Last month (June):
Years left: 0.75
P =$1,170.83, I =$43.57, Escrow =$812.79
This month (July):
Years left: 0.666666666667
P =$1,175.46, I =$38.94, Escrow =$812.79
Amount saved from prepayment: $0
Before going on leave we saved up $84K in the slush fund so that we could live in Paradise (where everything is at least 2x as expensive as where we normally live) on a lower income without worrying about money. It looks like we will have about 40K leftover (give or take) after subtracting out our summer emergency fund and moving back expenses.
We have been doing quite nicely since DH quit academia and got an industry job. I still can’t believe our good fortune. (Though I am not sure how long it will last!) Definitely a different world than the one we were inhabiting even 3 years ago. For the first time in a long time there aren’t obvious places to stash more money.
Last time we had ~25K extra, we threw it into the mortgage. Before that when we had large chunks of extra untargeted money, we saved them in retirement vehicles.
So, for people who aren’t long-term readers, here’s where our monthly nut after bills has been going since DH got his industry job:
- We max out all of my retirement options
- We pay up to the match with DH’s retirement (it has bad fees)
- We are no longer eligible for tax advantaged IRAs unless we do a backdoor conversion. So we don’t do IRAs anymore. If we were eligible we’d totally to this.
- $500/mo in each child’s 529 (This is not enough for 4 year private schools without financial aid, but DC1’s is getting too big for 4 year public or even a 4 year private should our income fall and we become eligible for financial aid. I debate on whether or not to stop contributing, but figure we can stop DC2’s contributions later if DC1 has too much.)
- Previously we had been saving for a year in paradise with me at half salary, but we won’t be doing that anymore.
- Mortgage. You will note that the mortgage runs out in 8 months and there’s not much point to prepaying at this juncture.
We have a LOT of money put away for retirement and for college. Most of our money is in retirement savings, and most of that money is in the most difficult to tap form of retirement saving (the 403b). That makes maxing out DH’s retirement account with the high fees potentially less attractive than saving the money outside of retirement accounts (in case we move to Paradise someday and want to buy a house), or you know, just spending it.
In terms of taxable stocks, we have around 125K in an account we could just tap. We have about $300K in home equity. Sadly, this is not enough money to buy a house in paradise with 20% down in a good school district, and it would be pretty risky to try. We do, however, think this makes a pretty reasonable secondary emergency fund. Combined with our primary emergency fund in savings, we figure that if DH loses his job we’ll be ok just living on my salary where we normally live until we figure what else to do.
So that leads us to this money we saved for Paradise but didn’t spend. Here are our options (in no particular order):
- Start maxing out DH’s retirement even though it has crappy fees (~15K/year over what he’s already contributing). We may do this anyway as we’ll probably be generating a surplus with both our salaries next year. [update: I miscalculated, it’s actually only 5K more than what he’s currently contributing– we put in the request to max out today.]
- Figure out how to do a backdoor IRA ~11K
- New car (if my 2005 Hyundai Accent that I love continues to have check engine problems once we get back) ~$30K
- Kitchen Renovation ~$30K. The triangle just isn’t quite right and our countertops suck and the sink is chipped. The problem with this is that it will take our time which will be in short supply when we get back and there’s been a small construction boom in our town meaning that construction costs are higher and take longer than usual. We don’t know how long the boom is going to last.
- Bathroom renovation ~$10K. We don’t really need this, but we’d kind of like to replace the plastic shower with a tile one and maybe get rid of the gold accents in the bathroom. Totally cosmetic and unnecessary. This would be unlike us since we don’t normally replace things until they need to be replaced.
- Xeriscape the lawn ~$?? We have no idea. Problem: Bermuda grass may make Xeriscaping an expensive failed dream unless we can get more trees to stay alive (an endeavor we’ve already lost quite a bit of money on).
- Solar panels ~$20K. There’s basically nobody in our town with solar and we’re wondering if there’s a reason for that. Lots of people do, however, have the black shades over the outside of their windows.
- Charity– I don’t think we’re going to direct this money to that. We usually do charitable giving in December.
- Looking through old “things we wish we had money to do” posts, I notice that we wanted to replace carpet with hardwood in our dining room. We probably still want to do that, though it’s not a high priority. I think that would cost under $5K, though I’m not sure how much under.
Also… since we’re not saving for Paradise and we’re not putting extra to the mortgage and DC1 is trying out public school… we’re probably going to have extra untargeted money once school starts and I start getting paid again. I don’t yet know how much that is going to be. Or what to do with it. I’m thinking DH’s retirement (even though it has ridiculous fees) or backdoor IRA Roths (the lower fees may make the hassle factor worthwhile) and then more taxable stocks. But I dunno. It’s like, we would need so much more saved to be able to buy a house in Paradise, but we don’t need that much to live in our small town. But might as well save until there’s a good reason to spend, you know?
What would you do with a 40K windfall (of money you’d saved but didn’t need in the end)? If you’d save it, how would you save it? If you’d spend it, what would you spend it on?