[this is a ymoyl update.]

i gave $6,130.65 to charter one auto finance today, and the car is mine. i debated this for days. i called to get the payoff amount after i received my tax refund check, and found that between it and what i had saved to invest, i could pay off the loan if i wanted to. the idea seemed an extravagance under the circumstances; shouldn’t i be saving that cash as a reserve against a time of unemployment? or at least continuing to invest, while making the monthly payments?

i decided to do it after computing what i’ll save on interest payments. by paying it off now, i’ll avoid $400 in interest. there were 20 months left in the loan, so i thought of it in terms of the slimming i did last spring. i viewed it as getting rid of a $20/month bill that i was paying for no reason. also, it had to be paid sooner or later, and by doing it now when i have the cash available, i’ll avoid having to make payments during harder times, if it should come to that. i can also see it as freeing $343.91/month to go into my cash reserves. finally, the car is in good shape, has a transferable warranty, and has had expensive work completed under that warranty in the past few months, so if necessary, i should be able to sell it at a good price and live off the results for several months. with the monthly car payment gone, the cash reserves needed for maintaining my current lifestyle through six months of unemployment should be closer to $10,000 than $12,000.

i’ve had misgivings, but have finally decided i’ve done well. i have the satisfaction of knowing i’ve lived up to what i consider one of the most important financial principalsno pun intended.: get out of debt as quickly as possible.

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