Setting priorities

On Our own

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OK we had the scare of losing DHs pay. And, it was a good thing because we only lost one week and it made things pretty clear. Except for a few things I want some feedback on:

Our very first focus is to pay off debt. The less debt the less we need to manage. We got rid of the credit card but still are finishing paying of a car loan. We think we'll be able to pay that off by April.

So, do we keep focusing on paying down debt (there is only the mortgages after that.)

Or do we save cash reserves in case of job loss?
Or do we buy that generator we've been talking about?
Or save for the other car we need as mine is on life support? And I need it to work.


We agree that we are not going to go into debt for any of these things, we just can't decide which to aim for first. Ideas??
 

inchworm

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1. Small emergency fund first - maybe $1500.

2. Then pay off the debt.

3. Then bigger emergency fund - say 2 months living expenses.

Glad it wasn't a longer lay-off,
Inchworm
 

justusnak

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I agree with inchworm. First priority would be to have a cushion of some sorts. $1,500 is good, but if you can get more...even better.
Then, work on the vehicle. One needs a good reliable vehicle to find employment. Then, if possible, the mortgages.
Times like this make a person think ahead more. Glad to hear the layoff was not a long one.
 

SKR8PN

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I built my "cushion" up first, then concentrated on the mortgage. I am a mechanic so getting another car is never a big concern for me,but owning my house was. If your that close to having the car paid off,I'd do that first,then take that payment AND whatever else you can scrounge and stick it into your cushion.
One bit of advise: NEVER let your car hear you say that it is paid off. They always break just after the last payment.;)
 

On Our own

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Thanks guys. We have a cushion, but I know we need for it to be bigger.

That's the problem I know what we should do but we need to choose what to do first!

Grow the cushion and just buy what need comes first car or generator?

DH wants to wait until mid summer to buy the generator since he thinks they'll be cheaper then.
 

enjoy the ride

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Well a generator is nice- especially if you have a freezer full of food or need it for heat but- you need a bank account to bridge your living expenses in case of a lay off. A generator and a new car are not much use to a person who has no money to buy fuel to run either or not enough for food.
Saving the money will allow you to do other things as needed.
 

PamsPride

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I would say pay off all small misc debt and then save, save, save! If your DH does lose his job (God forbid!) having an extra $10K paid down on your morgage will not help you live day to day because you will still owe the same monthly payment. But, if you have $10K in a savings account it can get you threw and pay the monthly bills until he does find another job...so that you do not lose your house and all the equity you paid into it. When the job market is secure again then take your extra savings and pay the house off.
 

lorihadams

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Figure out what your expenses are for 1 month. Multiply that by 3 or 4 and that is how much money I would put away for your cushion. That way, if anything happens you know that you have 3 or 4 months to get another source of income before you have to worry about the bills. Put in everything, phone, electric, water, groceries, car pmt, etc. Also think about what you can live without if you need to "trim the fat" if something happens and DH needs to find another job. Example, do you really need cable, or cell phone, or house phone if you have a cell phone, etc.

I think you are thinking along the right lines. Hope this helps and I hope everything goes well for you! Good luck!
 

VT-Chicklit

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I suggest that you check out Dave Ramsey on his web site at http://www.daveramsey.com/or on his radio show or tv show (Fox Business News Channel) five days a week. Dave has written many books on the subject of becomeing debt free and financially independent. Dave also has seminars that are given by churches and other orginizations as well as his live stadium shows. His book (one of many) The Total Money Make Over gives you seven "baby steps" to getting out of debt. These steps are also on his web site. Dave says that when you know that you will be loosing your job you need to pile up cash and not debt. You pay the minimums on your debts and stash the extra cash so that you will have cash flow once you are unemployed. When you find another job you then start again on the 7 "baby steps" to a debt free life. I listen to Dave all the time on the radio and sometimes see his show on FBN. What Dave says to do makes alot of sense. His web sit is very imformative, even if you dont buy his books!

http://www.daveramsey.com/
 

On Our own

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Thanks for the tips! We're pretty close to debt free now actually. We had a huge financial disaster three years ago - not of our doing but it cost us big - that we are still digging out of. But, if we had not had a big cushion and were mostly debt free that would have put us under. But, it got us into debt one mortgage and a HELOC, and the car loan. But, the car loan will be gone here soon and the HELOC is next to be attacked.

So, we'll work on rebuilding the nest egg first. And slowly restocking one or two extra items every shopping trip - more flour, more salt, extra OTC meds and contact supplies!

Just cross your fingers that the car holds out a few more months! I really want to be able to buy that with cash.
 
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