Need help figuring out finances

[katdurant]

I may have to move for a new job but the problem is I'm not sure exactly how much I'll be bringing in yet. I have about $20,000 in savings. I need to minimize my monthly debt because my pay check could vary greatly. I have 3 options so far: 1- pay a full years rent in advance and save any left over money from my paycheck for next year, 2- pay almost all my car off and refinance the rest (owe about $26,500 with 3 or 4 years left), or 3-use the savings to supplement my income as needed. I am upside down in my car due so I'm not sure I want to waste my money on that. Plus my rent will be more expensive then my car payment. Any help is greatly appreciated.

[pennrj430]

Hi, if it were me, I would sell the car, pay whatever was left on the loan out of your savings. Buy a cheap used car for a few grand. That should leave you debt free and still have a nice emergency fund. Then you can move and not have to worry about payments.

[BMEPhDinCO]

I may have to move for a new job but the problem is I'm not sure exactly how much I'll be bringing in yet. I have about $20,000 in savings. I need to minimize my monthly debt because my pay check could vary greatly. I have 3 options so far: 1- pay a full years rent in advance and save any left over money from my paycheck for next year, 2- pay almost all my car off and refinance the rest (owe about $26,500 with 3 or 4 years left), or 3-use the savings to supplement my income as needed. I am upside down in my car due so I'm not sure I want to waste my money on that. Plus my rent will be more expensive then my car payment. Any help is greatly appreciated.

1. Don't pay a full year in advance, what if something happens? What is the amount in rent you have to pay? Is there somewhere less expensive?

2. Keep paying the car - you can knock off some if you want ($6.5k maybe) but otherwise if you can afford the payments, keep it up. If you can't, then pay down to where it's an even sell, then sell it and buy a cheaper one with the savings.

3. Moving is expensive - I'd say right now, keep as much cash as you can, be prepared to have to live off it for 1-2 months before paychecks start rolling in and then reassess your budget when you know your net pay.

[dunnrobert700]

Don't underestimate the utility from the flexibility of cash on hand. Most people angle to have 6 months or so of living expenses as a cushion against things like unemployment.

Being upside down on the car is immaterial to whether you should pay down the loan you took to buy it. The interest rate matters a lot though. If the rate is say 4% or higher, maybe some paying it down faster than required would be smart once you have your cushion.

Based on what you said i can see zero benefit to prepaying your rent. If you get a significant discount maybe, otherwise it is like giving your landlord a zero interest loan.