With DC2 going to public school right away instead of private school, we’ll be paying a lot less for childcare. DC2 will be in the after school program, but that’s only $120/month give or take, and DC1 has aged out of that program so really it just cancels out what we had been spending on DC1. There will also be 3 months of daycamp next summer, but that shouldn’t be much more than the cost of daycare would have been.
What to do with the extra money?
The mortgage is gone. We’re maxing out our retirement options (except we’re not doing backdoor Roths). We currently have no debt. We have a healthy (one might argue bloated) cash emergency fund and a secondary emergency fund in taxable stocks. We’re not saving for anything in particular. DH’s job situation is highly precarious, mine is very stable. We spend a little bit more than half our take-home pay each year now that the mortgage is gone.
Here’s some possibilities:
- The amount we’re saving annually is about equivalent to 1.5 months of DH’s take-home pay. If/when he loses his job, the money can go towards regular expenses. (He’s on break this month, but we had already saved up for June/July/August.)
- We could up our 529 saving by another $500/month to 1K/kid/month. (Currently ~106K in DC1’s and 38K in DC2’s.)
- We could put it in taxable stocks.
- We could spend it.
- We could just let it continue accumulating in savings until we decide to do something about it.
Right now it looks like the most likely option is the one where DH’s company goes out of business and we live on my takehome pay. Dropping to one income will be a bit easier this time around now that my salary is higher, our mortgage is gone, we have a substantial emergency fund, and nobody is going to be in private school next year. And yet, we’re still going to be at a point where we spend about what I take home just the same as last time DH was unemployed. How is this so? We upped the 529 contributions, we’re fully maxed out on my retirement now, and we’ve upped our charitable contributions substantially. DC1 is in more expensive summer camps now that zie is older and there are more interesting options. Both kids have more lessons. Also they eat more. And inflation + local (mostly demographic) changes have made our regular expenses like local taxes, utilities, and grocery bills go up.
So I guess this reduced expense is good timing for us.
What have you done when a regular monthly expense (loan payments, childcare, etc.) goes away?
Grumpy Rumblings (of the formerly untenured) 
June 12, 2017 at 7:55 am
I swear that every time we have access to more money, either through reduced expense or a bonus, another expense goes up. Like, we got a $100 monthly increase in income but that just offsets our recent rent increase.
June 12, 2017 at 8:31 am
I guess it’s better than getting the cost increase without the corresponding income increase?
June 12, 2017 at 10:15 am
You, like my husband, count extra investment/savings as “spending”. I guess it’s one way to not speed up the hedonic treadmill :)
June 12, 2017 at 10:27 am
Extra savings isn’t spending! But some investment directly affects our take-home pay.
Maxing out retirement isn’t spending, but it decreases what shows up in the checking account. (I probably misspoke a bit about the 529– it is auto-deducted from savings and is additional expense above our take-home pays. So that money never shows up in the checking account, but it technically does come out of our take-home pay. One could argue that it’s pre-paying for college expenses, but in an emergency we could liquidate it at a loss.)
In an emergency, we could start saving less for retirement which would increase my take-home pay. It’s another cushion.
June 12, 2017 at 10:45 am
I’m not debt free, so when a regular monthly expense goes down/away, I just allocate that money to another expense. Y’all are doing great. :-)
June 12, 2017 at 10:52 am
Thanks! Looming job loss is definitely a lot less scary this time around.
June 12, 2017 at 1:32 pm
Sounds like a good situation to be in! If I had a regular monthly expense go away I’d probably use the money to pay extra on the mortgage. Right now I don’t feel able to do so, but I also have a bit of anxiety when I think that I’ll still have a mortgage when I’m in my 70s.
June 12, 2017 at 1:36 pm
Our entire house value would only be a 20% downpayment for something smallish in the bay area.
June 12, 2017 at 2:14 pm
Great thread on what you can do about the AHCA here: https://twitter.com/ezralevin/status/874272379681243136
Also: I’ve been seeing on twitter a lot of people saying, “My senators won’t listen to me, should I even bother?” The answer is YES, even if they’re going to do the wrong thing no matter how many people call. The reason is that the more people call, the more they will know that they have limits. That means what comes out will not be as bad than if they feel like they have carte blanche, or worse, if they’re only hearing from people telling them to shoot all immigrants and minorities on sight. Calling and registering your opinion means they know that they can only go so far. You’re tugging on the Overton Window. This is even true if Cruz and Cornyn are your senators (they’re the most mentioned as “what do I do if” in twitter from what I can tell). Cornyn is the majority whip– any little bit you get him to budge is going to have big implications. He may be a Trump sycophant, but there may still be movement on the AHCA, especially on whether or not the bill is going to get discussion and media attention prior to it coming out.
What can you do if your senators are blue? Ask them to slow down legislation until Republicans open up the ACHA process to them.
More on Wednesday!
