After a lot of consideration and what-if scenarios, I've finally decided what I will do with my car loan. Thank you for all your comments and suggestions on how I should handle the loan. I've decided I would be comfortable with having $10,000 in savings. If I paid off the car loan now, that would leave me around $7,000.
I want to be sure that this loan is gone by the end of the year. In order to accomplish this, here is how I will handle the car loan. I will continue to pay an additional $200-$250 each month in addition to my regular payment. I will also continue to contribute as much as I can to my savings account. Looking at my budget for the next few months, I should be able to save at least $300 a month.
After about 6 months, the numbers should look something like:
- Car Loan Balance: $350/month decrease in principal from regular monthly payment. $200/month in additional principal payments. Car Loan balance should be roughly $20,900.00.
- Savings Account Balance: $300/month deposits, $150/month savings account interest. After 6 months, approximate savings balance should be $35,000.
- Savings Balance $35,000 - Car Loan Balance of $20,900= $14,100.00 left in savings.
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