Thank you for your sweet welcome. I look forward to gleaning and sharing with you!
I'm here at Saving Advice because most of my savings, investment, and debt repayment strategies and practices are moribund, weak, tepid and minimal. I'm not in a position where I can ply extreme strategies (live in the woods! trap your food! bicycle everywhere in a flat landscape! turn the heat off in January!). It's hard for me to pay attention to so many accounts. I don't always save more than I spend every month.
These are my challenges.
I would like to accelerate my debt pay-off and increase my taxable stock account balances, but right now it seems to me I can do one but not both.
My mortgage and car loans are both accelerated; that is, they will be paid off before the original amortization term. My home equity line of credit will be paid off after the first mortgage if I don't accelerate it. I'd like to pay the HELOC off before the first mortgage is finished, otherwise I'll have such an anticlimax. Not so much a mortgage-burning happy dance, but a shoegaze shuffle to Slint or Stars of the Lid.
Right now, I keep about twelve mortgage payments' worth of cash. This cache covers my car insurance, license tabs, utility bills, living expenses and debt payments. I have a spreadsheet for tracking the balances for these categories. When my cash exceeds 12 mortgage payments, I divide the difference into investment cash and debt repayment. The problem is the difference is usually less than $20, so the investment cash doesn't go far. The instant gratification goes to seeing some 3% or 2.79% loan decrease.
On payday $910 goes into the checking account, the rest into the money market account. Any cash left over from the last spending period goes to the credit card, which usually has a balance under $300, but is paid in full habitually.
There'll come a day when the sum balance of my home equity line of credit and my car loan will be less than my cash-on-hand: will it be worth it to pay off one loan, even if it means not having twelve months' mortgage available? Should that loan to pay off be the one that's a depreciating asset, or the one with the highest interest rate? The loan with the highest monthly payment, or the loan with the most cumulative interest?
I keep thinking there's a black belt or red belt way of making the most of a slender surplus. That's why I joined the Saving Advice community: to see how people with slender surpluses manage their amounts. I am doing things right, but not wonderfully.
What I Hope to Learn Here
August 27th, 2014 at 03:40 pm
August 27th, 2014 at 04:07 pm 1409155648
August 27th, 2014 at 04:30 pm 1409157059
There's a lot of information missing if you want some specific advice on your situation, but it seems your only debt (other than the credit card that you're paying off at least monthly) is your car, mortgage, and HELOC? In general I think people would say set up an emergency fund (not one from which you pull monthly payments, but one that is for, well, emergencies) of 3-6 months expenses (not just the mortgage payment). You really only need to keep one months' expenses in cash/checking, technically, since hopefully your monthly income is more than your expenses and so between making the payments and depositing the income, you'd always have a month saved in the account. (Your comfort level is a factor, too, of course, but that's what the emergency fund is for.) Then pay off the car, unless your mortgage/HELOC rates are extremely high. After that, you'll generally save more money by paying the loan with the higher interest rate first, but psychological factors are important and I can completely understand the desire to pay off the HELOC before the mortgage. There's a 'debt snowball' calculator at www.whatsthecost.com that will let you play with the numbers and see what kind of a difference it would make paying by interest rate vs. balance, both in time and dollars.
I found a lot of helpful information reading through the blogs, not only the current ones but the archives of those whose posts sparked my interest. (I've spent hours on some of them!) I'd say look into "snowflakes" -- creditcardfree (CCF) is making a lot of progress on her mortgage just by routinely putting small amounts toward the principal -- it adds up faster than you'd think! Also, given your comment that your excess is rarely more than $20, you might want to look at the $20 challenge some people are doing. Everyone tweaks it to what works for them, but at least one blogger here has turned that $20 into thousands over time.
At any rate, there is a ton of good advice to be gleaned here!
August 27th, 2014 at 05:14 pm 1409159651
August 27th, 2014 at 07:20 pm 1409167244