I owe $15,000 on my car and have $30,000 in savings. Should I pay off my vehicle?
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Dear Dave,
I’m 28, and I make around $75,000 a year. My only debt right now is a car payment. I still owe $15,000 on the vehicle, and currently I have $30,000 in savings and a 401(k) through my employer. I love my job, but my income can fluctuate from month to month. Do you think I should pay off the car, or hang on to all my savings?
Erin
Dear Erin,
Debt is a bad thing to have in your life, even with a good income. It’s an especially bad thing when your income can vary from paycheck to paycheck. It’s sounds like you’re in pretty good shape financially, except for that car note. It’s like an anchor weighing your finances down.
If you paid off the car, you’d still have $15,000 sitting in your savings account. And with your income, plus the money you’d free up by no longer having a car payment, you could rebuild your savings in a flash.
You know where I’m going with this, don’t you? Pay off that car, young lady!
— Dave
Dave Ramsey is CEO of Ramsey Solutions. He has authored several best-selling books, including "The Total Money Makeover." The Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.