Hello, fellow budding mustachios.
I'm new to the site and looking for where to begin on my path to a full and definitely attractive mustache. I'm married, living in Charlotte, N.C., with no kids and no plans to have them.
We're early in this journey and still battling the everyday struggles of consumerism. But I talked my husband into taking his lunch to work 4/5 days this week, I shopped at Aldi this week instead of Harris Teeter, and we've cancelled several subscriptions and other monthly expenses over the last couple of weeks, so there's visible progress. I'm looking for the best place to start taking bigger steps, with one big car problem.
Let me start by saying that I found this site and philosophy about 5 days too late. I recently had engine failure in my old car, and when it came time to buy a new one, I went for what I will now call the stupid option: a 2013 Chevy Equinox, with a $2,000 down payment and a $17,000 bank loan. The semi-bright side? My credit union lent me the money at 1.99%.
I know now that I should have looked at something half that cost or less that didn't require a loan. But the payment was $50 less than my former car payment, so at the time, I thought I was going in the right direction.
Since the deal is done and I'll have to come up with at least another $4,000 based on KBB value (to account for the immediate depreciation if I sold it back), plus the additional taxes and fees for another car and the lost $2,000 down payment, I'm not sure that's not an option. But maybe I'm wrong about the cost vs. savings?
Here's our stats:
Income and assets
My take-home monthly pay: $3,000
Husband's take-home pay: $1,800 after 401K contribution to get company match.
Mutual fund: ~$16,000
Husband's 401k: $15,000
My IRA: $7,500
Cash in checking/savings: $9,500
2006 Toyota Corolla, paid off
Expenses
Mortgage: We owe ~$101,000, worth ~$119,000. Monthly payments of $815, 3.25% rate. Mortgage insurance included for two more years.
Car loan on 2013 Equinox: $301/month for 60 months, 1.99% interest rate. $17175 to pay off today.
Car insurance: $80
Utilities: $240
Cell phones: $34
Internet: $50
Netflix and SlingTV: $29
Groceries: $400 avg. over last three months (Working on this one; headed to Costco this weekend)
Restaurants and fast food: $400 avg. over last three months (working on this one, too.)
Gas: $110 avg. over last three months
We do both need our cars, since we each work about 30 minutes from home in opposite directions. I'm a newspaper editor, and try to work at home when possible.
Husband's car was recently paid off, and he's been putting the extra $300/month into our savings account to build up a "six-month emergency fund."
So my questions:
1) Instead of saving that $300/month from husband's car payoff, should we be using that to instead pay off the new car loan in half the time? I calculate that to be a savings of about $450. Based on the incredibly scientific method of plugging numbers into an internet investment calculator, it seems like it might be better to take that $300 and put it in an index fund, which would gain $4,150 at 7% over the 5-year life of the car loan. But I might be missing something here?
2) We pay about $150 extra in principal on the mortgage each month with the goal of getting the equity up above 21% by March 2018, when we can have the mortgage insurance removed and save about $115 month. Would it be better for us to be putting that money in an index fund for now, and pull it out to pay down the loan balance after March 2018 to remove the insurance?
3) We've been trying to build up our emergency fund based on the generic personal finance idea that "you should have 6 months' worth of expenses saved up." But it seems like those dollars aren't working for us if they're sitting in a basically zero-interest savings or checking account. Is it safe enough to have all of that money invested if we suddenly had a big, unexpected expense? Is there a safe number that's less than "6 months' expenses?"
4) To add another layer of dope-ery, I still have the old car. I owe about $2,800 on it. My goal when it was paid off in 8 months was to give it to my soon-to-be-16-year-old brother, so my mom's making the payments now. It needs a new engine, which is looking like it'll cost us a good $2,000-$3,000, plus the remaining loan payments. Does that sound unreasonable? It seems if we still have to pay $2,800 on the loan, we might as well get whatever we can out of it by replacing with a junkyard engine. But maybe we'd be better off selling for scrap and buying him another cheap-o car?
Thanks for your guidance!