Tell me WWYD with my current financial situation?

[ilovemygirl]

I've posted several times over the last couple of years. Here's my latest ... tell me WWYD? 

All credit cards are finally paid off but we still owe 15k in car loans (one is 9k and the other is 6k) and 8k in medical/dental. We have 15k in savings. We literally have no other assets ... sold everything worth anything, rent our residence, cut everything we are willing to, etc. 

We end up with a little over 1k per month to put towards savings/debt but one of my jobs will be ending in November and I will almost certainly not be getting another to replace this income. So, at that point we will be more or less breaking even every month.

What would you do now? Keep all the savings or put some of it towards one or both of the debts? They are all similar and fairly low interest of 5 percent and under. My thinking is to to pay off the 6k car, leaving us with 11k which is 3 to 4 months worth of expenses and then using the 1k a month we are currently over every month to pay off the medical leaving us with just the 9k car loan when our income drops. Does that make sense? Is it the best way to go?

[APToddlerMama]

What are your interest rates? 

[cristina47454]

What are your monthly minimums? That might determine the best way to go.  You definitely have a huge stormcloud on the horizon!

[zebra15]

Well, IMO they cant repo medical services, they can repo a car.  If you really want to keep the car make sure that is paid, and make that payment a priority.  If you're not going to be working and wont need a car then does it matter?

[ilovemygirl]

The 9k car is 4.75% with a min. of $275

The 6k car is 5%  with a min. of $215

The medical is 5% with a min of $100

We can cover all of those monthly payments with the income loss but it leaves us no wiggle room at all.

eta ... I will still be working and need my car. I have two jobs right now and thankfully I'm only losing one of them.  

[APToddlerMama]

tough call.  I guess I wouldn't pay off any of it and would keep my 15k in savings since you know you you're going to be in a tough spot financially.  If something major happened, I'd want to have the savings and your interest rates aren't too bad either.  If you have something/someone else to fall back on in case of a major emergency, I'd consider paying off the other stuff, but only if that was going to be really easy, which for most of us it isn't.  good luck!

[midstreammama]

Can you get the medical payment adjusted because of the loss of income?

[cristina47454]

Such a tough call! I totally get you wanting to get rid of one of those debts so that you have some wiggle room in your budget without digging into savings. But if you keep the 6k in savings instead of throwing it to the car, that 6k will go a lot further for an emergency than the $215 that would be freed up by paying off the car.  If your interest rates were higher, I might advise differently.  Do your minimum payments stay the same whether there is 6k or 1k left on the loan, or do they adjust downward?

[BombleMomble]

Unless I am missing something, could you pay off the 6k car loan and then, since there are about 6 months until November (when you lose the extra income), you could basically put all of that money back into savings between now and then.  Plus, you would have the extra $215 per month (from the paid off car) to put toward one of the other loans!

[mommyto4grits]

I totally agree with this! I would however, pay a bit extra towards the principal each month on each of the car's.

 

Originally Posted by APToddlerMama 

tough call.  I guess I wouldn't pay off any of it and would keep my 15k in savings since you know you you're going to be in a tough spot financially.  If something major happened, I'd want to have the savings and your interest rates aren't too bad either.  If you have something/someone else to fall back on in case of a major emergency, I'd consider paying off the other stuff, but only if that was going to be really easy, which for most of us it isn't.  good luck!

[moneymama]

How about this: pay off the $6K before you lose your job.

When you are no longer working - will you still need 2 cars? If not, consider selling the other car (even if you take a loss). 

Without 2 car payments and the cost to insure 2 cars - I calculate you will rid about $400 of payments/month, not to mention gas - which could be another $100-200 - potentially leaving you with $600/month extra.  You would still have most of your emergency fund in place.  Does this sound doable? Most one-income families in the 70s went with one car.  Just a thought worth considering.

If you must have 2 cars - keep the paid off one, and get a $2000-$3000 car (paid for in cash) as your 2nd (less used) car.