Use e-fund to pay off last of CC debt?

[isabel]

I'm thinking I probably already know the answer to this, but I'm considering using a portion (I would leave some behind) of our emergency fund to pay off the last bit of our CC debt. Now that we're within that range I'm eager to just get rid of it. I'm not sure that's the smartest idea though. Regardless of what I do, once the CC is paid off we'll begin throwing all of the debt repayment money toward savings for a home purchase next year. We should be able to replenish what I use from the e-fund in just a couple of months.

Thoughts?

[cahabalily]

How much debt, at what rate? And how much do you have in your efund? Are your jobs secure?

[smiley]

How long will it take you to pay off the debt if you don't use that money? Would it leave you with a comfortable amount in your e-fund if something were to happen?

[countthestars]

How much is your efund now? How much do you owe? At what rate?

[isabel]

It's at just under $5,000. Still at a 0% interest rate, but I can't quite remember when that runs out. Sometime in July or August I think. We have $7,000 in our efund, per the recommendation of our financial advisor. He has a different view on "emergencies" than most of MM, which we happen to agree with. Jobs are very secure. No concerns there.

We would be able to get the debt paid off by the end of August if we don't touch the efund. The efund would basically be replenished around that same time as well since all the money we've been spending on debt repayment would go back into savings. I think we'd be comfortable with our efund level for those couple months that it was low.

I think ultimately my reasons for wanting to do this are based around personal desire to get rid of the debt and not being quite sure when we'll have to start paying interest. Although, even if we do have to pay some the debt will be paid off quickly enough that it shouldn't have a huge impact.

[jinnifah]

I see it as a good idea, assuming the following statements apply:
-You are paying more in interest per month on the cc debt than you are making in the e-fund
- You are not completely depleting your savings
- you re-fund the e-fund as a priority - presumably by taking the extra $$ from your cc payments and recycling it back inti the efund along win your normal contributions to that account.

Then, if an emergency comes up, it'll obviously go back on LOC or CC - but you're not really the worse for wear - right back where you started and at least you'll have profited from not paying crazy CC interest rates.

ETA: after reading your update, I wouldn't bother while it's at 0%. You should probably call and find out when the interest does start to apply though, as well as whether the interest is backdated to the original purchase date if you don't pay it off before the end of the promotion. So my new answer is, yes use the efund if you won't be able to pay the CC off before the 0% promotion expires. And don't bother otherwise.

[cahabalily]

It's a 0% - keep paying as planned. If the interest will start accruing before it's paid off, then maybe you can re-evaluate, but I don't see any reason to drain the E-fund. Transmissions go out, tires blow, etc. and that e-fund may be needed when it isn't there anymore...

And you can call the CC company and ask when interest starts back - it takes one phone call, so that's not really a justifiable reason to wants to drain the e-fund.

[isabel]

Alright, that was the reality check I needed (and expected). I'll leave it alone and just keep throwing extra money at it.

Thanks!

[Roc A Bee]

If you are going to be charged interest on the entire amount when 0% runs out, I would pay that off ASAP.