To pay off or not to pay off

In my post on why I hate Debt, I wrote about how my car payment is my second biggest expense every month, and how I want to pay it off rather than sell it. After that discussion, I got online and checked the payoff amount of the car.

$5,794

That is a much smaller number than I expected. I mean I know that I’m two years into a three year loan, and I know that I’m paying a very low interest rate (1.9%), so most of my payments have been going toward principal, but somehow that number just startled me.

Now, it’s been a very good month. I just got a larger than normal check from my part time job, hubby got a small but noticeable raise in his stipend, we got a MUCH larger than normal tax refund check, my family sent me some checks for my birthday, and we’ve been doing a pretty good job saving. So, when I combine what’s in our checking account once our bills clear, a good chunk of our emergency savings, and some savings bonds I just found in the back of my closet, we have just about $6000.

I know that numerically it doesn’t make sense to pay off this debt instead of paying toward the bigger student loans, which have a much higher interest rate. It would, however, make it much easier to breathe and to figure out what I want to do if I didn’t have this payment anymore. But would that make me lazy? Would I start spending the extra $400 a month, instead of snowballing it into my next biggest debt?

Then there’s the biggest reason why I’m wary of dumping this much money on something right now. It’s summer. I’m a teacher. That’s the biggest chunk of our household income right now, and it’s gone for the next two months. I think I could find a way for us to break even, between my part time job, hubby’s raise, and various freelance work, but I can’t be sure. It’s a little scary to go into a summer without a big chunk of savings.

So what do I do? The payoff is within reach, and I’m itching, itching to grasp it.
What would you do?