Getting Married- Financial Advice

[Spock]

I'm getting married later this year, and we've been discussing some future financial plans- I was wanting some outsider advice on this.

Our situation: We make about 88,000 between the both of us (I may take a less stressful job which would drop that to 80,000). No debt other than one vehicle (owe 13,000 on, $250 a month payment, less than 1% interest) and house (owe 96,000, worth about 125-130,000- $850 a month). We have roughly 35,000 saved in cash between the both of us. I designate about 15,000 of that as emergency, leaving 20,000 as "extra" not purposed for anything.

My question is: what to do with this extra?

I'm already planning on still "paying" her $500 monthly rent payment and applying it toward principal on the house. That's an automatic $6,000 equity in the home each year.

There's two big financial things I foresee happening.
1) Buying a different house. I would really like to not buy without a 20% downpayment (I'd estimate a house we would like to be about $150,000). If I can put down 20% downpayment on a 150k house, my payments would not be much different than they are right now. However part of me acknowledges what is "cheapest" is staying where I'm at until I NEED to move (kids or something).
So I may make $20,000 if I'm lucky off my house if I were to sell. So in my mind, this extra 20,000 along with profits from house sale would go well to down payment on a new home.
HOWEVER- since one vehicle is very old we would lose the "extra" cash we could have used to purchase a new vehicle- and then I would now have 2 car payments in addition to the mortgage. Not something I want to do. However, if that pinch of a situation came about I could certainly use the $500 extra rent payment for a new vehicle loan.
If I purposed this money as home down-payment right now, it would just sit in an account doing just about nothing: waiting for when we buy a house... I want it to help us out financially right NOW. Which leads me to my next idea: pay off some existing debt to free up monthly money to begin saving more.

2) Getting a newer vehicle (not the one currently making payments on). You know how vehicles go- who knows when the older vehicle will die.
We could pay off the current 13,000 loan- freeing up $250 additional each month. It'd still leave us 7,000- being rebuilt by the extra $250 a month we aren't paying toward the current loan. If the older vehicle died the next day, at least we would have 7,000+ down payment on another one- and still only have one payment to make on vehicles.
However, I am not sure if that is the wisest move as that vehicle's loan is "cheap" debt (total interest on the whole loan is about $300). In the past, may have been smart to pay that off when you had insane interest, but that debt isn't costing me much other than just having to make a payment each month.





What is the wisest thing to do?

Pay off the 13,000 vehicle loan, freeing up $250 monthly?
Leave the 20,000 extra alone right now- use as home down payment?
Some combination of the two? Something else?


The only other thing I want to mention: the possibility (probability?) of kids exists, and I'd want her (possibly) to stay at home- losing one income. I don't want to be financially obligated (why I don't want more than one vehicle loan) to where it becomes stressful later on, unable to take vacations, etc.

[Petunia 100]

What does your wife to be think? Have the two of you discussed your priorities?

If starting a family right away and her staying home with your child(ren) is something you both want to do, then it makes sense to build up cash and liquid investments, and stay put in the home you already own.

If starting a family right away is not something you both want to do, then is buying a bigger house something you both want to do? Perhaps yes, perhaps no.

There is no right or wrong priority, it just depends on what is important to you.

I'd put that extra $500 from no longer paying rent towards any consumer debt before I put it towards the mortgage. Keeping monthly payments to a minimum is important. You never know what life may decide to throw at you.

[snafu]

Do you and fiancee have access or participate in employer sponsored retirement plan? What is the plan for wedding cost? You've mentioned most major, life changes in rapid succession like marriage, changing employment to 'less stressful, selling-up and buying a different house, different car requirements and parenthood. What are the details on the two vehicles?

[bjl584]

Just because you need a new vehicle doesn't mean that you need to get a loan. I'd look into getting something that you can pick up for cash when the time comes to do so.

[riverwed070707]

Just because you need a new vehicle doesn't mean that you need to get a loan. I'd look into getting something that you can pick up for cash when the time comes to do so.

Agree. At 1% interest it isn't worth paying off your existing loan. If the older car died today, you could go pay cash for it and not deal with another payment or having to get another low interest rate. I'd keep saving for now and decide when time comes that you're ready to make a move on either the house or the car. The money doesn't have to necessarily be earmarked for something. However, if you think you might move soon (2 years or less) I'd stop paying the extra on the current house each month and sock that into savings too so you have more in cash and less riding on the sale price of your current home when the time comes. Th

[snafu]

This AM I saw a discussion on whether to fix or sell an older vehicle. They explained it was important to stay aware of the KBB value of an older/high mileage vehicle. It was deemed worth the cost of small repairs so long as thy didn't exceed the value. The conclusion was it's not smart to do major replacements that cost more than the value of the machine like motor, transmission. You need to balance the cost/monthly payments of a newer, depreciating value auto and the cost of a series of small cost repairs. Take into consideration lower cost of basic insurance for 3rd party liability.

[Spock]

Thanks for the input!

What does your wife to be think? Have the two of you discussed your priorities?

Kids in a couple/few years, not right away. Priorities are as I listed. A house isn't NECESSARY in the foreseeable future, a new vehicle certainly will be in the future (who knows when it dies- decided when it needs a repair worth more than it's worth we'll be done with it).

Do you and fiancee have access or participate in employer sponsored retirement plan? What is the plan for wedding cost? You've mentioned most major, life changes in rapid succession like marriage, changing employment to 'less stressful, selling-up and buying a different house, different car requirements and parenthood. What are the details on the two vehicles?

We both participate in employee-matching plans up to their maximum contribution. That's pre-check so I didn't include as an expense.
Wedding cost- her parents are footing most of it. I've already paid for honeymoon, tux rental/reception dinner is about all that I've got to pay for.

One vehicle is a 2002 with high miles, one is a 2013.

Just because you need a new vehicle doesn't mean that you need to get a loan. I'd look into getting something that you can pick up for cash when the time comes to do so.

That's a predicament. We'd like an SUV (larger to pull a trailer with if we had to) or pickup truck. The thing is: I don't want such an older, unreliable one that I cannot go out of state with the thing. 5-year old trucks and SUVs are still $24,000.

Agree. At 1% interest it isn't worth paying off your existing loan. If the older car died today, you could go pay cash for it and not deal with another payment or having to get another low interest rate. I'd keep saving for now and decide when time comes that you're ready to make a move on either the house or the car.

Very good point- thank you!