Anonymous wrote:Op here again?

Or would you split the $3k monthly

a. Put 1/3 in emergency fund (until what number?)
b. Put 1/3 in debt?
c. Put 1/3 in retirement?

I understand this way of doing things, but I feel this also delays our debt payoff from 3 years for.. what? 7 more years?

In the meantime we’re only able to be so aggressive because we’re not doing
d. Travel fund

I can wait 2-3 years to postpone fun. I can’t wait 7 years to postpone travel. We have young elementary kids. Would they be in 9th grade before we take them anywhere?

It's hard to know without knowing your finances. No vacations, cut out everything you don't need and pay down the debt. Don't forget to save for college too. We don't travel. Kids re fine.

Op what is your hhi? How old are you? How many kids do you have and how old are they?

If you are in a secure job and have access to funds in an emergency through a Roth, investmemts, or wealthy family, then 6 to 7 months in emergency savings is overkill. That said, rates are high right now so the opportunity cost of excess emergency savings is low.

Job loss is not the only emergency. What if you had a very sick parent or child and wanted to take time off?

Does your husband have both short and long term disability? I don't think you specified. What if he had to take unpaid FMLA leave?

Op, I think that you should simplify. Your writing suggests you are stressed out and overthinking things. In 2024, I think you should knock out debts 1-3 and also boost your e-fund to 20k in a separate account. Then in 2025, you tackle debts 4-5 and retirement, in parallel, and maybe squirrel away a little for vacation. But your universe of choices will be less overwhelming to you. Good luck!

Are you employed or an independent contractor, OP? You're supposed to be paying quarterly taxes if you're independent, but DH's large withholding hedges against that. If you change his withholding, you have to monitor whether you owe taxes each quarter.

Anonymous wrote:Op here, one more post today. I think I feel great about all of your answers. Some stuff to think about. Walking away from this thread positively. Thank you.

I just sort of pre-calculated our tax refund now that the year is done. Something I didn’t see before is how high dh’s company withheld for us this year. Way too high.

I see …if I have it right.. a 20k tax refund.

We will see. That would be insane.

If that’s the case, we are looking at a boost to our emer. fund. Or going ahead and paying down 6-7 months worth, taking that off the end of the expected debt-free date.

Plus if we adjust this to a more appropriate amount, that’s an extra 20k each year. ….. I knew they had been overdoing it. We always get bigger refunds. But something happened this year with their calculation. I think bc DH went from 159k gross to 172k gross, it might have triggered something in their system to withhold more.

Op here, one more post today. I think I feel great about all of your answers. Some stuff to think about. Walking away from this thread positively. Thank you.

I just sort of pre-calculated our tax refund now that the year is done. Something I didn’t see before is how high dh’s company withheld for us this year. Way too high.

I see …if I have it right.. a 20k tax refund.

We will see. That would be insane.

If that’s the case, we are looking at a boost to our emer. fund. Or going ahead and paying down 6-7 months worth, taking that off the end of the expected debt-free date.

Do you have a Roth IRA op? The funds that were made as the contributions could be taken out if things were to get dire. You could consider that part of your worst-case-scenario emergency fund. It sounds like things are pretty stable and you are on track to pay off the debt. I wouldn’t go crazy over the details at this point when you seem to at least have an end in sight.

I’d do the debt snowball - get those little ones paid off and then roll those funds into paying off the bigger ones. You’ll be in great shape once the debt is gone and you can toss the $3k a month into retirement funds and a more robust emergency fund.

Anonymous wrote:Getting rid of loans 1 and 2 are the best risk-free return you are going to make. Do it as soon as possible.

Unless you also have CC debt that you haven't mentioned. Basically, prioritize by rate.

Getting rid of loans 1 and 2 are the best risk-free return you are going to make. Do it as soon as possible.

Your emergency fund is no where near ok. Used to be 3-6 months of actual living expenses, I'd say 9-12 is more appropriate (the breadwinner in our house has been laid off 3 times in 25 years, once was 2 months, once 5, and the most recent took 9 months to get a job!). Each time we ended up better off, but it was stressful each time, and I will never let it go under 12 months again!

I would separate the funds: emergency fund that you don't touch unless there's an emergency, and a working capital fund, that some months you use toward debt relief and other months you use toward short-term savings (vacation, new refrigerator or sofa, whatever).

