Hello party people. I am having trouble deciding whether to pay off my wife's car, or keep building our cash savings. Here is our situation:
EquityCash: ~$12,000
401K: ~$38,000
DebtAuto loan: $7,600 remaining on my wife's car
Income$7,600 net per month between our two salaries
ExpensesRent | $1,550 |
Utilities | $150 |
Car payment | $250 | (200 to principal, 50 to interest currently) |
Groceries | $600 | (wife groceries run a bit high. Still working on this) |
Pet food | $50 |
Two CrossFit memberships | $250 |
Wife's one-on-one CrossFit sessions | $140 |
Car insurance | $140 | In one more month, wife's accidents will be >5 years old and this will go down to 90, woohoo. |
Gas | $150 |
Internet | $170 |
Wife nails/hair | $100 |
Total: $3,450
Net income after expenses: $4,150
I realize there is still some fluff above, but we have made a LOT of progress since I discovered MMM in April. Our average savings rate (cash + debt payoff) since that time has been about $3k/month.
Looming Expenditures of Doom- Baby scheduled to arrive in late February. This will represent a loss of income in some way--one of us moving to part or zero employment, or childcare costs if we both continue full time work.
- Currently, we do not have much furniture in the house, and my wife wants some living room stuff and something to support extra clothes storage, as our sets of parents will each be spending some time with us to help out after the baby is born. I am not sure how much this will run, but she wants some nice pieces that will last.
So we currently have 3.5 months of expenses saved up in cash, or 4 if we really tightened expenses to a minimum. My goal is $20k cash and to own the car free and clear by the time this baby pops out (with about 5 months and $4k/month to work with, we're about there saving $8k more in cash, $7,600 toward this debt and $4,500 toward furniture). Here is my question.
I am tempted to pay off the car completely, which would still leave ~$4,500 in cash. On the other hand, we could be more conservative and pile cash until we reach our e-fund goal of $20k, and only THEN pay down the car with spare income. Which would you do, and why? Any frugal tips on buying decent furniture are much appreciated as well.