I would certainly get rid of as much debt as you can. You sound like you at least have a good handle on things and have a couple of 'lucky' factors - the fact your husband does have that severance (and bonus), plus your job which sounds fairly recession proof all things considered. Your mtge sounds reasonable, and your husband's coaching will bring in some real money - don't start worrying immediately about replacing "100,000" a year off the bat. That may not happen (and I think you know that), but you'd be surprised at how well you can live on even half of that if you plan carefully and keep your priorities straight. I doubt if you really need to be told about skipping lattes and expensive dinners, but don't be afraid to have pizza once a week or month, if only to keep you all sane. In the end, with some good budgeting, using both your smart heads and a little luck, off in the future as it might be, you should be ok for quite a while I think. Don't make hasty decisions on big items right now, take a little time to examine all angles, talk to your bank mgr., and/or whoever you really feel are good money people, and see what kind of advice they have for the short and long term stuff. I should tell you I've been where you are (actually pretty much in very similar circumstances money wise) and can tell you that not only does the sky not fall, but sometimes good things show up completely unexpectedly to help out! Good luck and keep us posted.

ellenj,

Take a breath everything will be ok.

Given your specifics your family is in a better situation than most. It also appears you've made some pretty smart decisions up until now so Im sure you will be fine.

My advice is to put everything into the bank for now and make your decisions once some of the "ifs" become clearer and some of the emotion,shock,and fear wears off. You can always write checks to your debtors at a later date.

Personally the first thing I would do is cash in the company stock and invest into mutual funds. Not sure what the overall value is but many times people make the mistake of having too much of their world wrapped into 1 company. If they go under you are hurtin. Your husband just got laid off. Seems to me the writing could be on the wall.

Keep your head up,good luck

Mutual funds are not the way to go now, only once the market turns around and looks to be good for some time.

I would build your emergency reserve up to at least 6 months, maybe longer. Pay your bills as they come due. Companies are still laying off, companies are not hiring. IMO, we are nowhere near the bottom yet.

True, mutual funds are risky now but not as risky as owning lots of stock in 1 company that is laying people off. Definately pile up cash.

Hold onto as much reserve cash as possible, and SLOWLY prepay your debts down, giving priority to the ones that charge the highest interest.

The stock market is not going anywhere anytime soon. But selling stock in your 401K will lock in your paper losses. That would be a shame. Hold onto the stock holdings and just forget about them for now. Eventually, things will turn around, but not anytime soon.

But your strategy for Company stock might be different, and that depends on the condition of the company and what percentage of your 401K is invested in the company. I think only about 5% of your 401K stock holdings should be in company stock, and the rest should be in diversified mutual funds, preferably index mutual funds with a mutual fund firm like Vanguard, because their expense rate are rock bottom. If you hold substantially more than 5% of your 401K stock total balance in company stock, it might be a good idea to get an impartial assessment of the value of the company stock and its long-term prospects. You can do that in your public library by looking up the company in VALUE LINE, MORNINGSTAR or in STANDARD & POORS -- these 3 publications rate the financial soundness of most publicly traded companies. (Make sure you ask for MORNINGSTAR stock publication, not their mutual fund publication.) If the assessment is negative or less than bright, it might be the right thing to sell all or most of it and invest the proceeds in an index mutual fund of short term bonds. Vanguard and Fidelity have such a fund, and other mutual fund companies too. If you are going to sell any company stock, I do not think it's a good idea to invest that money in the stock market right now, because the market may go down more -- the downturn has not come to an end yet. At least with a bond mutual fund, you can earn some interest. And stay away from "long" bonds or bond funds, because their price fluctuates too much. You want a fund with bonds of up to about 5 years term, no longer than that.

Good luck. Stay safe and healthy. And give yourself and your family small treats often, things that make life worth living.

I agree with Hausproud - get rid of the company stock or most of it but keep the 401K in its current configuration (don't sell the stock portion).

Personally , I would try to cut expenses as much as possible so I would pay off the personal 11% loan with the bonus money. See how much is left and what your net balance will be if you paid off the other loan. I take it that the $3000 401K loan has been paid back?

Good luck.