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Dave Ramsey says: Pay off car note, then enjoy freedom from debt

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Dear Dave,

My only debt right now is a car payment. I still owe $12,000 on the vehicle, and currently I have $25,000 in savings.

I’m in a very stable line of work, but my income can vary somewhat from month to month. Should I hang on to my savings, or pay off the car?

– Erik

Dear Erik,

Debt is a bad thing to have in your life, especially when your income can vary from paycheck to paycheck.

You’re in good shape, except for the car note, though. It’s like a ball and chain around your neck.

You’d still have $13,000 left if you paid off the car. And with the money you’d free up, you could rebuild your savings in no time.

Pay off the car, dude!

— Dave

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