June 12, 2017 at 3:57 pm
A friend of mine in a red state says “If they are going to hurt me they have to listen to me cry”
And I figure my awesome Senators and their staff enjoy praise. Don’t want them getting up in the morning thinking “why even bother, it’s all pointless”
June 12, 2017 at 4:02 pm
Great points!!!
Plus when you call, the staffer you talk to may end up becoming someone important and a better person based on calls like yours.
June 12, 2017 at 6:21 pm
I like that idea that “If they are going to hurt me they have to listen to me cry.” My philosophy has been yes, they can do whatever they want, but they also have to (hire someone to) listen to me.
And I like the idea that the actual people we talk to may be affected. Mine mostly sound bored and rushed, but it’s a good idea to make them hear at least one of my reasons and not just tell them which side to put my tally mark on.
June 12, 2017 at 6:10 pm
Any extra money that comes my way goes into a savings account at the moment, as we’re saving up for a down payment on our first house, and I’ve got a regular schedule for paying off my line of credit and for investing for retirement. We’re close to having enough for a large down payment (the amount required to not have to pay mortgage insurance) and a nice chunk of money for renovations, if needed, so soon I’m going to have to look for another place to put the money.
What a great place for you to be! I’m terrified of not having enough, so if I were in your shoes I’d probably hoard it somewhere…but making bigger charitable donations is also a nice option for extra cash.
June 12, 2017 at 6:27 pm
When I paid off student loans, I slapped the savings onto my other student loans. When those were all paid off, I saved the extra toward a car. When that was paid off, I saved the extra toward a down payment on a house. When my mortgage was paid off I quit the job that was breaking my soul.
June 12, 2017 at 6:33 pm
Woo!
June 13, 2017 at 7:45 am
Hoping that one day some of our expenses will decrease. Private school tuition is 25k/year per kid. Afterschool care is 500/month per kid. Then there’s violin, math enrichment, afterschool lessons in their third language (the school is dual immersion, but doesn’t introduce a third language until late elementary), summer camp and so on….
Our jobs are super-secure and our only debt is the mortgage, but we live in a very high cost of living area.
I definitely envy your situation, but unless we move or make very different choices for the kids, I’m not seeing how our expenses will decrease.
June 13, 2017 at 7:49 am
You shouldn’t envy our situation– a lot of our not spending is because there aren’t things to spend on. If we were still living in Paradise we wouldn’t be able to afford to get a mortgage to pay off. Tiebout sorting!
June 13, 2017 at 10:50 am
I have always been a saver (a miser, truth be told), so any decreases in expenses resulting more savings. When mortgage, day care, or private school tuition ended, the savings were put into retirement funds or 529 college savings. The result is that that I have more money in the 529 plan than my son’s expenses for 5 years of college (he is in a BS/MS plan at a public university, and we saved enough for 4 years full tuition at a private college) and enough money in retirement savings to retire on it alone (in addition to the approximately 80% of my current salary in defined-benefit pension).
When we stopped putting money into the 529 plan, we upped our charitable contributions (which are pretty still pretty small at only 3% of gross pay).
The biggest expenses over the past couple of decades (other than saving) have been upgrades to our house: redoing the bathroom in tile and adding a skylight, converting half the garage to a book room/office, adding a large skylight to the dining room, converting the roof from composition shingles to clay tile, retiling the porch and upgrading the steps, adding a clay tile floor to the kitchen and breakfast room, tiling the patio, … . We’ve put about as much money into home upgrades as we did into the original purchase of the house. The result is a house whose value has only about matched inflation over our investment, but which we live in at very little cost (property tax, insurance, and utilities came to about $6k–7k a year, amortized maintenance and appliance replacement adds another $1k–2k a year).
June 13, 2017 at 9:07 pm
“What have you done when a regular monthly expense (loan payments, childcare, etc.) goes away?”
Celebrate!!!! You have the best PF “problems” this year, bills keep disappearing on you! Realistically, maybe do a backdoor Roth for the year if you aren’t totally oversaving on retirement… which you probably, so the 529s are a good plan. Otherwise, cash/taxable investments. You can send it my way if you run out of ideas? Or any lingering home improvement projects – but it seems like you tackled the ones that would give you the most pleasure already. Yup, I think sending it my way is the best option on the list.
June 14, 2017 at 1:17 pm
Well, let’s see if DH’s job reappears in July like it’s supposed to. Signatures are still missing on the DOD paperwork, which is not good.
June 14, 2017 at 12:53 pm
So far when bigger expenses go away, we have another expense crop up which is annoying but it could be worse. Last year our mortgage went down but that savings was offset by the expenses of putting together our trust. Our childcare went down a little bit and then we had this moving thing come up. If it didn’t have a corresponding expense increase elsewhere, I’d be putting it into our brokerage or saving it up for another rental property.
If you’re truly conflicted, SP and I could split the excess ;)
But maybe more for DC2’s 529?
June 14, 2017 at 1:20 pm
I suppose we could lump sum in the 529 and then turn off savings later if we needed the additional cashflow. I hadn’t really thought of that option– I’m just so used to the monthly auto-deductions.