Author Topic: E-Fund to pay down high interest loan?  (Read 407 times)

Easye418

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E-Fund to pay down high interest loan?
« on: August 28, 2019, 01:12:23 PM »
I'll keep this quick:

I have $15,000 cash sitting in savings account making 2.00% interest and I have $28,000 on a 20 year home improvement loan at 5.99% interest. 

Should I dump the $15K on the home improvement loan and rebuild the e-fund?


RWD

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Re: E-Fund to pay down high interest loan?
« Reply #1 on: August 28, 2019, 01:19:11 PM »
Yes.

Villanelle

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Re: E-Fund to pay down high interest loan?
« Reply #2 on: August 28, 2019, 01:25:21 PM »
I would.  I assume the rest of your finances are in good shape?  Just make it a priority to rebuild the e-fund ASAP. 

Easye418

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Re: E-Fund to pay down high interest loan?
« Reply #3 on: August 28, 2019, 02:17:31 PM »
Yes.

Thank you

I would.  I assume the rest of your finances are in good shape?  Just make it a priority to rebuild the e-fund ASAP.

Yes, rest of finances are in order in a sense.  I kinda want to hold back $3K-$5k as an extra precaution, but not sure. 

seemsright

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Re: E-Fund to pay down high interest loan?
« Reply #4 on: August 28, 2019, 03:05:05 PM »
Yes.

Thank you

I would.  I assume the rest of your finances are in good shape?  Just make it a priority to rebuild the e-fund ASAP.

Yes, rest of finances are in order in a sense.  I kinda want to hold back $3K-$5k as an extra precaution, but not sure.
Keep what ever amount you need for your comfort....you can always send more cash to the loan.

Kayad

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Re: E-Fund to pay down high interest loan?
« Reply #5 on: August 28, 2019, 11:09:24 PM »
Do you have other savings?  I consider all of that part of the e-fund, if things really hit the fan. Id roll at least 10k to the loan, unless you are especially emergency prone (chronic health problems etc), this is all or nearly all of your liquid assets, or you are psychologically needing a fat cushion for mental well being.

MDM

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Re: E-Fund to pay down high interest loan?
« Reply #6 on: August 29, 2019, 10:40:31 AM »
6% is on the high side.  If you have any bonds in your taxable accounts, selling those to pay the loan is very defensible.  Selling stocks in your taxable account, if there would be little or no capital gains, might also be a consideration - although less clear a choice than bonds paying much less than 6%.

frugaliknowit

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Re: E-Fund to pay down high interest loan?
« Reply #7 on: August 29, 2019, 01:51:53 PM »
I 6% RISK FREE rate of return is AWESOME!!

Easye418

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Re: E-Fund to pay down high interest loan?
« Reply #8 on: August 29, 2019, 01:55:53 PM »
Do you have other savings?  I consider all of that part of the e-fund, if things really hit the fan. Id roll at least 10k to the loan, unless you are especially emergency prone (chronic health problems etc), this is all or nearly all of your liquid assets, or you are psychologically needing a fat cushion for mental well being.

I don't really have savings other than $15K in the account.  If things got really ugly, I could draw out of my inherited IRA with no penalty.  Otherwise, I have plenty of Credit Cards in case of emergency.  Thank you.  Debating on still what to do. 

6% is on the high side.  If you have any bonds in your taxable accounts, selling those to pay the loan is very defensible.  Selling stocks in your taxable account, if there would be little or no capital gains, might also be a consideration - although less clear a choice than bonds paying much less than 6%.

I don't have any bonds, I am pretty much 100% VTSAX little bit international.  Thank you.

I 6% RISK FREE rate of return is AWESOME!!

This is true.  Thanks.