View Full Version : Pay off the Car or keep the cash


ang_wutz
HI,
I'm looking for some opinions on how to manage some cash. We are in the process of selling our current home and moving to a larger house. We should get enough equity out of our current house for 20% down in our next house. We have two car loans 15K @ 6.5% and 25K @ 4%. We fully fund our 401Ks, IRAs, and an ESPP. We have an 25K ER fund. We have 28K in cash sitting in a money market account @~4% and are arguing over how to best utilize the money.

I think we should pay off the 6.5% car loan and invest the remainder.

My husband thinks we should invest some and keep about half on hand for housing costs. (He is definitely the more conservative saver/hoarder in the couple!)

We did have a bad experience in our last housing purchase - we showed up with the moving truck to find 6" of water in the basement, so we had a huge unexpected expense.

We would appreciate some outside input! TIA

Dingobiscuit
Paying off the 6.5% car loan would be a good idea with the numbers you provided. It sounds like you are in a higher tax bracket, and you would have to earn 9-10% on whatever investments you purchased before taxes to match the guaranteed results in paying off the loan.