Should I use all the money in my savings account?

I have the option to pay off my car loan but if I do that all the money in my savings will be wiped out. And it's been a struggle to save in times like these with gas prices, food and other bills. Should I pay off my car with all the money in my savings or is it wise to keep some in the account in case of emergency's? I really want this car loan over with.
Should I use all the money in my savings account?
At the minimum you should keep $1000.00 in your savings as an emergency fund. Use any money over that to pay off the car faster. Once you pay off the car, use the "car payment" money to rebuild your savings. Here is a general plan that I have used for years and it works:





You can jump start your payoff by having a garage sale and selling anything that you no longer use and you should consider getting a temporary part time job until you get everything paid off. Here is a plan that will help you. If you work the plan, the plan will work for you:


1. Make a budget. Make the budget a week before you get paid. A budget is not a punishment! It is a tool which will free you from ever having to worry about money again. Put everything in your budget. Especially those annual, biannual, or quarterly bills like car registration, insurance, etc. Give every dollar you are going to bring home the name of where it is going. Add an "emergency fund" category to your budget for 25 dollars and save up until you have 1000-1250 dollars. Your emergency fund will help keep you from getting into new debt because of an emergency. If you can, set up a direct transfer to a savings account for your emergency fund. That way it moves automatically and you don't even have to worry about it. You must cut your spending and live on less than you make.





2.First get current on all of you debts and make no more late payments. Stop using your credit cards immediately. Do not take on any more debt. Credit cards are like quicksand only the death is much slower. Make a list of all of your debts in order of highest interest rate to lowest interest. Use cash only for your spending from now on.





3.Pay the minimum due on all of your debts and then put your extra money towards paying off the highest interest one first. After you get that one paid off, you put the money you were paying on debt #1 (the minimum payment and the extra payment) towards debt #2. That will pay debt #2 off faster. When that is paid off, you put all three payments towards card #3 and that one will be paid off pretty quickly. As an example:





To start :


Debt #1 (highest interest): minimum payment+ extra payment


Debt #2 (middle interest): minimum payment


Debt #3(lowest interest): minimum payment





Debt #1: paid off


Debt #2: minimum payment from Debt #1+ Minimum payment from Debt #2 +extra payment


Debt #3: minimum payment





Debt #1: paid off


Debt #2: paid off


Debt #3:Mimimum payment from card #1+ minimum payment from Debt #2+ minimum payment from Debt #3+ extra payment.





That way, you will get them all paid off, on time, and pay the least interest. It will also help towards rebuilding your credit since you will no longer have any late payments. This works no matter how many different debts you may have.





4. After you get all of your debts paid off, add to your emergency fund until you have 6-12 months of income saved up. Put that emergency fund money into a liquid money market fund or into a Bank of America no-risk CD so that if you need the money you can take it out without penalty.





5a. When you have your emergency fund in place, add a category for "fun" to your budget. Save for a holiday, a vacation, a big screen, or dinners out, whatever goal you want. Remember to enjoy your life.





5b. When you have your emergency fund in place, start saving for your retirement. Join the 401(k) plan at work and contribute the maximum. Your employer probably matches at least part of your contribution so why give up free money? Open a Roth IRA and contribute the maximum on a monthly basis. If you start saving for your retirement now, you will probably retire a millionaire.





5c. When you have your emergency fund in place, start saving for your next car. Only buy cars, or other things that depreciate, with cash. Save up for a nicer car. That way you get the interest instead of paying the interest.



Reply:Don't wipe out your savings. You can't afford to pay the car loan off in one payment if it is going to wipe you out--what if you get sick or have an emergency and need the $ for something else?





You can try to pay it down faster, however. But first, check your loan agreement. If permitted, you can designate additional payments to be applied to the principal. By doing that, you save $ long-run. However, make sure the loan documents don't say they will apply everything to interest first. Check your contract and call the customer service line to be sure!
Reply:Pay it off (if you want to leave yourself a few hundred dollars in savings and pay it off next month, then do that). First, your credit score will go WAY up with a paid off auto loan. Second, you'll be able to save quickly if you put your car payment amount into savings each month. Third, your car loan interest is more than what you're making in a savings account, so it makes sense to pay it off.





This is a good question!
Reply:You should keep money in your savings account in case something happens and you become ill, lose your job, the car breaks down, etc. A paid off car won't help you if you don't have money for important things.
Reply:Another option would be for you to double up on the payments, using only a portion of your savings until it's paid off, that way you still have some of your savings to fall back on.
Reply:The money in your savings account will be earning considerably less interest than the interest you are being charged for the car loan. Pay off the car loan and rebuild your savings.
Reply:I suggest you leave money in savings...you never know when you'll need it, and instead off paying off your auto loan...pay more on your monthly installments. You'll pay it off sooner, less interest, and still have money saved up!
Reply:If i was you, i'd pay off as much of the car as possible, and leave some money in your account for emergencys etc.


Its literally a win win situation :)





xx
Reply:i would pay off half of the car loan and keep the rest in my savings.
Reply:always have a emergence fund
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