Payoff the cars??

[outtaheresoon]

I recently "paid off" our 2 cars (owe about 10k on each) with our HELOC, figuring to at least get to be able to deduct the interest.  But now I am wondering if I should just pay off the HELOC with cash in our savings account.  If I pay off the HELOC I will still have about 25k in savings as our emergency fund.  Thoughts?

[Sibley]

Pay it off. If you need more than $25k, dip into the HELOC.

[SantaFeSteve]

Pay it off. If you need more than $25k, dip into the HELOC.

+1  No need to carry that debt.

[Retire-Canada]

Yup. Pay off the Heloc. You'll still have ~$22K more cash in your EF than I bother holding for emergencies.

-- Vik

[jmusic]

Yup. Pay off the Heloc. You'll still have ~$22K more cash in your EF than I bother holding for emergencies.

-- Vik

+1.  Also, couldn't you keep the HELOC open with a $0 balance, so it's still there if you need it?

[outtaheresoon]

yes, we can keep the HELOC open with a 0 balance.  In fact we have had it for 3-4 years with a 0 balance and the cars are the first thing I have put on it.

[solon]

Definitely pay it off. No reason to carry that debt.

[jmusic]

MMM also weighs in on this issue:

http://www.mrmoneymustache.com/2011/04/22/springy-debt-instead-of-a-cash-cushion/