29 Comments

  1. All your options are good options, so I would choose the one that excites you the most! It sounds like you’re very motivated to pay off the mortgage, so if that motivates you to save more towards that goal even if you could technically make more in the stock market, I would do it.

  2. Jover

    80-10-10: save or pay down mortgage with 80%. Spend 10% on you, give away 10%.
    Or bet it all on Baby, aka 529. I don’t have a kiddo, but HP would be happy with that choice 😀

    • I have an $13,000 college bill coming up in a few months (for half the year…) – I like Jover’s idea 😉 HP would like it! But I’d be using it to pay off one of our 0% credit cards right now. All of our remodeling and refinancing have zapped those “emergency” accounts!

      • I love that you use zero percent cards the same way that I do! I actually need to apply for a new one, but I’m still savoring my credit score. I’m so vain apparently!

    • I keep meaning to do a separate post on this. We put $350 a month toward his 529. We could really ramp it up, but I’m not sure. There are days when I want to give him all of the extra money. Hmm.

  3. Ooh, I love these posts. Wish I really had the extra $500. But we actually have an extra $1600 this year because we paid off our apartment in Chile!! and car loan!! and are spending less on groceries! whoo hoo! So, I guess I could tell you what we’re doing with that. $200 goes to a travel fund. $700 goes to emergency savings to build up our cash reserves (we’re not at a year yet, so I’d like a little more in there). $700 goes into taxable investment accounts. Well, actually, no. It’s going into the emergency fund and I’m going to pull it out when I decide exactly what to do with it, but the idea is that it will eventually go in taxable investments. If I had yet another $500 extra, I would probably do everything I could to max out my i401K with it, as I’m only putting in $833 a month now. I’m actually the opposite of you, Penny. I tend to funnel all my extra money into investments and not keep enough cash and then run into cash-flow problems. But that’s my default. I love, love, to pad those investment accounts! 🙂

  4. Personally I’d go straight for the tax-advantaged investments (so the 403(b)). I looooove getting extra tax savings – instant return! Plus, in our case, contributing more to these types of accounts helps us qualify for the Retirement Savers Credit (or make the credit bigger if we already qualify for it), so that’s even more tax savings/return. Love it love it love it. 😀

    • If the fees weren’t so high, I’d say it was entirely a no-brainer for the reasons you give. My husband can only invest with AXA…annuities and fees, oh my (oh barf).

      • Ah yes, I saw in some of the other comments (posted after mine, I think, or I just missed them) that you have crappy investment options. That’s gross, I am so sorry. 🙁

        In that case… I’d probably go with the mortgage. In our personal case, my next target after all the retirement accounts are maxed will be my student loans, so that’s roughly equivalent (though my loans are a higher rate – 4.75%, so that leans me toward them). Though, if the mortgage rate is real real low… then I’d probably lean toward the taxable account. Though, I too feel weird about that. And I don’t really know why. “White-knuckle” is a good description. It makes me weirdly nervous, even though it’s just index funds in my case. WHY WOULD THAT MAKE ME NERVOUS? Brains are weird.

  5. I would opt for investing. That $500 will be between $2500 and $3000 in 20 years. If you find $500 once per year for those 20 years and you’d have a cool $25k in savings. I promise you, you’ll need it then too 🙂

  6. When I get an extra $500, I put it in the Wells Fargo savings account that gets almost no interest, but that most of our expenses that still require checks comes out of (ex. music lessons). I guess that’s sort of like the emergency fund option? (We’re also refilling the emergency fund after a new car purchase, but I’m fine with the emergency fund refilling with just our regular paychecks.)

    In your case, I’d put it in the IRA and then reevaluate when the tax refund comes (that would either go to 403b or mortgage depending on how bad the 403b is).

  7. This is my favourite money problem!

    At the moment, I’d put it towards my line of credit, which I’m hoping to have gone by the end of the year. Once that’s gone, I’d probably just throw it retirement savings. I max out my tax-advantaged savings (RRSP and TFSA), so it would go into a taxable account.

    It’s always nice for me to hear someone say something negative about home ownership. Renting for the win!

  8. Right now, we are working on creating a 3-6 month cash reserve in our joint savings account and then opening up a joint taxable account. But that’s after we’ve already maxed out all retirement accounts available to us. For you guys, it seems like you have plenty of cash for now and have a plan for the Roth IRAs, so I would be putting it into your 403(b)s! Especially when you’re worried about the solvency of your pensions 😉 With your mortgage 3.5%, the 403(b)s do seem like a good idea…

  9. I loved this post! I’ve just recently found your blog through twitter and I just have to say, I love the way you think!
    For me personally, I think I would put that extra $500 towards servicing our car and getting a new tyre… I can just dream about that luxury!
    Again, loved this post!

  10. Yes, 40 weeks is 10 months!

    What I would do with an extra $500? Right now, either pay down CC or rebuild EF. I’m getting to answer this question in a big way soon and I’ve been thinking about it for months.

    • I’m so glad you said that, Karen. We didn’t reduce the charitable giving part of your budget when we scaled back, BUT that doesn’t mean we shouldn’t increase it!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.