I have paid off my credit cards, and have a debt consilidation loan that has interest built in (so paying off faster wont reduce the interest). My concern is making sure my partner is not left to pay this debt when we are down to one income…but he has no savings either.
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In black and white terms you should not have savings – and still have a loan owing, the interest you are paying on a loan far outweighs interest you would accrue from your “savings”.
Having said that it usually happens because people want to have some “real money” available if things go wrong – although it is a bit of a false economy
So I guess my answer is “it depends” – if the loan is not big and you are not likely to dip into your savings I would be tempted to keep the loan going.
But – and you are not going to like this – you obviously work & so does your partner – and in this case you should have savings (unless you have something like a mortgage) or you have had an emergency like medical expenses etc
If thats not the case, start learning some belt tightening and budgeting skills, otherwise you will still have your loan, will have eaten into your savings and will be respending on you CC debt
Congrats on the new bub to be
A few things… first, congratulations! Second, don’t listen to ANY of us… listen to your heart. If I were to decide I would not part with all of the savings but rather continue to make the payments on time when due so you at least have a cushion of emergency money should emergency needs arise. It’s going to be difficult to secure a loan (even with zero debt) when you have zero income. If you are a traditional spender (doubtful from you having savings in the first place) by all means pay off the loan but otherwise sit tight with the money paying a little monthly. It will also help your credit to have a history of timely payments.
It is possible the loan could be challenged in court and legally cancelled. Get help from http://www.bdebtfree.info and see if they can save you some money.
Offcourse you may clear your debt