No. of Recommendations: 1
I also have approx $5500 in CDs which wont mature for 4-8 years, but I could always break them and eat 6 months interest as a penalty if required.

Why is this not counted as part of your emergency fund? As you point out, you could break the CDs for a pretty minimal hit, if you really had to. That would increase your e-fund up to the $15k range.

So, as the new year begins unfolding, I am wondering if I should:
(a) Leave well enough alone. Make those minimum $130/month payments and not worry about it--I mean c'mon! Its 'Good Debt', aint it? </sarcarsm>
(b) Pay off the loans from my savings. Just lease another car next year instead of buy--which is what I'd likely do anyway as I think NYC destroys cars which is enough to get me past my anti-lease views in the past
(c) Use one of those blank checks my credit card company sends me (I dont carry balances on credit cards--this is my last piece of 'debt' outside of the mortgage and lease payment) to pay it off. 0% interest for 2 years. 3% fee.
(d) Lower my 401k withholding to 6% and roll the post-tax adjusted take-home bump into my student loan payment (would pay off the loan in 3-4 years, maybe a little quicker)


Are you willing to stop using the credit card that sends you the checks? (You don't really have to do this, if you are able to pay the monthly charges off every month, in addition to the required minimum payment, but it will be a bit harder to make sure you are paying enough to pay the former student loan debt off before the promo rate expires.) Are you willing and able to make payments in the $350/month range in order to pay the debt off before the promo rate expires? If so, I would say that you should consider this option. It will cost you about a $233 transfer fee and the debt will be gone in 2 years. Compared to continuing to make $130 payments for the next 6 years or so, which will cost you almost $1700 in interest, using the 0% balance transfer option will be a significant savings.

Another option might be to transfer the debt to the credit card, and continue making the $130/month payments. plus any extra money that you can find, to the credit card. (Please note - your first payment may need to cover the $233 fee so you should plan for that). At the end of the promo rate, you should be down to a $4600 balance (or less, depending on how much extra you've been able to toss at it), which could be covered by your money in CDs, if you don't have another decent BT offer. If you end up buying a car instead of leasing one next year, putting your previous lease payments toward the debt could probably pay it down substantially before the promo rate expires.

AJ
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