CONFUSION! HELP

**nodmicks** · 05-02-2006, 04:08 PM

I'M trying to decide if we should pay my car off. I got a bit of an inheritance. Payoff is 7730.61 as of fri
We are expecting a 600 bill from the roofer
Dh needs 2000 worth of dental work
We need to finish a few projects around 1000 before Mom comes and stays so we can go to tx
We need to keep a chunk ready to pay for Ds's braces.

I figure this will leave us a quite small EF Not a few months worth of expenses like we currently have. Logically I know we should pay it off since we are quite upside down on the loan. I know on paper we can rebuild our EF back up. I am just so reluctant to let go of this $$$$$$$. The car notes was a 66 month loan and we owe 22 more months.
I just really like the security of the $$$ being in the bank!!!! That and I fear we wont have the dicipline to build the ef back. I know this inheritance is a blessing and if we play our cards right it can make a difference in our lives being car debt free.
Ehh gads I'm rambling! I keep putting the pen in the checkbook and stopping!!!

**guest32** · 05-02-2006, 06:26 PM

You didn't say how much your inheritance was....is there enough to pay off the car and have any left over?

**Lorelei** · 05-02-2006, 06:44 PM

If it were me, I wouldn't drop the EF very far. You need to keep enough in there that you're comfortable. Have you considered making a large principal payment on the car loan? Wouldn't pay it off, but would cut the amount you owe and the time to pay it back. Maybe that is an option for you.

**Dave'sGirl** · 05-02-2006, 06:53 PM

My way of thinking is that you didn't have this money before and if you need this money for an EF than the EF wasn't a priority before. You want the money in the bank just in case....just in case what??? If left there it will be spent. If you pay off the car you will be no further behind than you are right now. I say pay the car off. You'll have the car payment amount to put in the bank for just in case. I think this is a real no-brainer...you've been blessed with a true opportunity to improve your financial situation. Pay the car off. If left with no purpose it will be penny annied away, cuz there really is always something you could spend it on...

**SHOPGIRL** · 05-02-2006, 06:57 PM

I'd keep a comfortable amount in your EF, 3-6 months worth of expenses. Then, I'd take the rest and pay on your debt. Even if you don't pay your car entirely off, you'll have drastically reduced the amount you owe on it.

**Valerie in WA** · 05-02-2006, 07:07 PM

I think according to Dave Ramsey, you should keep your EF at $1000 until all your debts are paid. If it were me, I'd pay for the roofer, dentist and household projects. I would also set aside your down payment for the braces. Then whatever was leftover I would put as a "principle reduction" payment on the car. That might be enough to make you not upside down anymore. The biggest risk with being upside down is that if your car is totalled, the insurance check won't cover the loan and you have to cover the remainder yourself.

**nodmicks** · 05-02-2006, 09:03 PM

We did have a 6000 ef before so with the inheritance and everything comming up to be paid we will actually be slightly lower in the ef than before the inheritance.
We currently have a tad under 15k with the inheritance(spent a tad over 2k on flooring materials to be put in so it was higher). I figure it will leave us with about 4K after car pay off, roofer and Dh's dental work. If we pay the car off I will continue to save towards Ds' braces and home repair as always as they are sinking funds.
Looking at the budget for may we will put the reg car payment due on the 19 back in the ef along my pt pay (approx 400 after taking 75 for our moms for Mothers day). June is about the same 775 back in the ef. Dh's paychecks vary. I always budget on the minumum expects so there could very well be extra in his check to add to the ef.
If we do this I told Dh we need to really stretch to get money back in the ef a.s.a.p.
Now it's funny Valerie mentioned Dave Ramsey because we have used parts of his plan and I have been rereading TMMO as I've been laid up since sat with a back injury. Dh's dental work will be going on in bits and pieces over the next 8 months as it can be done. His mouth is currently having to heal from all the extractions last week.
When Ds's braces will go on is a toss up. Were doing the 6 month check thing. Ds is 10 . July is the next check on his teeth. I need to check with ins if we pay the first 1000, 1500 or 2500 as everyone is saying something different!
I retalked with Dh and he says the paint and trim will be under 500.
We also agreed to recored every penny spent in may to make sure we are getting as much in the ef as possible.
I have our weekly cash at 60 gas (which is very hard and may go up), 10 allowance kids, and 80 for critter feed and groceries(includes paper and cleaning). I really don't think I can cut that but I am going back to cash groceries only to make sure I don't overspend.
Dh says to just write the darn check! I told him I'll write it but I want us to think about it until fri.
Thanks for your replies and giving me things to think about.

**leezza** · 05-02-2006, 09:55 PM

Rod,

My 2 cents are as follows:
*keep the money in EF and make payments as normal.*
you will earn interest on the money while its in there and you can just take it out as you need it for the projects you mentioned. If you pay for everything you will be unconfortable knowing that there is no savings.

My reason to say this is, "You sound like you would be a lot more comfortable with a bigger EF". Personally it means a lot to me to know that if something happens we will be alright for a while, JMHO.

Kind Regards,
leezza

**pecunierrant** · 05-02-2006, 10:48 PM

Well since the inheritance is something like 'found money' Id be rid of the car debt and put the monthly car payment towards the ef.
Good luck, Im sure whichever way you go will be fine

**frugalnana** · 05-03-2006, 01:08 AM

I like Audrey's idea, pay the car off, leave whats left in the bank and then make the payments you would have been making for a car to the EF account.
That way when it comes time for braces you will have it. Thats one less thing you have to pay on each month.
Good luck.

**Darlene** · 05-03-2006, 07:34 AM

Originally Posted by frugalnana

I like Audrey's idea, pay the car off, leave whats left in the bank and then make the payments you would have been making for a car to the EF account.
That way when it comes time for braces you will have it. Thats one less thing you have to pay on each month.
Good luck.

That car loan is costing you big bucks in interest payments. I'd be calling for the payoff quote & writing that check.

**pepper1** · 05-03-2006, 09:15 AM

I'd also pay off the car and pay your payments to your ef fund

**nodmicks** · 05-03-2006, 10:15 AM

Dh agreed to look over the budget and all the bankwork tonight(which is big because he never looks or has ever paid a bill since 1991) before I pay it.
I do feel very unsafe with out a bigger EF. Dh has to agree to be strict so the ef grows fast before we pay this. Dh has wanted a 4 wheeler forever! I told him once the 6 month ef is in place we will save those payments for the 4 wheeler. Now that should keep him on track!
I also told him We will budget for him to golf 2x a month and thats it. Eatting out , movies etc will need to be squeeked out of the grocery budget. So if they want to go to the drive in no one can complain about simple groceries. Sounds fair to me!
The money in the bank is definately making less than the interest on the car payment. The car payment note is 6.99%. So the car payment of 355 plus most of my pt pay can go back to the ef.
Can you tell I'm still trying to talk myself into this. Now for some reason the difference between the 6k ef and 4k or a tad less seems to be my comfort zone issue~ I guess it is the extra month worth of expenses.

Darlene~ I got the pay off quote yesterday. Grin!!! I even wrote the check. I
now need to drop it off~ eek