Dear Dave: I can’t decide what to do about my car. I owe $8,000 on it, and I have the cash to pay it off with plenty left over. One of my co-workers said I shouldn’t pay it off, because I have a very low interest rate on the loan. What do you think?
Dear Derricka: What do I think? I think your co-worker is broke. Taking financial advice from broke people is like taking dieting advice from fat people. In other words, it’s dumb.
Pay off your car, and never borrow money to buy a car again for the rest of your life. If you want to win with money, you have to get out of the land of car payments. The idea that you’re stuck with car payments — that you’re always going to have one — is the mantra of those who’ve given up hope. You are in charge of your life. You are in charge of your financial situation. Don’t be like all those folks out there who whine about stuff like stagnant wages and are unwilling to get up off their stagnant butts to make their lives better.
Derricka, pay off your car today. And please, don’t take any more financial advice from broke people!
Dear Dave: My wife and I are completely debt-free. We would like to have part of our emergency fund in cash inside a heavy-duty safe at home. How should we document this cash in the event of fire or theft? Also, would our homeowners insurance policy cover cash?
— Will1 comment on this story
Dear Will: Typically, homeowners insurance policies have a limit as to how much cash they will cover. I’d advise re-reading your policy, and double checking with your insurance agent just to be sure. When it comes to documenting valuables, I’d suggest making a video or taking photographs. Just to be extra cautious, you could store these in a safe deposit box at your local credit union or bank.
Having some cash on hand is never a bad thing. When it comes to the portion of your emergency fund you keep at home, I’d recommend just being reasonable. If you’ve got $10,000 set aside for emergencies, I’m okay with you keeping $5,000 at home in a quality safe. I wouldn’t put all, or even most of it, in a safe, though.
Again, just make sure your homeowners policy covers anything you might put in there. A strong, fireproof safe is a must!