I would not be putting off retirement savings - every penny you are not putting in, you are losing that, amd the compound interest on that whoch you are not earning. If you have any funds above what you've earmarked for the debt, it should be going to retirement.

You didn't mention it, but I hope your saving for college for those kids - if not, start a 529 for each. And the minute your debt is paid off, after the trip/celebration, all the extra goes in there

Addressing some of the questions above.
We are so good at not touching emergency fund. We save monthly for annual bills, we save monthly for auto care and medical bills.

Again, I’m finding tension when we have money above 3k that we commit to debt. (And for that 3k extra)

794.31 committed to minimums
With the monthly 2205, we just plunk it away on the debt.

a. But is our emergency fund ok? (Many of you saying no)
b. Retirement we’re putting off. The balance we do have is growing so that’s good. I don’t even want to get into that. I’m assuming debt will be done in these 3 years and then we’ll get really cracking on retirement savings.
c. Vacation we do rarely, and only if the monthly extra is above 3k. (This variation comes down to DH being on production pay, and my work being very variable. I do 2 PT jobs, usually from home). It’s not a big area of tension but it can’t be completely ignored.


**If you pit emergency fund + debt + retirement against each other, they all slow down. RN our strategy is all debt. Time is important.

I came here asking about our measly emergency fund, sitting there in our cash flow. Again, ranges from 4k-17k-even at 20k one time.

I actually feel stronger now that we just keep going on the debt. 3 years it will be done and then we can move forward with all sorts of exciting questions.

DH and I both feel we will make more coming up, but that progress we won’t see until April at least…

Op back with debt numbers.
3years 4months to pay it off. I’ll post the rates and balances below.

Some months we have 3k to put on it. Most months. There are a few times we do not have the 3k. There are other times we have more than 3k, and this is where we have a little fun. We can do great vacations for 2400-4000. We have done this twice in the last 8 years. One was 2400 no kids born, shared house for a week. One was a big bucket list vacation with kids that was about 4k. A third was an anniversary, no kids but I don’t remember the numbers. Again, it was just two of us, I’m sure we found a deal. We always set it aside beforehand. We just did a small one with kids about $1k over summer, but again, we had extra that month.
But kids growing might raise the cost coming up. So no big vacation planned until 2027. Then we’ll celebrate big as we plan for loans to be done. Still well well under 10k.
Kids are starting to do small local sports. We have managed to keep that cheap. (One class was only $65!) One kid is interested in doing more, but we’ll see if our income increases…Kids are 5 and 7 years old.

Minimums + extra = 3k. 36k per year or thereabouts.

Debt table. I’m going to add dollars and cents because a year ago I did this, rounded up or down and people added things up themselves and found the numbers were off. It’s all here:
Loan / balance / minimum/ rate
#1. 7,852.46 113.30 8%. This one has a term, so it will be over one day regardless. Can’t remember the term, and it will be done in 3 months anyway.
#2. 5,092.72 74.10 6.55%. This and below are federal, have no term. It could last forever.
#3. 5,477.73. 38.61. 4.25%
#4. 48,818.60. 315.68. 5.16%
#5. 40,408.02 252.62. 5.96%

Summary: minimums 794.31
Extra each month: 2205.69
Highest 8%
Lowest 4.25%

Anonymous wrote:your emegency fund is NOT cash flow and should not be in your checking account.

the emergency fund should be in a high interest account, some banks are around 5% or higher right now. You need money accruing as it sits somewhere. if it feels right to you and your budget you can use whatever interest accrues monthly towards a travel budget or extra towards debt. you would essentially siphon off what you made in interest every x months if that works for you and is easier to visualize/rationalize.

my issue with using funds towards student loans is if they are lower interest loans, then wouldnt you want to run the numbers based on investing for retirement now vs paying off the loans faster? at the end of the short-term and long-term which one makes you have more money and/or which one is more important- your short-term or long-term financial goals? For many of us with competiting priorities, the short-term and long-term can be dissimilar and you need to figure out 1) what is your risk is weighing either more importantly 2)is the benefit >risk of prioritizing one more than the other

do either of you have pensions? do you both have stable jobs? what is your debt profile- is it all studnet loans and mortgage or other debt?

Oh very true PP! Emergency savings should be literally never touched, separate account not the bank balance of your main account.