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?