Update! Please advise!

[cashisking500]

Hi Everyone,

I read the forums here every week and I haven't posted in about 4 months, but I wanted to bring you all up to date on our debt slaying journey!

We did have a setback where we had to replace our home's heat pump, so that cost us about $4700 from the emergency fund! Because of this, things are moving a little slower than I'd like, but such is life I guess, right?

We're still reducing the debt as we can and we are left with the following, which we should have knocked out by the end of March 2015.

Car Loan - $7530 (about 4.5% interest)
Student Loan - $3700 (About 2% interest)

My question is after snowballing and tossing in a little from savings to get these wiped out by the end of March, we will be left with $7,000 in our EF.

Is it safe to take our EF that low to reduce the debt? Honestly, I get nervous when we go below 10k in the EF, but I am beyond ready to shed the rest of this debt.

Monthly expenses after we pay off the debt should be about $3,200 per month.

Thanks in advance for your advice! Everyone here is so helpful.

[bjl584]

Rule of thumb is to keep 3 to 6 months in the EF. So, you'd be drawing it down a little below 3 months.

You may want to extend the payoff date an additional 6 months or so. Say, have a goal to have everything paid off by September. This will prevent you from drawing your savings down.

[autoxer]

Is it safe to take our EF that low to reduce the debt? Honestly, I get nervous when we go below 10k in the EF, but I am beyond ready to shed the rest of this debt.

Monthly expenses after we pay off the debt should be about $3,200 per month.

How quickly will you be able to build the EF back up from $7k to $10k without any debt payments? I would write out a savings plan that you can start as soon as the debt payment plan is over, then it won't be as scary to pay it off a little early, because you will know when it will be back to a comfortable level.

[cashisking500]

We should be able to save at least $1000 per month, which is after maxing out our Roth IRA's. If we wait to max out the Roth, we can get back to 10k in about 1.5 months.