Just Getting Started

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Just Getting Started

Postby Latro » Mon May 14, 2007 10:14 am

Like a lot of things in my life I'm really just getting started into Personal Finance and support but feel that I've been taught most of the important aspects as I grew up.

Here is a current sketch of where my family (My wife and our son) are at:

Credit Card Debt = 0 (we've always paid our cards off in full)
Car Debt = $23,000 (We have two cars, a 02 Explorer and an 07 Dodge Caliber)
No other debt beyond our mortgage which is extremely large given the cost of living in the D.C. area.

We have about $6000 in an emergency fund.

Having said that, my wife wants to quit her job and stay at home with our son as soon as possible...

Whats the best way for us to work towards this, paying off our car payments, or saving the money to last as a window until I make enough to cover our expenses? The latter is not as sure a thing and harder to measure but I am just starting in my career and hope for significant salary increases over the next 5 years. My salary is currently the majority of our income.

Any thoughts would be great. THANKS!

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Postby bwian » Mon May 14, 2007 10:31 am

Considering you're doing well with the consumer debt, I would focus first on beefing up that emergency fund. With two vehicles (one brand new) with insurance, a child, and a D.C. mortgage, you would have very little time to fix things up in the event of an emergency where you are.

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Postby tinyhands » Mon May 14, 2007 11:48 am

I think you need to put together a comprehensive budget and then compare that to actual numbers for a couple of months. An exercise like that should be able to answer all the other questions you haven't yet asked yourself. With your budget, be realistic. With your actuals, be honest.
Read my 'fiscal fitness' financial disclosures <a href="http://www.getrichslowly.org/forum/viewtopic.php?t=176">here</a>.

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Postby Siobhan » Mon May 14, 2007 11:49 am

I think we'd need a lot more information to give you decent advice. Exactly how high is your mortgage? (Better yet, what are your total monthly expenses?) By how much does your salary alone exceed those fixed expenses?

Anyway, I think it would be crazy to spend that $6,000 on your car loans. First of all, given that it wouldn't be enough to close the loan, it won't lower your monthly expenses, which seems to be your primary concern. Secondly, with a family of three, a mortgage, and car debt, I think you need a MUCH larger emergency fund than $6,000!

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Postby consultantjournal » Mon May 14, 2007 12:06 pm

Beef up your emergency fund to cover 6 months of living expenses. Would your wife be willing to consider part-time work or a work-from-home job? Even 8 hours a week at $8 an hour would bring in $278 a month. Or perhaps she could earn a few dollars a month from self-employment. I work from home, but only in the evenings and when my child is napping. I bring in a lot more than $278 a month.
Andrea Coutu
Consultant Journal

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