By: Revanche

Someone, please say me nay

November 12, 2008

I don’t think I’m going to succumb, but feel a little weak in the will at the moment. I know we’re playing Emergencyopoly, or just saving my butt off, but this month’s bedeviling loan statement came in and the balance is only $3130. Once that’s paid off, I free up almost $400/month of cash flow.

Then, “inspiration”: Why not pay it off now? Then I free up that $400/mo now, and stretch the e-fund by $2400.

Internal debate:

Well, not really, that $3000+ has to come from somewhere, doesn’t it now, silly girl?

Erm … efund?

No, NOT an emergency.

But *squinch* … better cash flow?

No. Less emergency money and you’ll have to make up for it by saving that cash flow anyway. Same end product.

It’s so tempting to take the cash and pay it off.

But, the interest rate is very low (1.9%), I’ve only about 8 more payments to make and this move is clearly motivated by antsy impatience. The cash on hand is more important than getting rid of a single payment (probably). Slow and steady saving and payments may win the race, but sometimes I crave a big splash of change to fend off that plateaued feeling.

7 Responses to “Someone, please say me nay”

  1. Man, I remember how it felt to just want all the debt GONE. I think you’re making the smart choice, though. Your efund is probably earning more than 1.9% and you’ll be better off having that moeny available in case of a real emergency.

    All of which you already know, but of course we all need a little reinforcement every now and again.

  2. Revanche says:

    paranoidasteroid: yeah, especially when I was just about to tuck away some of the lower earning money into a CD at 3.5%.

    Reinforcement = good!

  3. Smart decision, but i completely understand the desire to pay it all off, and NOW. Luckily (or not) my student loan debt is so far from the realm of “why not just pay it off now?” that the temptation usually isn’t strong.

  4. Karen says:

    I paid mine off about 7 months early. Although in my case, my loan interest rate was greater than my savings interest rate.
    I did it for better cash flow.

    If you pay off your vehicle, will it lower your insurance?

  5. Sense says:

    hmm, yeah, I definitely know the feeling of wanting to clear the debt once and for all, but Murphy just loves invitations like that…

    smart move!

  6. Revanche says:

    karen: If I did pay it off, I could reduce the coverage to collision only since I would be the title holder, but that saves me about $200 while spending a little less than $3000. The “discount” is good, but the opportunity cost of not having that cash in hand for emergency money is almost not worth it.

    sense: As a lightning rod for Murphy, I’m pretty wary these days 🙂

  7. Karen says:

    I forgot that it’s not your primary vehicle and then you mentioned a reorg in your office…

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