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I Can Pay Off My Loan But Need to Use Some Cash From My Savings Account. Should I? – Sulian

Sulian

“Dear Steve,

I have this 19% personal loan with a payoff of $816.00 I’ve been paying for the last 4 1/2 years. I am so ready to pay it off I can feel it. I bring home about $1220 a month after taxes from work and about $2,200 in a savings account.

The minimum payment is $150.33 and they say I have six months left. Basically I would like to know the quick and best way to pay this off? How much of saving should go toward it?

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How much of $2,200 saving should go toward paying of $816.00 at %19 debt? I bring home about $1220 after taxes.

Sulian”

Dear Sulian,

Go ahead and pay the loan off now using the money from your savings account. Then to replenish the savings account put the old monthly payment for the loan in your savings account each month.

The risk in doing this is that an unexpected financial emergency might come up in the next eight months you might be a bit short, but you’ll still have $1,400 in your savings account and building it back up each month.

If you are comfortable with that approach, do it. Experiencing the joy of eliminating a debt is a special thrill to savor. Enjoy the accomplishment.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

3 Comments

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    • Dear Mr. Bruno James,

      You are too late. We’ve already outed this email and as a scam loan opportunity. But thanks for posting another example of what people should avoid responding to.

      Steve

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