Can someone help me run scenarios?

[Sam_2.0]

I think the baby has stolen my brain already. Trying to figure out what the best plan of attack is for our current outstanding debts. Ignoring SLs and mortgage for now, we have:

CC1 - $1731.43 @ 0% until September 2013, monthly min approx $40
CC2 - $4675 @ 0% until June 2014, monthly min approx $50
CC3 - $6634 @ 0% until June 2014, monthly min approx $130
Loan - $7259.58 @ 5.25%, monthly payments $247
Car - $12,975 @ 6.5%, monthly payments $367

DH is hopefully getting paid enough next month to wipe out the loan completely. So that is first on my radar. But I wonder where to go from there. We had been working on paying off the credit cards (and had utilized the BTs to get everything at 0%). But now I think we should switch it up a bit. Here's what I am thinking:

1. Pay off the loan in April/May.
2. Pay off CC1 since it expires in September
3. Funnel snowball towards Car loan, adding an extra $300+ per month to knock this out as soon as possible and free up the most cash-flow.

Am I putting too much thought into this, or would the plan make sense? DH is paid all on commission, with the biggest chunks coming quarterly. Depending on how he does over the next few months, we could have the car gone by October if we focus on that next, which frees up the cash-flow just in time for the next LO to get here.

[Peace77]

Do you have an emergency fund of at least 6 months worth of expenses?

I would focus on building the EF first since your husband is on commission only.
It is also good to increase your EF since you are pregnant.  You can never predict if you will be put on bed rest or have to leave work early due to the pregnancy.  

Depending on the amount in your EF, you may be able to use the next commission check to pay off CC1
Increase the payments on the loan to at least $250 per month.

[Rocky Mtn Saver]

Mar 25, 2013 14:57:49 GMT -5 Sam_2.0 said:

I think the baby has stolen my brain already. Trying to figure out what the best plan of attack is for our current outstanding debts. Ignoring SLs and mortgage for now, we have:

CC1 - $1731.43 @ 0% until September 2013, monthly min approx $40
CC2 - $4675 @ 0% until June 2014, monthly min approx $50
CC3 - $6634 @ 0% until June 2014, monthly min approx $130
Loan - $7259.58 @ 5.25%, monthly payments $247
Car - $12,975 @ 6.5%, monthly payments $367

DH is hopefully getting paid enough next month to wipe out the loan completely. So that is first on my radar. But I wonder where to go from there. We had been working on paying off the credit cards (and had utilized the BTs to get everything at 0%). But now I think we should switch it up a bit. Here's what I am thinking:

1. Pay off the loan in April/May.
2. Pay off CC1 since it expires in September
3. Funnel snowball towards Car loan, adding an extra $300+ per month to knock this out as soon as possible and free up the most cash-flow.

Am I putting too much thought into this, or would the plan make sense? DH is paid all on commission, with the biggest chunks coming quarterly. Depending on how he does over the next few months, we could have the car gone by October if we focus on that next, which frees up the cash-flow just in time for the next LO to get here.

Do you mean next month, or April 2014? 

I agree about paying off CC1 first because it will reset first.  How much do you have at this moment to snowball? 

[Rocky Mtn Saver]

Sam,

I like this debt management calculator at Bankrate.com. You can plug in all the numbers from your various debts, including when interest rates reset from 0%, and it will come up with the least expensive payoff plan and an amortization schedule for you.

www.bankrate.com/calculators/managing-debt/debt-pay-down-calculator.aspx

[Sam_2.0]

Thanks, Rocky, I will check that link out. I meant next month for the loan, and possibly CC1 as well if we can swing it. He's got several months of payments waiting to hit the pay cycle after getting approval (all the paperwork is in and they are "done" - now we wait for him to get paid), plus his normal quarterly stuff that he's building up. Snowball is currently at about $400/month, give or take depending on how bills shake out.

Peace - the EF is sitting at one month for now. We really should boost it up more but for some reason I can't make myself do that while we still have debt. Maybe we can knock out the loan & throw the payment towards the EF instead of the car.

[econstudent]

Do you have short term disability insurance and/or enough leave saved up from work in case your pregnancy becomes difficult? Your pregnancy will most likely be fine, especially since it was last time, but sometimes things happen and you end up needing bed rest. Maybe you can put some of the money toward the debt and move some of it to savings? You could apply the savings to the debt after the baby comes. It never hurts to have flexibility in your cash flow when you have a new baby coming. Now if you think you would be tempted to spend it, then maybe you'd be better off paying the CCs off. Just my thoughts when I read your most recent post.  

[Rocky Mtn Saver]

I think it might be a good idea to build up your EF a bit more. Much of your debt is at 0%, which is basically free money for now. You could always put cash aside as an EF until the 0% resets on the cc's and then decide at that point how you want to handle it. It would give you a year's cushion in case you need the cash for anything, especially unexpected baby-related expenses.

Unless you need to free up some cash in the monthly budget, that is. In which case, getting rid of payments is a priority. But it sounds like that's not the issue for you.

So in the absence of an immediate need, I'd probably go with (a) pay off the loan now, (b) pay off cc#1 by September, and (c) park the snowball in cash until the cc's reset in June 2014, then pay them off if all is well.


ETA: I suppose you could split the difference if you want, and put the $400 in cash savings until the cards reset and then put the extra $250 (from the loan payoff) toward the car. Whatever would make you the most comfortable with your goals and your current situation.

[Sam_2.0]

I have up to six months of STD through work if needed (meant to cover the gap until LTD kicks in), and maternity leave will be mostly paid.

I think what we will do is kill the loan, the small CC, and then funnel the rest towards savings/medical bills as they trickle in. Maybe DH will close a big case and we can knock out the car by October with what he brings home. We've finally gotten to the point where my salary is covering everything that we need. But we do need more savings.

[Rocky Mtn Saver]

Congrats on the new addition to the family, and also for getting yourselves in a pretty good financial place while doing so!

[justme]

Have you considered refinancing the car? If your credit scores are good you should be able to knock several percent off the car loan. My credit union is currently offering a refinance rate under 2%. You could keep the term (about) the same or extend the loan, both would lower the payment and then you could either still throw the difference of what you pay now to pay it off faster, throw at the CC, or your EF.

[Sam_2.0]

Good idea, justme. We will have to look at that option too. Even if we do accelerate payments it could save interest in the meantime.

[Peace77]

Dave Ramsey recommends putting debt pay-off on hold until after the baby is born and you are both home and healthy.

You could pay off the loan and refinance the car.  I suggest holding onto the funds for paying off CC1 until August just in case.   Focus on increasing the EF.

It's great that you have STD but too many people have struggled to get benefits or have been unjustly denied benefits.  Another reason to up your EF.

[mamasita99]

Mar 25, 2013 18:56:18 GMT -5 Sam_2.0 said:

We've finally gotten to the point where my salary is covering everything that we need. But we do need more savings.

It sounds like DH's pay can pay off that loan, another credit card, and build up your savings. That's a nice way to use the second income!
I would pay off those two things and build up savings to a few more months expenses, then knock out another cc with the payments from the loan and cc1. Snowball from there. Snowball cc payments with money set aside for debt payment, while saving continuously.

[busybee]

Do the ones with an interest rate, but do the expiring 0% card first