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I have a 94 850 with 120,000 miles and an 87 740 with 150,000 miles. The 850 is a lot more fun to drive and does not look like your typical "socker mom's" car. For me the 740 is easier to maintain. There is a wealth of knowledge available right here for both cars, but a lot more experience and tribal knowledge floating around on the 700 series. This may be important if you plan to do much maintenance yourself. You could spend the 20K on a late model FWD or maybe about half of it for a low milage early 90's 740 or 940 (Turbo if you want more performance). If you go the RWD route, you will have $10K in the bank which will cover a lot of repairs.
How old are the kids? If they will be driving in a few years, I would go with the 740 and pass it down when that time comes. My oldest daughter has only wanted Volvos since she was 16. Go figure.
It sounds like you have time to make this decision and wait for the right car to come along. In my area there are at least two shops which specialize in Volvo repair and in addition buy and sell cars. I suspect you have one near you and this might be a good place to start. The market here is good for Volvos and the classified adds are flush with used cars. Buy from a seller in one of the nicer suburbs. They "always" take their cars to the dealer and have full service records. Avoid curbsid dealers. You can recognize them because they are selling the car for a relative who owns a shop, is out of town, or some other lame excuse. The car needs new stainless steel muffler bearings, but they are going to get them put in when you buy it.
Enjoy your new Volvo.
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