What should I do?

[veronak]

Ok I have a little more than a $1000.00 in my EF, I have 2 student loans one is about $800.00 the other is $278.00. Should I take the money from my EF and pay off the $278.00. I have had these loans since 1993 and I am sick & tired of them the interest rate is 6.1 and 6.25%. I was also thinking now that I have reached the $1000.00 mark for my EF (D.Ramsey plan) I should stop funding it and tackle the bills now with the money I was placingin the EF ($150.00 a month), so what do you guys think?

[PrincessPerky]

I would...at least the smaller loan, I maight wait two months for the bigger one, but then my EF is also my 'don't over draw the checking account' fund.. So I hate when it goes below 500.

1000 plus the 150 you have to put in this month is enough to pay both school loans totally off...then you would be debt free what a freeing feeling!

[robex]

I agree with Princess. I would pay off both loans and be freeeee.....

[sweeps]

I would hold on to the EF. If you pay off the loans and then something bad happens, you'll have to take on credit card debt which would be a lot more expensive than 6%.

[nanamom]

i would leave the EF at 1000.00 and tackle the bills from now until they are done. In two months you'll have paid off the smaller one and then 6 months after that the larger one will be done. That leaves you debt free and with a 1000 EF in 9 months. That would be awesome. If you do decide to use some of the EF money leave at least half of it. That makes you free in 4 months, but with only 500 in an EF Look at what you have that might break before you decide which way to go, IE is your car healthy?

[veronak]

Thanks guys I appreciate it but I think I am going to pay off the smaller ones and then tackle the other debt, CC's with much higher interest

[funnyvalentine]

I'd try and consolidate the school loans; mine are currently at under 3%. It only makes sense to pay off your highest interest loans first....

[Haku]

Were it up to me, I would maintain the EF. Student loans at a little more than 1k ... really isn't much at all. Such an amount is extremely manageable and the impact to your monthly bills would be minimal.

Contrast that with a minor emergency that may crop up, and not having enough emergency fund to cover the expenses....

The compromise to pay off the small one while chipping away the larger one is fairly reasonable I think.

Either way, this should not pose a problem to you, especially if you have bigger debts to worry about. CCs perhaps?

[PrincessPerky]

Err I missed you having bigger debts to pay off (bigger interest) scratch my reply to pay around half on the bigger ones.

[Ima saver]

I would maintain the emergency fund also. I find it hard to believe that so many adults have no emergency fund to fall back on.

[thriftymom]

$1000 in the EF really isn't that much. Just think about what kind of a car you can get for that. So, I would definitely maintain your EF and pay off your highest interest debt first regardless of the size of the balance.

[flash]

Don't lose the forest for the trees. If you have much larger ccs at a high interest rate, paying off little loans with low interest may make you feel like you've accomplished something. But, if while you are doing that, the cc's interest is racking up your debt, you need to tackle it first. Think of the reducing the overall money owned, not just the number of debts.

[funnyvalentine]

This is wise advise; you want to get rid of the debts that cost the most to service....

c


QUOTE=flash]Don't lose the forest for the trees. If you have much larger ccs at a high interest rate, paying off little loans with low interest may make you feel like you've accomplished something. But, if while you are doing that, the cc's interest is racking up your debt, you need to tackle it first. Think of the reducing the overall money owned, not just the number of debts.[/quote]

[cptacek]

Yep, I think the thing to do is keep the EF and put that $150 a month towards the highest interest CC. Of course, if your credit is good enough, you might be able to get a 0% interest CC and roll all your credit card debts to that card...although some that I have checked out are charging 3% for that privilege.

$1000 EF might be enough if you are single with no dependents and the ability to pick up and move on a whim (or because of necessity) to get a new job. But, if you have car payments or a house payment or anyone dependent on you, you probably need more. It all depends on your comfort level. You seem rightly proud to have gotten to that level, and psychologically, paying off a few debts before adding to the stash would probably help you realize your hard work is paying off.

[sakigt]

Id use $300 of your savings to pay one off.

For some reason having a debt under $1000 looks a little more manageable to me.

[PrincessPerky]

I was going to say that..pay the little one off and celebratre, then pay your highest interest debt with your 150 a month..