H and I had a talk about emergency funds and paying off the debt. He wanted to put any extra funds onto my credit card. I balked at the idea, I wanted them to go into our savings.
I made a suggestion that we agree on a specific number that needs to remain in the Emergency Fund at all times and any extra goes onto the debt. He agreed and we came up with the following plan:
1) We will bring the Emergency Fund up to $5000. This should cover the majority of any major home problems, or at least a significant portion. Given that we still have maintenance on two homes, I voted for the larger Emergency Fund. If we draw from the fund, then we need to bring it back up to the stated level before applying extra money to the debt.
2) After the Emergency Fund is at our goal, then all extra money goes to pay the credit card.
3) H has a minimum level he likes to keep his personal checking account, so he will maintain that level. Since he never reconciles his accounts, I can’t blame him. I don’t understand it, but it works for him. All our utilities and the mortgage come out of his account. We are not going to bother going through the hassle of switching everything over to our joint account right now. We are creating a master password list, so if something happens to one of us, we can access the other’s information.
4) After the credit card is paid, we are bring the Emergency Fund up to $10,000 and focus on paying the student loan. Technically, the car is a higher interest rate but the Student Loan interest payment is so much larger that we are going after that next. The cars will be paid within reasonable time periods.
This is the plan…..Engage…