I tend to have sort of an obsessive mind when it comes to decision making. If I’m trying to decide something I obsess about it forever, and until I come to a conclusion, I can’t think about much else. I’m in one of those conflicts right now, and I need your help! I’m thinking about 2010 financial goals, and I just can’t decide what I should zero in on as my #1 goal. Here are my options:
Option A – Pay off my smaller student loan. It has about $4600 on it right now at 3.2% interest. If I chose this option, I would still be saving (I’m not going Dave Ramsey-style; I don’t feel comfortable saving nothing) but not saving very much (about $200 per month between my Emergency Fund and my Roth IRA), and I would be throwing all my extra cash at the loan.
Option B – Build up my Emergency Fund. I just had to pull $133 from it to pay for my renter’s insurance premium and I’m sort of depressed about how low my savings level is. If I chose this option I would be paying the minimum on that student loan and throwing all my extra cash into my emergency savings. (BTW, because of a great comment on my post from yesterday, I think I’m going to go back to calling my Emergency Fund my Freedom Fund – I think it has better connotations. Thanks for reminding me psychsarah!)
Why I’m Conflicted – What I really want to do is build up my savings, but this smaller student loan is just nagging at me. One the one hand I feel like my job is pretty secure and I have no big events coming up (at least not that I know of yet) so I should focus on paying down the loan, but on the other hand having so little in savings is a little limiting in case something does happen. I like the process of saving, but I like the end result of paying off a debt. Basically, I want both at the same time! I want to end the year with a pile of cash and a paid off loan, but I know myself and I know I’m better at focusing on one goal at a time, so I have to pick.
Which option would you choose if you were me?
