Pay off Car Loan or Keep Savings

[Green Panda]

My husband and I are debating on what to do. We have $700 left on the car loan. We have Around $4k in our savings. We could pay it off, but we're on one steady income. I'm a bit nervous with our situation and this economy. He's also up in the air. We're going to talk about it more tomorrow. Just wanted to see if there were any pros/cons we hadn't considered.

[Flexo]

$700 is not much left on the loan, so the good news is your interest expense probably isn't that high.  $4K in savings is good. How much longer will $4,000 last compared to $3,300 in an emergency? 

If you would feel more nervous with $3,300 in savings than $4,000, then you might be better off from a sanity perspective by continuing minimum payments for a while longer.

[Smithee]

Hi, Green Panda. Flexo's point about the interest left on the car loan is right on. You're probably better off saving toward a 3-month buffer. Or even 6 months, depending on your situation. <a href="http://www.consumerismcommentary.com/2008/08/18/your-emergency-fund-what-qualifies-as-an-emergency/">Flexo laid out everything you should need to think about with regard to how much to save.</a>

[Green Panda]

Thanks for the perspective! We've slept on it and we'll decide today on what to do.