Home > escrow, or surplus

escrow, or surplus

August 31st, 2007 at 05:21 pm

Most months we run a surplus of cash in that we send off to the car (in addition the the normal payment)

Next month the car insurance will be due, and being smartish I have money in the savings account mentally marked 'escrow' for just such expenses as these.

Now the question is, do I take the money out of savings and use it for the insurance, or do I use the surplus and send less on the car.

I am leaning on surplus, cause it seems that paying down is easier to sacrifice for than savings...but then, mathematically the interest paid is more than the interest earned...Though I am not using that math to empty the account, we feel the need for some savings 'just in case'.

Just not sure yet.

2 Responses to “escrow, or surplus”

  1. monkeymama Says:

    I'd say it depends on your savings and the interest rate on the car loan.

    If you feel your savings is not sufficient I'd pay from the surplus. If the interest rate is really high I'd take the money out of savings. If it's not so clear cut (probably why you asked) you'd probably be fine either way.

  2. princessperky Says:

    yeah..I think I might flip a coin Smile

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