Finances- What would you do?

I was doing alright financially until I stopped receiving child support payments. Most of what I was receiving I was putting into savings, so I didn't realize until now how much I relied on them. I have two loans: one is an auto loan, the other is a savings secured loan. The total monthly payments I make to these loans comes to $274 a month. Also, I have to carry full coverage insurance on the vehicle, which is about $50 more than if I had minimum coverage. Where I am at right now, I was saving money for a house, but without receiving monthly child support, I have nothing at the end of the month to put towards savings anymore. I have enough in savings to pay off both of these loans. On one hand, it would wipe out my savings, but on the other, I would have an extra $325 a month that I could put towards savings and if I later found a house to buy, I would then be able to afford the mortgage payment. I don't know what to do... I have been looking for a house for a long time, but either way seems kind of hopeless. I don't want to see my savings washed away, but it's basically useless if I can't afford a mortgage payment. Maybe I have a sentimental attachment to my savings.. I don't know.
Hair Type: 3a/3b
I'm the same way with my savings. I worry that something will come up & I will need the money. It's my security cushion. I have read, tho', that any loans that you are paying an interest rate on should be paid off. Especially credit cards. I'm certainly no expert, but I think in your case you should pay off your loans. Sounds like you can rebuild your savings account with what you will save each month. At this point you aren't able to put anything towards your savings.
From Michael Berg:

Every person has a unique connection to the Creator that can never be extinguished, and every person has a great soul that can manifest important things in our world. To make a person feel less than they are because of something inside themselves, be it faith, race, or sexual orientation, is the greatest sin of all."
I would payoff the loans and save that amount to savings every month.
Did you stop getting cs because your son reached the age? if not, I would try to get that money thru the court. If your ex has a tax refund they will forfeit that. Or so my ex told me...

I rely on child support a lot too. I wouldn't be able to buy food otherwise. My job covers my mortgage, utilities, afterschool care and house repairs or car repairs.
Child support covers my food, clothes and my son's sport classes.

My long term goal is to not rely on cs so much. Its not easy.
It's definitely a tradeoff ... pay more interest over the life of the loan but feel more secure with cash on hand for emergencies? Or pay less interest over the life of the loan, but take a risk without cash on hand for emergencies?

I think I was in a similar situation a few years ago. I had a really stable source of income so I opted to pay off the loans first and be done with it. I kept about $1000 in savings though because various things always come up and it's nice to not have to rely on credit cards to get to the next payday.
One quick question ... the $50 extra for auto insurance you mentioned ... is that $50 extra per month? And would it go away if you payed off the car loan? If so, that would make me lean pretty strongly towards paying off the auto loan first regardless of what you decide with the other loan. $50 per month is $600 a year - that's a lot!
One quick question ... the $50 extra for auto insurance you mentioned ... is that $50 extra per month? And would it go away if you payed off the car loan? If so, that would make me lean pretty strongly towards paying off the auto loan first regardless of what you decide with the other loan. $50 per month is $600 a year - that's a lot!
Originally Posted by tc
Yes, If I paid off the car loan, I wouldn't have to carry the full coverage insurance on the car anymore.

Violets: It's not because my son reached age (that won't happen for another 16 years ). I was told that my sons dad is now in jail.

Seems like everything is going bad right now... investments... the economy... unemployment.... baby daddys...
Hair Type: 3a/3b
For me, $50 a month isn't that much to be paying for full coverage on a car. If you got rid of that, would you prepared to pony up the money to buy a new car if you totaled your car tomorrow? What would you do if you bought a house and then totaled your car? Is there anything else on your insurance you can get rid of? If you have health insurance, you don't need medical coverage on your car insurance.

What I'm thinking is that wiping out your savings to pay off your loans doesn't sound like a great idea. I would definitely get rid of the savings secured loan. You would need to pay that off anyway when you use your savings for a down payment on a house. How much will that save you each month? Can you refinance your car loan to lower your payments?
For me, $50 a month isn't that much to be paying for full coverage on a car. If you got rid of that, would you prepared to pony up the money to buy a new car if you totaled your car tomorrow? What would you do if you bought a house and then totaled your car? Is there anything else on your insurance you can get rid of? If you have health insurance, you don't need medical coverage on your car insurance.

What I'm thinking is that wiping out your savings to pay off your loans doesn't sound like a great idea. I would definitely get rid of the savings secured loan. You would need to pay that off anyway when you use your savings for a down payment on a house. How much will that save you each month? Can you refinance your car loan to lower your payments?
Originally Posted by mrspoppers
I would still keep my car insured, but it would be $50 cheaper per month if I went with minimum coverage. I don't know what would happen if I totaled it. I guess I would be back in the same situation I'm in now where I am financing a vehicle and paying full coverage again on my insurance ? As far as I know I can't get rid of anything on my insurance so long as I am financing it. If I paid it off I could pick and choose what coverage I wanted to keep. I could be wrong.
If I paid off the savings secured loan, it would save me $62 a month.
Refinancing my car loan isn't going to save me much money. I just took out the loan last august. I might save a couple dollars if I got rid of the GAP insurance, life and disability insurance on it though. But I might end up with a higher rate because the car is now "technically" 1 year older than it was when I first financed it last year.
Hair Type: 3a/3b

Last edited by jmw; 03-15-2009 at 12:47 PM. Reason: oops

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