What to do with the home owners credit?

[project15]

Well I just received my refund - slightly less than $7500 since we owed a little, but we'll just call it $7500.

I have a car loan (6.5%) with a balance of $6100 and make minimum ($267.51) and extra payments ($150) a month for a total of around $420.

My question, which seemed like a no brainer to me at first, is should I use this money to pay off the car outright?

Here's why it's not so simple to me:
I'm currently fearing a future job loss since I'm in the IT field. I really have no reason to believe that I will lose my job, but I'm just preparing for the worst.

My wife works as well. I have a fully funded emergency fund and this is my only consumer debt. I have a mortgage(5.875%) and student loans (2.25%). If I do use this money toward the car, I will build the $7500 fund back up within 6 months.


Cliff notes: In this shaky economy with the fear of a future job loss, is it better to have cash on hand or pay off a debt that has a monthly payment?

[noppenbd]

How many months is your EF?

If 6 or more, I would say go for paying off the car. Just remember to bank that $7500 since you have to pay it back.

[project15]

Originally Posted by noppenbd

How many months is your EF?

If 6 or more, I would say go for paying off the car. Just remember to bank that $7500 since you have to pay it back.

4.35 full months (yes, I have it down that exact ) in a savings account + 1 full month in my checking account. I'm not worried about having 6 months because both spouses work and the possiblity of us both losing our jobs during the same period is none since we're in completely different industries and hers is much more stable than mine.

Yes, I plan to build that $7500 up again if I use it on the car.

[maat55]

Originally Posted by noppenbd

How many months is your EF?

If 6 or more, I would say go for paying off the car. Just remember to bank that $7500 since you have to pay it back.

I second this.