[Elgin526]

First, I think you need a financial advisor. Find a fee based one, don't talk to the bank about financial planning, I'm sure they are very nice but they are biased! A fee based financial planner will have impartial advise on how to manage your money. They'll look at your total finanical picture (assets, debt, income) and then your life goals (having kids, opening your own business, retirement planning, saving for college) and really help get you on the right track.

Off hand, based on what you said, I'd pay off both the HEL and the car loan, buy a 2nd used car for around $10,000 cash ($20,000 for a used car is way too much, IMO). Then, I'd take what I was paying per month towards the the HEL and car loan and put that into savings, you should get your savings back up again in no time. I'd also move the savings to a higher yeild savings account.

Being debt free before having kids is great, you just never know what will happen, if (heaven forbid) something were to go wrong, you'd have the ability to focus solely on your family and not have to worry about making loan payments!