So, here’s the deal. Two years back, the wife decided to ditch the 9-5 and go solo in her business. And boy, did we end up with a $10k debt hanging over our heads! Every time we thought we were making progress, BAM – another obstacle in our way.
But guess what? I just made the final payments and man, does it feel good!
Now, I’m treating myself by planning out the next couple of months without those pesky credit card dues. And let me tell ya, it feels like a weight lifted off my shoulders!
Edit:
So, what’s the smart move now?
I’ve got an emergency stash set aside, covering a year’s worth of expenses. But do you think I should aim for an extra cushion to avoid pulling out the credit cards for non-emergency stuff like car repairs (cuz let’s be real, those happen)? And how big should that buffer be?
Should I go all in on both our Roth IRAs?
Or maybe knock out that $5k car loan at 4% APR?
What about the $8k student loan at the same rate?
And should I start tossing cash into 529s or an HSA plan?
From: Budget Master”
Response from THE MONEY MINDER:
Hello There,
Congratulations on scheduling the last payments on your credit card debt, that’s a huge accomplishment! It’s understandable how challenging it can be to see progress derailed by unforeseen expenses. Now that you have some breathing room in your budget, it’s a smart move to plan ahead for future financial stability.
Considering you already have an emergency fund with a year’s worth of expenses, it’s prudent to take the next step in building an extra buffer to prevent reliance on credit cards for non-emergencies like car repairs. It’s wise to assess your typical expenses and set aside a dedicated fund for these predictable but irregular costs. You could calculate an estimate of annual expenses for car maintenance and repairs, then divide that by 12 to set a monthly contribution goal.
After establishing this buffer, you could consider prioritizing maxing out both your Roth IRAs to take advantage of tax benefits and potential growth for retirement. Once that’s done, you might want to tackle your car loan and student loan, considering the interest rates. If it makes financial sense, paying these off could free up additional funds for other financial goals like funding 529s for education or contributing to an HSA for healthcare expenses.
Remember, each financial decision should align with your long-term goals and risk tolerance. It’s great to see you taking charge of your finances and thinking strategically about your next steps. Keep up the good work and stay focused on building a solid financial foundation for your future.
Farewell from THE MONEY MINDER.
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