This thought has entered my mind several times in the last two weeks: We have enough money in cash that we could pay off the truck today. It would still leave us with plenty of cash for other emergencies, too.
I think the thought comes from impatience. I want to be done with the loan. I spend too much time making calculations as to how soon I can pay it off. I'm annoying myself!!
The pros: We own the truck free and clear. We pay no more interest on the loan. I don't have to make calculations and record the loan. We still have plenty of emergency fund money. We will have only mortgage debt.
The cons: We have to use emergency cash. We lose interest on the cash (although it's very little). I have to focus on paying ourselves back...which will require calculations, too.
I suppose I would need to consider any risk to this payoff scenario. I did read on USAA's website, that with the fiscal cliff negotiations looming, there is a higher probability of a government shutdown. This could lead to a delay of pay for the amount of time it takes. It might be nice to have that truck loan cash on hand if that occurred.
I won't decide right away. Payday is later this week. I expect to send in close to $450 to the truck loan at that time. Once mid month rolls around I expect the loan to be under $3K in a very short time.
I'm off to do more calculating. What would you do if this option was open to you? Pay off with cash on hand, and repay to your savings? Or just keep working to pay it down and off fast?
ETA: Interest rate is 3.39%, balance is $3706.02, regular payment is $329.13, and we have about $900 extra a month to send to the loan.
It Has Entered My Mind
January 28th, 2013 at 06:49 pm
January 28th, 2013 at 07:21 pm 1359400884
The hedge with a paid-off vehicle is that you can always sell or downsize in a large emergency.
My crystal ball tells me that you are not 100% comfortable with paying it off right now, but you probably will once the balance is $2k or $3k.
January 28th, 2013 at 07:31 pm 1359401469
Paying off now vs. as scheduled saves you about $65 in interest. But, I'm sure you already knew that. And, it sounds as if you'll be paying off faster than scheduled anyway.
January 28th, 2013 at 07:46 pm 1359402415
I'd pay it off. Sounds very similar to what I did today with my sewer loan. I paid it off, about $2900. I took it out of checking where my money is earning nothing just sitting there.
January 28th, 2013 at 07:57 pm 1359403061
January 28th, 2013 at 08:05 pm 1359403507
January 28th, 2013 at 08:07 pm 1359403660
January 28th, 2013 at 08:54 pm 1359406447
January 28th, 2013 at 09:41 pm 1359409267
January 28th, 2013 at 09:54 pm 1359410050
January 29th, 2013 at 02:08 am 1359425312
January 29th, 2013 at 03:33 am 1359430434