skippy740 Posted April 22, 2014 Report Share Posted April 22, 2014 I'm not a financial planner; but I'd be inclined to attack the car loan first. If your income situation goes kaput and you can't make any of your loan payments--your student lenders won't come after your car (not for a very, very long time, anyways); whereas the car lender's repo guy could be on your doorstep tomorrow. Well... after two months of non-payment anyway. Which, if we re-read the OP, there's plenty of savings to use for an emergency. If something happens to one's income, you first plan for the necessities of life and being able to obtain employment. This is the fundamentals of provident living. However, while it's always better to be debt free... in the midst of a cash crisis, I'd rather have cash on hand... than lack of debt. Debts can be financed... and paid with cash. But if you don't have any cash... it's a major problem. Cash is king. If you properly structure things, I like to use L.U.C.K. with my clients:- Liquidity- Use- Control- Knowledge Each situation is different, but let's suppose we were talking about paying off a mortgage, instead of a car. If the mortgage was $300,000... and you had $300,000 in the bank.... I'd recommend that you keep the $300,000 in the bank and continue making payments. Equity is not liquid... particularly if one becomes unemployed. You cannot use the equity in the house, unless you borrow it out. You aren't in control of the value of your real estate. Again, every situation is different. https://www.youtube.com/watch?v=m1o-nA5en78 Backroads and Just_A_Guy 2 Quote Link to comment Share on other sites More sharing options...
Wingnut Posted April 22, 2014 Report Share Posted April 22, 2014 My husband and I bought a house a year and a half after we got married. He had just completed his Masters' program, and we were moving to a new state and a new job. At that time, we were able to qualify for home loans based on my then-current income, as well as his contracted income-to-be. We didn't have money saved for a down payment, and instead took out two mortgages (an 80/20 arrangement). I love our home. We have brought both our daughters home from the hospital to this home. We have lived here for nearly seven years now. We have made memories in this home. We have made friends in this home and in this neighborhood. I wouldn't trade those things for anything. But I can't tell you how much I long for us to be out of debt. If I knew then what I know now, I'd have pushed a little harder for us to think about renting a home before buying. Pam is right -- you can't fathom the expenses that come up with home ownership (plumbing, electrical, minor repairs, rodent/pest control, etc.). On a month-to-month basis, you also need to consider property tax, homeowners' insurance, etc. Get out of debt! If you want to hold onto some of the student loans to show a record of consistently paying off your debt, that's fine. But get out of your consumer debt! It will be a blessing and a weight off your shoulders! I went shopping with my sister yesterday. She's visiting from out of town and needed to get some new jeans and shirts. I tried on a lot of clothes, too, but I had a really hard time with the idea of even buying a $10 shirt, because I didn't know if we could spare it this month. (The shirt was originally $25, and was even marked down!) If we were in less debt, I would feel less guilt about even a small purchase such as that. Being out of debt would be a huge blessing, partly because I could occassionally treat myself (or others), but more because I could do it without stressing or feeling guilty about it. Now, my husband argue over this. We've been attacking the debt for awhile before realizing we could be debt-free by summer but have not agreed over which to pay off first. I voted car loan--being that the student loans are different. My husband wants the student loans gone first, his reasoning being borrowed money is borrowed money. If I'm right--what's the best way to explain that to him? Pay off whatever has the highest interest rate first. That usually puts student loans at the bottom of the list. Also, if for some reason one of you had to claim unemployment, your student loans could be put on hiatus (I have a friend who is about to be in this position). Backroads 1 Quote Link to comment Share on other sites More sharing options...
Guest Posted April 22, 2014 Report Share Posted April 22, 2014 Oh, one more clarification: I'm not pregnant. The baby I refer to is 13 months and currently sleeps in our room (more than half the time in our bed) and she still is rarely sleeping through the night but it's so hard to sleep-train a baby in the same room! WHOA! I'm thoroughly spaced out! I thought I just posted something about you and preparing for post-partum things! Or maybe I did and didn't realize that thread was over a year ago. Hmm.... I guess I can now relate to the ancient age of Palerider... Quote Link to comment Share on other sites More sharing options...
Iggy Posted April 22, 2014 Report Share Posted April 22, 2014 WHOA! I'm thoroughly spaced out! I thought I just posted something about you and preparing for post-partum things! Or maybe I did and didn't realize that thread was over a year ago. Hmm.... I guess I can now relate to the ancient age of Palerider...Where oh where is the LAUGH button!! Quote Link to comment Share on other sites More sharing options...
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