Saturday, April 2, 2011

The Decision to not pay more on the mortgage...

I’ve let a few of my savings accounts idle a bit over the year and I stopped checking in on them every week for updates. Well, I got a lovely reminder from Daily Worth in my email about the end of the first quarter are rebalancing portfolios, so I thought I’d check cd offerings at Salle Mae and ING Direct, and just check in on some of my idle accounts. I'm making around $14 a month in interest on my accounts... which is really pitiful.
Last year I decided to slowly move my emergency fund to Salle Mae to keep it out of my sight in terms of my daily expenditures. So each month I have taken $200 out of my EF at ING and transferred it to Salle Mae. I then deposited $100 in liquid savings, and put $100 in a 60 month cd (I've been doing this for 10 months and have 10 $100 Cd's). Currently, my Emergency fund is:
  • BOFA Padding $1200
  • ING Direct Padding $1000
  • ING Direct Savings $6881.49
  • Salle Mae Savings $1004.64
  • Salle Mae CD’s 1010.18
TOTAL: $11,096.31
Right now you'll notice that we are close to that $12,000.00 mark if we include the "padding" in both my checking accounts… and I’d rather it didn't since i don't feel comfortable removing the padding from the accounts (because then i'd have to worry about how long it takes my paycheck to be deposited in one account, and parts of it to be transfered to other accounts… So we are really $3,103.69 short of our ultimate goal.
Well, right now with our current budget, we don’t have any money set aside for saving. Any extra money on my first paycheck of the month I’ve been sending to the mortgage out of habit as the second paycheck covers all non mortgage type bills and is what we "live off of." As much as it pains me, it makes more sense to hold on to our cash reserves instead of sending them to the mortgage. So were going to suspend adding extra to the mortgage until a few things are done:
  1. Fiancé has a job.
  2. Fiancé has paid back his parents the $1,500 they have loaned him over the years. Paying back his parents is important to me because they have been so wonderful and generous that WE WANT to make them a priority even though they have told us to just get it to them when we can. I also personally hate owing people money and feel guilty spending money on other things when I owe people something…
  3. The Emergency Fund is fully funded without counting the padding from my other accounts.
  4. We are BOTH contributing 15% towards Retirement. I'm close to this this year with my elected contributions, but for 2012 depending on our situation, I may need to open a 457 account or something.... and my Fiance is currently contributing zero because he isn't making any money yet.
Quite frankly because we have at least 3 months of expenses and my job is relatively secure, I flat out refuse to not max out my Roth IRA in order to expedite the EF (we could have it nailed out in a year if I did)... so we have 2 goals that we will work on simultaneously because I just can't not max it out.

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