdraw what you put in at any time without penalty while getting a tax-free return on earnings.
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Vols&Shaft83 
Tennessee Fan
Member since Dec 2012
3281 posts
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quote:
I currently owe about $9,266.00 on my car and I will have everything paid off except my house. My question is I have about $8,000.00 saved in my savings account should I take this and put it towards paying the car off? I also have a emergency account but I don't touch that account unless of a emergency.
Just pay extra every month, that way, you reduce the principal without having the painful experience of saying goodbye to your entire savings. Plus, you can continue to build your savings while paying off the car faster.
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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
3281 posts
| re: Paying Car Off (Posted on 2/11/13 at 12:28 pm to foshizzle)
quote:
BTW, I hope your emergency account is in a Roth. You can withdraw what you put in at any time without penalty while getting a tax-free return on earnings.
Ok once again, I think this is shitty advice. Yes you can withdraw your contribution at any time, but you cannot replace your contribution at anytime. Why would you sacrifice the opportunity cost of a ROTH IRA because you can't live with the idea of leaving $5,000-$10,000 alone in a money market or savings account for emergencies? I simply cannot understand this logic.
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kennypowers816
LSU Fan
Houston
Member since Jan 2010
772 posts
| re: Paying Car Off (Posted on 2/11/13 at 12:34 pm to foshizzle)
I agree with foshizzle.
But if you're itching to pay it off quicker, I understand. I was there with my car. I've had the savings to pay it off since I bought it, but I wanted to build the credit history and the rate was so low that it wasn't hurting to keep paying it. I ended up just paying off a large chunk of the principal to get the balance below $5k. Made it feel nice that I could pretty much just cut a check any day to get my title.
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Crimsonsaint24
Alabama Fan
Alabama
Member since Jul 2011
456 posts
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I just like knowing the fact that all my cars are paid for I may just double up and knock it down faster
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Fat Bastard 
New Orleans Saints Fan
Paradise
Member since Mar 2009
13493 posts
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nothing wrong with multi-levels of protection such as
1) emergency account(which you have)
2) ROTH ira (can be used for emergencies)
3) HELOC on home (can be used for emergencies), etc, etc
not everyone likes to use their roth as the #1 choice emergency fund.
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Ace Midnight
LSU Fan
Ball, LA - Home, Sweet Home
Member since Dec 2006
14890 posts
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quote:
I currently owe about $9,266.00 on my car and I will have everything paid off except my house. My question is I have about $8,000.00 saved in my savings account should I take this and put it towards paying the car off? I also have a emergency account but I don't touch that account unless of a emergency.
Yes, go ahead and pay down. You'll be out from the note in just a few months. If you're really hesitant - you're not eliminating it, anyway, so maybe pay $4000 to $5000 now, and hold the rest until you can pay off the remaining balance. The only problem is - some "priority" will show up and pull at that pot of money.
If it were me (and I've done it, in fact), I would pay what you can and once that debt is retired - DO NOT GET NEW CAR FEVER. Be disciplined and pay yourself the car note, every month, back into savings to replenish that $8000 you're about to dump into it. Don't incur another car note - just pay yourself the note until you can pay cash - keep doing that and you never have another finance charge on a car again.
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nelatf 
Louisiana Tech Fan
NELA
Member since Jan 2011
341 posts
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I need to know your interest rate....but the answer at this point is probably do not pay it off....keep savings intact and continue to pay monthly p&i.
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Crimsonsaint24
Alabama Fan
Alabama
Member since Jul 2011
456 posts
| re: Paying Car Off (Posted on 2/11/13 at 2:51 pm to nelatf)
Rate is 4.7
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Ace Midnight
LSU Fan
Ball, LA - Home, Sweet Home
Member since Dec 2006
14890 posts
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quote:
Rate is 4.7
I stand by my advice - pay it down, then off, THEN pay yourself back the $8,000 by continuing to pay the note. Don't get new car fever, just because you get the title in the mail.
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Powerman
LSU Fan
Corpus Christi, TX
Member since Jan 2004
115734 posts
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quote:
Rate is 4.7
If I were in your situation I'd probably dump the entire 8K into it
Then over the next several months knock it out
You'll be able to quickly replenish the 8K fund without a car note and you'll avoid the remaining interest
Although I'm not sure what the original loan was. If it's front loaded with interest like every other loan you may have already paid most of the interest
Can you pull up an amortization schedule that shows what portion of your remaining loan is interest and principle?
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jmtigers 
Southern Miss Fan
1826.71 miles from USC
Member since Sep 2003
3215 posts
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quote:
Rate is 4.7
This is probably a big departure from the norm, but refinance it w/ penfed for 1.45% and invest your cash elsewhere.
1.45% < inflation and you get to keep your $8k for other opportunities or emergencies.
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Tenforty1728
LSU Fan
Baton Rouge
Member since Oct 2012
46 posts
| re: Paying Car Off (Posted on 2/11/13 at 4:13 pm to jmtigers)
Don't overthink this. We're not talking about enough money to worry about not paying the note off and investing the cash. We're talking about saving roughly $350 a year in interest by paying the thing off. Just consider that savings and enjoy not having a car note anymore and continue to be a responsible saver like it sounds like you are.
Everyone take a chill pill with YOU MUST THROW EVERYTHING IN A ROTH!!! and NOOOO DONT PAY OFF ANYTHING YOU CAN EARN MORE THAN THAT INVESTING!!!! How much return are you really going to see from that over and beyond the guaranteed return of not paying a bank interest for a car note? Not worth the risk. Pay off the debt and enjoy being relatively debt-free.
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BACONisMEATcandy
LSU Fan
My opinions are my own
Member since Dec 2007
37675 posts
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I would go ahead and pay down and just continue to make the same payments back to the acct you spent the money from 
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PlanoPrivateer
LSU Fan
Frisco, TX and Delray Beach, FL
Member since Jan 2004
1110 posts
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I would keep the $8,000 in a safe place, say a money market account, and continue to pay the car note. Once you get the balance down to $8,000 then pay off the car and start putting the amount equal to your car note into savings or investments.
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jso0003 
Auburn Fan
Birmingham/Atlanta
Member since Jun 2009
4457 posts
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At 4.7.... pay that shite off!
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