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Subject:  Re: Debt vs emergency fund Date:  10/24/2013  12:03 PM
Author:  Fuskie Number:  307396 of 312188

What is the interest rate on your car loan and your credit card debt? What are your minimum monthly payments? How much would it reduce your monthly expenses to eliminate these debts? Most importantly, if you paid these debts off, how confident are you that you wouldn't load your cards back up with debt again?

With 4K in monthly expenses and $47k in emergency, you have about a year's cushion. I don't know what the market is for an experienced paralegal, but you should be able to find work in that time, so the only extreme pressure I see is what you are putting on yourself. Especially since you have 3 months to prepare.

If you want, you can list your individual monthly expenses and the members of the board here will go to town ripping them to shreds and getting down to the bare bones of what you need and how you can reduce your "want" expenses.

In general, I think you're in pretty good shape for 2014, with your savings and expected income (is that a severance and for how long does it last) pretty much matching your current annual salary. If you were to eliminate your credit card debt, you would reduce that cushion to 6-8 months, but you would also reduce your monthly expenses, which could stretch that period by a month or two. That said, you don't want to go on a six month vacation - you should take a week to decompress, then start your new job - finding a new employer or maybe even going solo.

One other consideration. If your retirement doesn't allow you to continue employer health benefits, you are going to have to enroll in a healthcare plan, either private or through your state's healthcare exchange, so be sure to factor that cost into your equations.

Finally, DH may be in school, but he can still contribute, either through reducing his own costs or getting a part time job as do many students.

Who wishes he could get paid $44k a year to retire...
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