#2

#5 absolutely! But really...a baby, a new car, and a renovation with an underfunded emergency fund?

Don't take on too much at once.

In your situation, I would put it in your emergency fund and put off any renovation until you get your finances in better shape.

Put it in my kids' college funds.

#3 - you have the choice to borrow or pay cash for the improvement.

If you really needed the emergency fund, you could always tap the HELOC later.

#5.

#5

add it to the emergency fund (but knowing you might need it for the renovation)

#5

part emergency fund, part home improvement

What would I do? Go to Disney World.

What should I do? Put it in the emergency fund.

definitely #5. no doubt.

What kind of car do you have now? If you have enough room for you two and the baby seat, I would put that expense off for now. It sounds like you're already on the road with the renovation, so you can't put that off, but until my emergency fund was not "underfunded," I wouldn't do either.

#5

We "found" an unexpected $5k, what would you do with it? These are the options we're considering:

1) saving for an upcoming maternity leave - currently setting money aside on a schedule that will meet the need when the time comes.
2) saving for a new (to us) vehicle that seats 5 - currently setting money aside, but will likely only have enough for a down payment and not enough to pay in cash by the time the baby comes. The $5k in addition to what we're already putting aside would probably get us about half way there.
3) putting it towards a major renovation. We're about to undertake a major renovation, which will have to be largely financed with a home equity loan.
4) keep it in reserve for when the renovation goes over budget?
5) add it to our somewhat underfunded emergency fund that is growing steadily, but slowly. Both jobs are stable.
6) something else?

While I agree in principle that it would be good to pay for the car and renovation in cash, that's not realistic at this point. We do have the cash flow to support both loan payments and no other debt besides the mortgage.