What would you do in my situation?

[FrugalIII]

I am 54 years old. My home is paid for and I have a small car loan ($12k @ 3%), no credit card debt. I have a HELOC with about $38k (6.5% interest)outstanding. Recently divorced, I have a loan for my ex's car with an outstanding balance of about $20k and 2.5 years left on the loan that I have to pay as part of the divorce settlement. My total monthly expenses are just under $3,000. My gross income is about $100k which includes a $42k defined benefit government pension. I have about $12k in cash and $30k in Roth IRA. I also have about another $10k in mutual funds. Both of the last two items lost about 40% this past year.
Here's are my questions. Should I continue to fund my Roth IRA to the max or concentrate on paying extra on the HELOC or the ex's car loan to get it paid off early? (Her car loan is about $700 a month) My second question is, how should I figure the amount I need for an EF, knowing that my pension is guaranteed and covers all but a couple hundred dollars of my monthly expenses.
What would you do?

[disneysteve]

What is the interest rate on the 20K car loan?

When you say your expenses are 3K/month, does that include the debt payments?

What is your net pay? If your expenses are only about 36K and you are earning 100K (probably about 65-70K after taxes), you should be in pretty good shape. You could put 6K in the Roth and still have plenty left to speed up the debt repayment and boost savings.

As for the EF, that's a good question that doesn't come up often. How much is needed when income is guaranteed? I'd point out that an EF is not just in case you lose your income but also if you suddenly encounter a large expense like a car repair, a home repair, a medical bill, etc. The 12K you already have in cash may be sufficient to cover that kind of stuff.

[FrugalIII]

Thanks,
I can't remember what the interest rate is on the ex's car loan, but I think it's between 6 and 8%. Yes, my $3k a month expenses include everything that has to be paid like utilities, debt repayment, food, insurance but no extras like entertainment; eating out; pocket money; gifts, etc.. My net pay is about $69k per year. I'm kinda anxious to get the ex's car paid off, but don't know if that's the right thing to do. It is the largest monthly expense I have. If I don't pay extra on the debt, I'll have more money to sock away in case of an emergency.
I do have what I think is quite a bit of money left over at the end of the month though. Since the divorce, I've been able to easily save 15% of my gross income.

[maat55]

I would take all extra earnings now and payoff the car note, then partially apply towards the Roth and pay extra towards the HELOC in a way that pays it off before you retire. I would be aggressive about paying off the car note.

3 to 6 months is standard for an EF, I would base that on your job security and whether you have disability insurance. Also, if you are comfortable with the amount of your retirement fund, raising the EF to 6 months to 1 year would be good.

[disneysteve]

my $3k a month expenses include everything that has to be paid like utilities, debt repayment, food, insurance but no extras like entertainment; eating out; pocket money; gifts, etc.. My net pay is about $69k per year.

I think you're in great shape.

Net income: 69K
Expenses: 40K (I added 4K/yr for incidentals)
Roth: 6K (you are over 50 so can put in 6K, not 5K)

That still leaves you 23K free, so you could pay off the ex's cars within a year. That would then boost your available cash by $700/month.

[jIM_Ohio]

You want the HELOC paid before you retire. Are you retired now?
I would do things in the following order:

1) max Roth (are you eligible for 6k catch up?).
2) pay down debts at 8 percent (car)
3a) pay off lower interest debts
3b) max retirement accounts (eligible for a TSP?)

Your pension appears to cover your expenses, an if you lower expenses you should have more disposable income from the pension.

I would NOT sell any of the investments right now (mutual funds or Roth).

[FrugalIII]

Yes I would like the HELOC to be paid off before I retire. I'm retired from one job, but still working full time. I'd like to continue to work full time for about 10 more years, God willing. I have no plans on selling any investments for at least 10 years. I don't know what a TSP is! But yes I am eligible for the $6k Roth now that I'm over 50.
Oh, and the job I have now also entitles me to another government (different government) defined benefit pension so long as I stay there until I'm vested which will be in 1.5 years. Of course the amount of that pension will increase with every year I work.