Debt vs e-fund

[jena]

The a/c died last week and we had to get a new system inside and out. Total was 13k. We paid $1500 cash to the handyman (moved vent, patching stuff) The a/c part we put on cc at 18% (a/c company financing was 27%! No thanks!)
We immediately paid $4k of it off from other savings. $7.5k on cc remaining.

We have $11k in the e-fund. But we don't save quickly, it took us a while to get there. We can put $500/mo toward the debt or to replenishing e-fund.

Other variables, we both have relatively stable jobs, only mortgage debt other than this, but dh may need a new car soon or at least major repair work (old pt cruiser it's just unreliable but we are holding off as long as possible).

Do we pay off the cc right away? Honestly, the idea of not having a sizeable e-fund scares me, but I think it's probably the logical thing to do. Any advice or a kick in the pants to just pay it off and start saving again?

[papie]

Just pay it. E-fund is also for situations like this imo. I know that may not be a popular opinion on this board, but I think carrying cc debt should basically never happen, regardless of efund. Pay the debt first, then build the savings.

[ijack]

At that interest rate, pay it.

[gt7301b]

Pay it, this A/C repairs are an emergency in my book.

[msmerymac]

You're losing money to interest by not just paying it off. You'll technically come out ahead by using the money to pay down the debt and then using the $500/month for savings.

How many months expenses does the $11k represent?

[noodleoo]

You'll still have $3.5k left in the efund after paying it off, so with 18% interest I'd pay off the CC. I'd then start replenishing the efund as fast as possible.

[Susie]

Pay it off; that interest rate is way too high to let the debt sit there.

Rebuild your savings at $500/mo. instead.

[thebulldog]

Sept 18, 2013 13:03:03 GMT -5 Susie said:

Pay it off; that interest rate is way too high to let the debt sit there.

Rebuild your savings at $500/mo. instead.

Exactly this. It hurts i know but that is why you have savings.

i be typing from me phone. typos and grammer dont count.

[SJ]

Sept 18, 2013 12:52:44 GMT -5 papie said:

Just pay it. E-fund is also for situations like this imo.

I agree!!

In a world where your e-fund was earning more than 18%, I would have a different answer, but if it's sitting in cash (earning <1%) I would use it to pay off the card.

[sixtwelve]

Definitely pay it off at that interest rate. We have a HELOC at a much lower interest rate sitting waiting for something like this to happen.

[bostonmichelle]

I agree pay it off, 18% interest rate is too high to let the cash sit and do nothing.

[lys]

Pay off the credit card ASAP - then just work to rebuild your e-fund.