You want the lease. Stop trying to convince us. MM is never going to be convinced that renting a new car is better than buying used.
Do what you want. It's not the "smart" thing to do money wise, but neither Is selecting cars based on sunroofs. Happiness is worth something.
I don't care about the sunroof (anymore) OR the new car smell, as someone else said. Honestly, we are trying to make the best decision we can make and I really, REALLY appreciate what everyone has said. I was serious when I said earlier that DH and I are considering all your suggestions and input. We have discussed the merits of every post. We are looking for used cars (I drove two today) and are running all the numbers and scenarios. I've erased my expectations. But we have very little breathing room every month and we are drowning here. We were NEVER going to get 12k out of my car, so in one sense, we have a small windfall. We are trying to maximize the hand we were dealt.
A used car is still very much on the table. We are looking, and are considering going down to one car temporarily until the right used car pops up. You are right - happiness has a value, and so does safe, reliable car with no maintantence costs. And yes, WE HAVE CUT CABLE! Lol.
If you can do without a second car, why not? How far is your H's commute? Could you take him to work each day or on the days you will need to go somewhere?
How much debt do you have? Are they all CC debt?
I still think an older used car is the best route to go if you are serious about paying off debt and want to have something to put down on a new car in a few years. If you get a lease and according to what you said about not being able to save that $350, you will not have anything to put down on a brand new car in 3 years.
If I were in your shoes I'd buy (not lease) a 2-3 year old Kia Soul. Drives great in the snow and rain, lots of room for kid stuff, and a sunroof. I know a brand new Soul is around $18k, you should be able to find a used one for $15k easily, and then put your settlement down on that and have a small monthly payment.
Now, suppose I tell you we found a better lease on the same car that would cost us $4800 in sunken costs over three years?
Leasing a car for three years often is abetter bet than buying new and getting rid of it in three years, yes.
But leasing is not better than buying used or buying new and keeping it until it dies.
People on here spend money on things others think aren't MM all the time. Do what you can afford and makes you happy. I personally think $150/month for a lease is great. Our paid off car (fully loaded RAV4) was $450/month for five years and we've had it another 3 so far. We put $3k down. So we spent $30,000 total, over 8 years. Currently cost at $310 and change per month on average. So you're still making out better leasing than us until we have this car for a while longer.