I spoke with a client recently about a question that comes up all the time: should you keep cash on hand, or use it to pay off a car loan in full?
John and Katie have a young daughter, love short trips, and value being close to family. John works for an electric tool distributor, and Katie is in a corporate role at a national supply company. They’re both doing well and steadily moving up in their careers.
In a recent Strategic Session, we talked through their desire to eliminate debt faster. John asked:
“Should we take our saved cash for a down payment—plus our bonus and any tax refund—and pay off Katie’s car loan?”
Their current snapshot
Assets
Liabilities
They’re willing to rent for the next two years and are currently saving $600–$800 per month, aiming to build their emergency fund to $20,000. Once they hit that goal, any extra cash will go toward their down payment fund.
Questions we worked through together
To get clarity, I asked a few questions to help connect the numbers to their real priorities:
After talking it through, they realized they were willing to delay buying a home in their new city—even though it’s a place where they hope to put down deep roots. Their goal isn’t just to “get into a house.” It’s to buy the home they can see themselves living in for decades.
The decision
Instead of making a rushed move, we decided to wait until:
Once we have clearer numbers—and a better picture of where they’ll be by summer—we can decide whether it makes sense to invest the down payment money for the next 2–3 years, while also building monthly contributions into a brokerage account.
Because here’s the truth: how you invest is just as important as whether you invest. We want their money to have an opportunity to outpace inflation—without taking risks that don’t match their timeline. And we’d rather not see $50,000–$75,000 sit in cash for several years while they wait to use it.
At the end of the day, my job is to help families get underneath the numbers and identify what’s really driving their decisions. For John and Katie, the motivation was simple: more cash flow and flexibility—so they can save, invest, and move forward with confidence.
If you know someone who would benefit from stories like this, feel free to forward this along. And as always, I’m here if you ever need a second (or third) opinion on your finances.
P.S. - Here are a few things I am reading/watching/listening to: