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Message
Advice Needed - Trimming Expenses
Posted on 7/19/18 at 10:21 am
Posted on 7/19/18 at 10:21 am
My wife and I have our first kid on the way, and we are trying to trim some of the fat from our expenses. I currently own a 2014 Toyota Tacoma with 58k miles on it. I bought it new 4 years ago, and still owe about $8,500 on the loan.
My question is this: The truck is still worth about about $23k, so I could make about $14-$15k if I sold it. I have a relative willing to sell me a 2005 Toyota 4Runner that has been well-cared for $7,500. I would pay cash for it from the sell of my current truck and have about $7k left over.
Should I save the leftover money for child care? Or pay off the last little bit of my wife's student loan?
My question is this: The truck is still worth about about $23k, so I could make about $14-$15k if I sold it. I have a relative willing to sell me a 2005 Toyota 4Runner that has been well-cared for $7,500. I would pay cash for it from the sell of my current truck and have about $7k left over.
Should I save the leftover money for child care? Or pay off the last little bit of my wife's student loan?
6
Posted on 7/19/18 at 10:29 am to UpstateCock2007
There is a lot of missing information that is needed to identify opportunities to "cut fat"
We would need to look at your entire budget to identify those areas.
i.e Are you spending too much money eating out?
Do you have unnecessary subscriptions/memberships?
If you are simply wanting to analyze these two loans. Start with which one is higher interest, or if you are only worried about cash flow, look at the most expensive note. I would say not to pay these off at the expense of blowing through a savings chunk because there can be unexpected large expenses after a child is born (Medical bills, etc. etc.)
ETA:
Do y'all currently have a liquid savings of any type?
Are y'all Barely scraping by month-to-month?
Do y'all have an established budget?
We would need to look at your entire budget to identify those areas.
i.e Are you spending too much money eating out?
Do you have unnecessary subscriptions/memberships?
If you are simply wanting to analyze these two loans. Start with which one is higher interest, or if you are only worried about cash flow, look at the most expensive note. I would say not to pay these off at the expense of blowing through a savings chunk because there can be unexpected large expenses after a child is born (Medical bills, etc. etc.)
ETA:
Do y'all currently have a liquid savings of any type?
Are y'all Barely scraping by month-to-month?
Do y'all have an established budget?
This post was edited on 7/19/18 at 10:31 am
Posted on 7/19/18 at 10:30 am to UpstateCock2007
quote:
Should I save the leftover money for child care? Or pay off the last little bit of my wife's student loan?
I'd probably pay off the student loan and use the extra cash flow for the child care unless you have a really low payment.
Posted on 7/19/18 at 10:34 am to LSUengineer12
Ok - I think we are just both a little paranoid about the cost of a child in general.
We have no credit card debt, thank goodness, but we both have car payments ($960 total), have a mortgage ($931/monthly), and she owes about $10k on a student loan.
We don't eat out much, typically on the weekends only. We don't have any subscriptions or memberships other than a gym membership that runs about $80/month total for the two of us.
We have a savings account, and I think that I am more concerned with padding it a little more for the reasons that you mentioned. I am just trying to weigh my options and make the best decision to do that.
ETA: Ultimately, I could eliminate about $800 in monthly payments if I sold the truck and then used the remainder to pay off the student loan. Would I be better suited going that route, or basically sitting on the other $7k in case of an emergency. Again, I think we are just overthinking how much a child costs in general.
We have no credit card debt, thank goodness, but we both have car payments ($960 total), have a mortgage ($931/monthly), and she owes about $10k on a student loan.
We don't eat out much, typically on the weekends only. We don't have any subscriptions or memberships other than a gym membership that runs about $80/month total for the two of us.
We have a savings account, and I think that I am more concerned with padding it a little more for the reasons that you mentioned. I am just trying to weigh my options and make the best decision to do that.
ETA: Ultimately, I could eliminate about $800 in monthly payments if I sold the truck and then used the remainder to pay off the student loan. Would I be better suited going that route, or basically sitting on the other $7k in case of an emergency. Again, I think we are just overthinking how much a child costs in general.
This post was edited on 7/19/18 at 10:56 am
Posted on 7/19/18 at 11:36 am to UpstateCock2007
quote:
Again, I think we are just overthinking how much a child costs in general.
Remember that people all over the world, right now, are raising happy, healthy, productive children with NONE of the ridiculous paraphernalia used by people in the US. You do not need a magic diaper pail, a plastic baby rocking seat that plays white noise, a wifi video baby monitor, a special baby food blender, or any of the zillions of other things people buy. You need love, patience, attention, clean water, and diapers.
That said, if it makes you less anxious to sell the new car and use part of the proceeds to buy an older car and either have a bigger savings account/pay down the student loan, do it. You're the grownup--whatever makes you feel better and makes sense financially is a good choice.
If the old car turns out to be a dud, you can sell it or trade it and get another one. It's a car, not a marriage, LOL.
Posted on 7/19/18 at 11:40 am to UpstateCock2007
quote:
2005 Toyota 4Runner that has been well-cared for $7,500.
Buying a 13 year old SUV for $7,500 seems expensive. I would not do this.
Posted on 7/19/18 at 12:09 pm to UpstateCock2007
When you have never had a baby, you think you need all the shite in the baby store. The reality is most of that stuff is no needed, takes up a ton of space and cost a lot of money. You can always add stuff you need.
For our kids we needed a crib, a pack and play, car seats. Most of the stuff you need will be given to her during the baby showers. There will be enough cloths where you should not need to put purchase any for the first year.
For our kids we needed a crib, a pack and play, car seats. Most of the stuff you need will be given to her during the baby showers. There will be enough cloths where you should not need to put purchase any for the first year.
Posted on 7/19/18 at 12:10 pm to UpstateCock2007
Let's just say Daycare and Misc child expenses equates to $750/mo. Currently, with the cash flow y'all have, would you be able to afford that while paying both vehicle notes? (Cut back on savings contributions, trim from other area, etc.)
How much (you can break it down into X amount of months income, rather than actually tell us the $ figure) do y'all have in savings?
How much are y'all currently contributing to savings montly, if any?
ETA: I agree with others here that the UPFRONT costs of having a baby do not need to be high. handmedown's, second hand stuff, only buying essentials, are ways to reduce upfront costs. Will she have a baby shower? Diaper showers? etc. etc.
How much (you can break it down into X amount of months income, rather than actually tell us the $ figure) do y'all have in savings?
How much are y'all currently contributing to savings montly, if any?
ETA: I agree with others here that the UPFRONT costs of having a baby do not need to be high. handmedown's, second hand stuff, only buying essentials, are ways to reduce upfront costs. Will she have a baby shower? Diaper showers? etc. etc.
This post was edited on 7/19/18 at 12:13 pm
Posted on 7/19/18 at 1:20 pm to LSUengineer12
Yes, to the baby shower. She has two planned already.
We are currently contributing about $500-$600 per month to savings, so our assumption that this money will be used for the baby going forward (at least initially). We have about 15 months of savings in the bank currently (if that's what you were asking).
We are currently contributing about $500-$600 per month to savings, so our assumption that this money will be used for the baby going forward (at least initially). We have about 15 months of savings in the bank currently (if that's what you were asking).
Posted on 7/19/18 at 2:21 pm to UpstateCock2007
Your car payments are more than your mortgage? Also, it depends on how much you make. If you both combine for 50k a year sell the car. You each combine over 100k keep the car
Posted on 7/19/18 at 2:37 pm to tigerbacon
quote:
Also, it depends on how much you make
THIS
Posted on 7/19/18 at 2:51 pm to tigerbacon
Yes, combined, they are more than our mortgage. The house we live in was mine initially, 1600 sq foot 3Br, 2BA, so not overly expensive. I appreciate the info guys. Just needed an honest, unbiased opinion.
Posted on 7/19/18 at 5:51 pm to UpstateCock2007
I think without all details the advice given may not be the best it could be. I think before advising what loans to pay off one would need to know the interest rate for the car loans and student loan. Also, what your income is per month. Getting a car older than 10 years may not be the best idea. Not sure when you found out about the baby, but if you did just find out take some time and don’t make any fast decisions that you can’t undo.
Posted on 7/21/18 at 2:30 pm to UpstateCock2007
Neither imho. Since transportation expenses never end and vehicles are continually in need of replacement sooner of later, I would open a separate account called the car/transportation account. Take half of the original note amount and keep adding in money on top of the proceeds. This way when the 2005 vehicle needs replacing, the cash is ready and you will never have another car note again.
Posted on 7/21/18 at 6:09 pm to UpstateCock2007
I think one thing you're missing is the amount of life left in that Tacoma. Realistically a 2005 vehicle will need replacing well before a 2014 vehicle, especially one with the reliability record of a Tacoma. Not to say an 05 4Runner isn't reliable, but you have an almost paid off just as reliable vehicle that's a decade newer.
Don't underestimate how much breaking down with an infant in the car in the summertime sucks.
Don't underestimate how much breaking down with an infant in the car in the summertime sucks.
This post was edited on 7/21/18 at 7:45 pm
Posted on 7/23/18 at 9:00 am to UpstateCock2007
quote:
We have about 15 months of savings in the bank currently
15 months seems excessive... You could bring this down to 6 months and use the 9 months worth of savings to pay off the truck. Then you could pay your truck note back into your savings each month.
After mom/baby are home from the hospital with no complications or issues, you can use that excess savings you built back up from paying your truck note into it to pay down/off the student loan.
Posted on 7/23/18 at 9:05 am to gdub517
quote:
We are currently contributing about $500-$600 per month to savings
quote:
quote:We have about 15 months of savings in the bank currently 15 months seems excessive...
I took this as he has 15 months x $500-$600 in savings, so ~$8,000 in savings.
Not 15 months of Salary in savings.
Posted on 7/23/18 at 9:33 am to LSUengineer12
Yep. Makes more sense. I was thinking it was 15 months of living expenses, which to me would be excessive.
Does the OP have another savings account with 3-6 months worth of living expenses? If so, then I would continue to contribute monthly to this baby savings account and then pay off debt(s) after everybody is home and well.
Does the OP have another savings account with 3-6 months worth of living expenses? If so, then I would continue to contribute monthly to this baby savings account and then pay off debt(s) after everybody is home and well.
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