Though this has basically depleted my savings, at least I now have a back up if something happens. I will contribute a small amount (between $20-$50) each fortnight and let it slowly build up. All the while, I will continue saving to pay off my car. Eventually, I would like my EF to at or around $10 000, but for now, I will build it up slowly while I pay off my car.
The plan was to pay off my car and then save up for a home deposit. I am wondering now, however, should I wait until my EF is fully funded at the desired $10 000 before buying? This seems like a good idea, as it will give me a back up if something were to go wrong. Gosh, I am never going to be able to afford a house!
Any thoughts?
Why are you saving in order to pay off your car loan rather than just paying extra each month? You'll pay it off faster if you make extra payments along the way because if you pay extra to principal this month, then next month's regular payment goes a little more to principal and so on like a snowball. But of course if you don't have any EF or savings you should do that first before paying off the car - if you need cash for some reason you can't get money back you paid towards your car note!
ReplyDeleteOnce you have the car paid off you can save that amount you used to pay, so your savings will accumulate a lot faster. Don't get discouraged! I know it seems like a huge amount to get to, but you will get there before you know it if you stay disciplined. Your income will jump over the next 5-10 years so you'll have a lot more to work with!