So few days ago I've decided to work on paying of the car.
My logic was - market is high right now, maybe it is best to first work on paying off the car, than afterwards, dollar cost average freed up money into SP500, and to designate that savings towards the "pipe dream challenge".
But, since seeing Creditcardfree's post I looked up the Navy Federal special offer of 5% CD (for maximum of $5,000).
Now, while it is not much, it is an awesome rate for a CD, which is guaranteed.
So the logical part of me does struggle with it -- the interest on the car loan is 2%. The interest on a CD is 5%. And it is guaranteed and risk free. So even after taxes, mathematically I would come ahead. So how can I justify paying off the car?
Pay off the car or... not?
September 5th, 2014 at 03:25 am
September 5th, 2014 at 04:20 am 1409890830
September 5th, 2014 at 05:03 am 1409893401
September 5th, 2014 at 11:50 am 1409917839
The best justification for paying off the car is psychological. The feeling of being free from the debt, the payments and driving a car that is paid for.
Since you would keep making payments on the car if you invest in the CD, when would the car end up being paid off? Is it still within the next year? Could you invest in the CD now, and still look for areas to cut and apply the 'savings' to the car loan?
Good luck deciding!!
September 5th, 2014 at 12:38 pm 1409920706
September 5th, 2014 at 01:43 pm 1409924623
I would do the 5% CD too, but I already opened 3 bank accounts this year for bonuses and it's a lot to manage (& I have a 6% CD already).