Anyone using their savings for aggressive loan paydown?

[xraygoggles]

I'm sure this question has been brought up numerous times in the past, but has anyone personally raided their sizable savings (relative term, but I would say at least 25-50k+) to just pay down the loans faster?

I've decided to be really aggressive and pay down the remainder of my loans in one year, which is possible if I use this strategy to start the snowball. Just curious if anyone else has done this, and whether you regret using the funds, etc.

[fatlittlepig]

Of course. Why wouldn’t you.

[Peds]

Yea if it's cash savings you are losing money....

[Tim]

It’s called a Texas Two Step.
1st is the aftertax deposit when your start getting paid.
2nd bump is when your done with loan payments.

That dance step works anywhere but you have to finish to get the second raise. Sooner the better.

[xraygoggles]

fatlittlepig wrote:

Of course. Why wouldn’t you.

Click to expand...

Hmm, is it really that much of a no brainer?

I feel somewhat hesitant to do it, due to the slight anxiety of not having any cash savings. Would have to wait for next month's paycheck for cash in case of emergency.

[CordMcNally]

I kept a pretty thin emergency fund. There’s not too many things these days where you have to use cash and can’t use a credit card and their grace period.

[DCdoc]

seems like a no-brainer to me. Pay off your loans.  If you’re in massive debt, isn’t that an emergency?  If it’s not, what else is?  You’re keeping a good deal of cash earning next to nothing to protect yourself against an emergency, while ignoring the debt emergency you already have.

[StarTrekDoc]

Really depends on what the savings are in and debt % is.   Remember the power of compounding on retirement funds.   You start early and the tail on this investments are significant if indexed and left alone.

OTOH if savings is a MMF at 2% and your debt at 6% -- well that's a no brainer.

If really 6months on all this -- you're talking small dollars over time and if you're paycheck-to-paycheck; why lose sleep over this over the span of years?

When starting out on physician career, there's nothing more stressful than cash poor IMHO.

[Panscan]

What does any cash savings mean, like 0? Obviously you don't want 0 but it's dumb to have 50k in cash sitting around with loans unless you have big expenses or unpredictable job

[fatlittlepig]

Blah blah emergency fund blah blah. Tell
me what emergency can’t be handled by 10 grand and your next paycheck. Having 50K laying around while your in debt seems pretty dumb.

[xraygoggles]

Maybe some numbers would help.

Current debt burden: 197k @ 2.45%

Cash savings: 40k @ 2.10%

Checking: 15k @ 0.37%

I am thinking of plowing all of savings into the debt, and keep checking for any emergencies until next paycheck. The debt would be paid off in exactly one year (+/- 1 month).

[fatlittlepig]

Why think, just do.
FLP

[CordMcNally]

I’d cut down to about $10k and put the rest towards your loans.

[highdoseamox]

I keep a really small emergency fund (like 5-8k). I really have 2 or 3 paychecks to pay off anything big and unexpected if I put it on a credit card. That allows retirement savings and student loan paydown (similar balance to you)

[treesrock]

Same vote as everyone else, keep like 10k in cash and pay off loans.  Assuming you have adequate insurance (disability, life, umbrella), you should be covered for a true emergency.