After paying off $12,000+ toward student loans in a single day, Eric and I found ourselves just $6,600 shy of being completely debt-free.
Paying off the student loans pretty much wiped our house down payment savings account, but we still think it was the best decision. Since making that bulk payment six weeks ago, we’ve managed to bring back our house down payment fund to $3,000+. Hopefully, we’ll be able to recuperate it back to $10k by the end of the year.
I said at the end of that post, that we’d most likely be debt free by the end of the year. But now I’m wondering: Is being debt-free the best decision?
The $6,600 that we owe, is broken down into a $1,100 student loan for me, and a $5,500 student loan for Eric. Both loans are interest-free. My loan is a $52 monthly payment. Eric’s loan won’t have payments due until December 2014, assuming he remains in school.
We’re currently trying to save up as much as possible for a house down payment and also a new (to us) car. Those are big ticket money items where having a chunk of savings would come in handy.
Also, our money can continue to earn interest (albeit a small amount of interest) in the banks, rather than going toward debt.
On the other hand, the allure of being debt-free is so enticing.
I could keep using the side hustle income to pay off debt, rather than going toward a new car savings account. Or I could continue to save for the things I know we will need either next year or the year after.
Which would you choose? Pay off 0% interest debt? Or save?