What to pay off the Dave Ramsey way?
I am about to start Baby Step 2.Here are my debts and interest rates: $2343 personal loan for carpet at 0%, $1590 personal loan for braces at 0%, and a student loan for $19500 at 1.625%. I have the cash that I can pay off the first loan, and the braces I use my flex health account at work to pay for pre-tax. However, with both of these at 0% should I just keep making the minimum payments and put the money in a high interest savings account? Or should I pay off the carpet now and the braces at the start of the new year when my flex account has money again and start paying double on the student loan? I think you will all tell me to pay them off and snowball, but I’m so scared and nervous!
If you don’t have a back-up reserve of cash for emergencies then I would put the money in a high interest savings account….because you never know when you might need it. Pay the minimum on the loans with 0% interest, one point of Dave Ramsey suggesting that you pay off things is because normally the banks, etc are making a lot of money from you…here that is not the case. Pay as much as you can on the student loan and pay it often. Don’t wait for the payment date…pay some each week if they allow it. It will disappear much more quickly because you will accrue less interest over the life of the loan.
