I'm 29, single, and just got a small raise. I owe $7k on my car at 6.5%, and I've only got $900 in savings. My rent is stable, but my job can be unpredictable for overtime. I can put an extra $300 a month somewhere and I'd like to keep stress low. How would you prioritize between the emergency fund and killing the car loan? If it matters, this is for a normal household setup, nothing fancy.
With only $900 saved and a job where overtime can swing, I'd prioritize liquidity first. Build a small emergency fund to at least $2,000 before you start hammering the car. Keep making the minimum car payment and put the full $300 into a separate savings account labeled Emergency so you do not touch it. The reason is simple. One surprise bill without cash likely turns into credit card debt at 20 percent, which is much worse than a 6.5 percent car loan.
Build cash first. Hit at least one month of expenses while paying the loan minimum, then dump the extra into the car until it is gone. After payoff, push the fund to two or three months.
I herd my family's chaos into folders, and the rule is always backup first, cleanup second. Same deal here. Get a proper buffer to at least a grand or two so surprises do not wreck you, then stomp the car and circle back to grow the fund.
With only $900, one flat tire or a light month at work can knock you off balance. I'd build the emergency fund first to at least one month of expenses, or a quick $2k buffer, while paying the car minimum. Once that cushion is sharp, throw the extra at the 6.5% and finish it fast.
Learned this the hard way last year. I rushed extra payments on the car, then a surprise bill landed and I had to put it on a credit card at a worse rate. Stack the emergency fund to at least a month, then crush the loan.
Back when we printed photos and burned mix CDs, we kept a little cash in an envelope for when the car coughed. It was not glamorous, but it saved more than it earned. Every time I skipped it, the alternator heard my hubris and died. Your overtime sounds like those fickle Friday night photo labs that closed early. When the hours dry up, bills still want their close-ups.
Keep making the minimum on the car. Throw the extra $300 into an emergency pile until you hit at least one month of expenses or about two to three grand. If you need momentum, toss a tiny tip at the loan here and there so you see the balance shrink. Once the cushion is there, redirect most of the $300 to kill the car, then finish building the fund to two or three months. You will sleep better knowing a flat tire or a slow month does not send you back to the plastic.