Payoff our car?

[troyw]

I won’t touch 8 months of EF if my wife is pregnant.

Seems like you are worried a lot about that 10k car loan. Of course you should because your total expense for 8 month is around 22k and you car loan is 10k. Why did you need to buy that expensive car in the first place? Our monthly expense is a bit more than 4k and we(me and my wife) paid around 5k for each car. Are you getting what am I saying? Why would you save 400 a month for your car replacement fund? What is your next car going to be? How much would it cost? Didn’t you learn the lesson of driving the car till it is in working condition and buy next car (used cheap one) with the cash?

$400 per month was the amount that my wife and I agreed upon. We can swing that amount without much trouble. That being said, I hate debt and would really like that car payment gone.

[khosta]

You know, it doesn't have to be all or nothing. Why not pay off half the car? Or even 1/3?.

I agree with this. I wouldn't pay it all off now, just put some money down on it. I think it's more important to have that extra money for when the baby comes - you never know what could happen.

[littleroc02us]

Could anyone sensibly argue that now is not a good time to pay off your debt?

Yes, if your talking about the poster. Personally I think it's scarier having a $400 payment towards a car when the baby comes. He has 22k in his bank account if he spends 11k to pay it off he can build it back to close to that amount before the baby comes. I'm sure most people could live off for a long while if they had to if they lost their jobs.

[maat55]

Personally, I would keep the cash. Pregnancy means too many expensive things can go wrong (disability, medical bills, a sudden wish to stay home, on and on and on).

If the pregnancy, birth, and post baby work plans all go well, then pay off the car. I'd probably wait a year.

This.

[mohawkstrip]

Using half of your total savings to pay off the car is not a good idea. Take about 2-3k to make a dent in the debt, then use a more aggresive pay off strategy and pay extra every month.

For the record, unless you have significant assets, it's a very bad idea to go into debt for cars. Avoid auto loans at all costs and stick with used models for less than $5k (reliable ones can be found).

[DebbieL]

I would pay it off, leaving 11K in the emergency fund. That leaves you with a good 4 months in there still (and actually I'm not sure if you were including your $400 car payment in the calculation, but that won't exist anymore, so you might have 5 months or so left in the emergency fund). You can then aggressiveiy build it back up over the coming months. I too hate debt, and would probably just want to get rid of that sucker.

I'm in Canada, so medical expenses and childbirth are never an issue here. I'm assuming you are in the US? How good is your medical insurance? Are you likely to get stuck with a huge bill for something pregnancy/delivery related, or are you covered pretty well? This could affect my answer. But, speaking as a Canadian who doesn't worry about medical bills, I'd pay off the car in a heartbeat.

[Frugal]

Personally (and this is just my opinion, I am NOT a professional giving financial advice), I would pay off the car. I paid cash for mine, as did my spouse, and it really helped not to have that payment on top of a mortgage payment. Children can be expensive, however. Maybe you could wait and pay it off in a half-year or later?

[CCCFree]

What does 22K represent to you in terms of monthly expenses? If 22K is 3 to 6 months worth of expenses, then I would be hesitant to draw down my savings to pay the car off. However, if 22K represents 1 year worth of expenses, then I would definitely pay the car off knowing that even by doing so I would still be left with over 6 months worth of an emergency fund.

I agree...everything come's down to your monthly take home, amount of monthly expenses and size of debt.