Save Money or Pay Off Debt?

We have a larger emergency fund then Dave Ramsey recommends and we still have debt. We go back and forth about whether we should have less in savings and pay off more debt or keep our savings.

Dave Ramsey recommends: $1000
We have: $9000

There are a few reasons for having a larger emergency fund.

Pros:
Husband is in grad school and if I lost my job I could hold out before putting kid in daycare fulltime.
Husband finishes in 1 year and we have some foreseen expenses for him to get a job (travel, postage for 100 applications, moving out of state expenses).
When husband gets job, we could pay off all of our debt in 6 months.

Cons:
We could pay off entire car loan.

I think we should keep the savings because our financial outlook will be drastically different in a year. We also need cash for those things that are going to be coming up.

It is just hard to sit on the money and not send it to Capital One.

My Debt Hit List – The Car Loan

Husband’s car loan is on the chopping block to be paid off. I sent in $1000 from our stimulus check and husband added the amount we were sending to American Express ($100) to the minimum payment as part of our debt snowball.

FTR, we are starting with $8090 to be paid on the car loan. When we get our next statement I expect the balance to dip below $7000. Yesterday I was playing around with debt payment calculators and according to them, paying the minimum plus $100 will take us over 2 years to pay off that sucker. lol Yeah, right. Like I will allow it to take that long. I still have $2000 for the car loan from our tax return and as soon as I see that Capital One credited our account properly for the $1000, I will send that in.

Stimulus Check is Here

Our stimulus check finally arrived. A friend of mine didn’t receive hers, something about a screw up that will be fixed in July. Too bad since she needed to buy a new washing machine unexpectedly. Ours arrived last week and it was for the expected amount too!

I expected to put all of it toward our debt but I think I will take a little bit out for a couple of things. Err, I mean to stimulate the economy. I bought some shelves for the kid’s room because her toys swallowed the floor and I thought she might sleep better if her room wasn’t so chaotic. lol That implies she sleeps in her room which just is not the case. I’m hoping to transition her to her room though and in my mind shelves will help. The other thing I want to buy her is a bike. Used of course. She won’t care though, she is 3.

The rest of the money will go toward our debt. Since I like crossing off lines in my spreadsheet, I am planning off husband’s smallest student loan ($98). I will probably put a couple of hundred toward one of my student loans so that it goes to the next lowest thousand mark. The rest will go to the car loan.

$1000 Goes To American Express

I just sent $1000 off to AMEX to pay down husband’s credit card. Although the new balance looks pretty nice, sending $1000, even electronically, is psychologically difficult. Now I have a little more than $8000 in the savings account which will go down quite a bit once we decide what to do with our car.

Someone offered us $5500 for the car today which is about $3000 less than we owe. Ouch. We might be keeping this car for a while. I’ll list it on Craigslist and see what happens.