I do know how you feel Melanie, and i am right there with you
This is exactly what I have been struggling with since DH found work this month. We would have been homeless in a heartbeat if DH hadn’t happened to have 8 weeks of vacation pay saved up….and the company wanting to avoid a lawsuit over DH’s termination, decided to pay it all rather than the two weeks they were obligated to.
The experience this year of being long term unemployed showed me the importance of having a 3-6 month savings built up. This month (January) we needed both of DH’s checks to pay rent and used my income to make the car payment, car insurances, and gas for the cars.
February 5th will be the first “disposable” income check we have. I did a plan for the next 4 months, the summary version had the theme “getting caught up.”
Then I realized our debt looked like this:
$2700 in various 7 credit card debts
$2000 in one single CC
$6500 in car loan
$5000 in IRS and state taxes (IRS is in abeyance due to DH’s unemployment)
I then realized that while I had planned to “get caught up” and pay all the CC’s the required amount to “get current”, and put some in savings, I could actually pay 4 of the 7 COMPLETELY OFF. Maybe 5 if I can work some deals with the CC people.
I have decided to act in faith, or trust in the system as Shay said, and pray (literally) that DH will continue to be employed. So my plan is to pay 4 out of the 7 off in February, the remaining 3 in March (and hope the car lasts that long), the large one with the 1st check in April, and pay the state taxes and put $1k into savings with the “extra” check in April.
Doing it this way, by the end of April, we could be debt free except for the IRS and the car. THAT MATTERS because if DH were to become unemployed again, we know that we can survive on the amount he would get on unemployment and what I bring in.
Would I like to have the $5k in the bank and “current” on CC’s? Sure. It would make me feel safer…that’s the equivalent of 2 1/2 months worth of rent, and I know your goal is to have 3 months of mortgage payment etc in the bank. But I’ve decided to take a giant leap of faith. It’s truly a leap of faith, because it’s scary thinking we could go through the same thing again, and this time, have NO nest egg to fall back on. Once the CC’s are paid off, I may revisit it and decide to slow down paying off the car and put 1/2 into paying off the car and 1/2 into savings, but I’ll cross that bridge when I come to it (right now, I’d probably hold my breath, pay the car off rapidly, because that is $400 a month off our backs and after the two months of paying off the car, I could be saving $2k a month)