Post by winemaker06 on Sept 27, 2012 18:07:13 GMT -5
Okay, I've tried to simplify this a bit, but I may need to clarify if there are questions.
I'm beginning to put together a budget for next year. We're thinking of TTC mid-2013, and want to move into a bigger house in a better school district by the time the kid is school age. That's obviously a long way off, but we bought in 2006 and are probably $30-50k underwater.
The EFund is where we want it, and by the end of the year we'll have a decent baby fund in place. Daycare is going to be at least $1,500/month, so we'll have to cut back on savings or get raises by then, but I think it'll be easy enough.
The required PITI is $1,870 and we owe $235k @ 4.75% right now (might be refinancing to sub-4% soon).
I'm sure people will say to not pay down the house any more, but I'm wondering where others think we should concentrate on putting extra funds while we have a pretty good amount leftover.
I think you might be doing the right thing by overpaying on the house because you're underwater. Since you say you want a bigger house when your kid is in school, you're looking at selling this house in 6-8 years. Unless you already have a chunk of a downpayment saved that you didn't mention, you need to build equity in your current house, which starts with getting above water.
As for that $1000 left over, are you contributing to retirement other than the ROTH IRAs? If not, do that first. Otherwise, I would be inclined to pay down the mortgage even more, once you're happy with your baby fund.
Please note that I have never owned a house, so this advice is all theoretical. I know though that I'm the sort of person who'd want to pay off my mortgage early, even if the rate was super low. I'm risk-averse. If you're feeling good about investing in the market (funds, bonds, stocks), you could potentially get a better return by investing instead of paying down at 4.75%.
Post by SusanBAnthony on Sept 27, 2012 18:38:36 GMT -5
We bought in 2005 and are selling (close in 3 weeks) for about a 100K loss, all told. Luckily we paid down all of that well before the sale, so we may actually get a couple thousand back.
I dont regret paying it down even though we had a fairly low interest rate. Either way the money is gone, and it isnt like we would have made off in the stock market over the same time period.
Post by winemaker06 on Sept 27, 2012 20:27:38 GMT -5
Glad to know others don't have huge regrets on paying a mortgage down quickly. I'm trying to keep it balanced so we can save and invest as well, just seems like there are tons of options, as always.
Post by winemaker06 on Sept 27, 2012 21:24:22 GMT -5
We have '08 and '10 cars, so hopefully no new ones for a very long time. ::knock on wood:: But I'd like to pay cash so am making some of those savings a priority.
Post by winemaker06 on Sept 28, 2012 6:46:12 GMT -5
Oh, in addition, our house is over 60 years old. So I'm trying to figure out what we have to do vs what we can live with.
Eg. We'll need a new roof next year, money is sitting in savings for that. But I don't know what else we'll have to do in 5 years to make it 'sellable' so am stockpiling cash for that. While also wanting to save up for the next downpayment.