Money Matters
labro
member
Dear Community,
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
MM Achievement!
This weekend we paid off my CAR!!!!!!!!!
As of July 31, DH and I are officially without any sort of car loan or student loan. We have our mortgage of course, but I'm ok with that. It just feels so so incredible to have all these massive monthly payments out of our lives. In November last year I lost my car in an accident so we were hit with the unexpected need for another car. We had the cash to buy one, but my bank offered a less than one percent interest rate on a new car so we put the cash towards our remaining student loan debt instead and exchanged a 6% student loan interest rate for a .99% car loan interest rate. Since January I've been putting most of my monthly income towards paying down the car loan and we paid it off in 8 months! I can't believe it!
We have some significant goals still for the next year, but most of them revolve around saving money rather than seeing money going out towards bills and I am really worried about temptation and income creep. For the past two years nearly my entire income has gone towards paying off our student loans and then our car loan. Now it's just going to accrue and I feel like it's going to be hard to not just look at that money and not want to have fun with it in some way. Paying off my car felt like a tangible goal to me...I saw the money going somewhere. But now?
So new goals:
Short term - Save for our Norway vacation in August 2017.
Mid term - Reach $50k in cash savings - I know it seems like quite a bit, but DH has some mental hangups from a very financially unstable childhood and this is his benchmark for feeling safe and comfortable. I think we'll hit this benchmark by the end of next year at the very very latest.
Long term - I don't know what's next here? We're already doing a ton for our retirement...I guess at this point we need to consider exploring getting more involved in investing.
On-going - Max out Roth IRA contributions annually for both of us - $11k annually.
Future on-going - Start making regular charitable contributions. I make small ones sporadically but I think I'd like to set up regular monthly contributions to a couple charities and organizations.
As of July 31, DH and I are officially without any sort of car loan or student loan. We have our mortgage of course, but I'm ok with that. It just feels so so incredible to have all these massive monthly payments out of our lives. In November last year I lost my car in an accident so we were hit with the unexpected need for another car. We had the cash to buy one, but my bank offered a less than one percent interest rate on a new car so we put the cash towards our remaining student loan debt instead and exchanged a 6% student loan interest rate for a .99% car loan interest rate. Since January I've been putting most of my monthly income towards paying down the car loan and we paid it off in 8 months! I can't believe it!
We have some significant goals still for the next year, but most of them revolve around saving money rather than seeing money going out towards bills and I am really worried about temptation and income creep. For the past two years nearly my entire income has gone towards paying off our student loans and then our car loan. Now it's just going to accrue and I feel like it's going to be hard to not just look at that money and not want to have fun with it in some way. Paying off my car felt like a tangible goal to me...I saw the money going somewhere. But now?
So new goals:
Short term - Save for our Norway vacation in August 2017.
Mid term - Reach $50k in cash savings - I know it seems like quite a bit, but DH has some mental hangups from a very financially unstable childhood and this is his benchmark for feeling safe and comfortable. I think we'll hit this benchmark by the end of next year at the very very latest.
Long term - I don't know what's next here? We're already doing a ton for our retirement...I guess at this point we need to consider exploring getting more involved in investing.
On-going - Max out Roth IRA contributions annually for both of us - $11k annually.
Future on-going - Start making regular charitable contributions. I make small ones sporadically but I think I'd like to set up regular monthly contributions to a couple charities and organizations.
Re: MM Achievement!
Another thought on the same lines. Split your direct deposits to another account and/or bank. Then you don't even see the money.
My thought.....combine these two. Savings accounts aren't paying much of anything right now. I'd keep a reasonable efund in a regular account and then invest the rest in something maybe somewhat conservative. Then your savings helps build itself.
Mid term - Reach $50k in cash savings - I know it seems like quite a bit, but DH has some mental hangups from a very financially unstable childhood and this is his benchmark for feeling safe and comfortable. I think we'll hit this benchmark by the end of next year at the very very latest
I'm the same way as your DH and because of the exact same reason. I'm finally starting to feel a little more relaxed about it now that my DH has a teaching job with a much more stable school district. We have a large chunk of cash in a CD ladder- 5 separate CDs ranging from 1-5 years with 1/5 of the total in each that renew every year. My DH thinks I'm crazy but he goes along with it because we fully fund our Roths, fund 401k/403b, have pensions, and contribute to our girls' 529 plans. Give him some time- he may realize that all that money just sitting there is kind of silly.. like I'm finally starting to!
Personally, I think a little lifestyle creep is fine, as long as it's not that much and your savings increase is outpacing your lifestyle creep.
If you want to be really responsible with it, you could also start considering things like:
1) Making sure your efund is up to snuff (you mentioned this)
2) Making sure your insurance needs are met - life insurance is appropriate, disability is appropriate (most people are super underinsured here), home and car is appropriate for your needs
3) Get caught up on any medical things you have put off like going to the dentist or getting your eyes checked
4) Create sinking funds for recurring expenses if you don't have them yet.
5) Increasing your contributions to tax-advantaged space like your IRAs and 401(k). Also explore HSA's as tax-advantaged space if you don't do this already
6) Taxable investments to wealth build
H and I have decided to allow ourselves a set amount of lifestyle creep/extra spending money when we get raises each year or pay off a significant debt that increases our available cash flow. Right now we are thinking of taking 20% of our "extra" money and having that be for lifestyle improvements. The other 80% goes toward one or more of the responsible things I listed above.
At the beginning of the year we really focused on sinking funds, which helped our budget a lot. For next year we are probably going to add a sinking fund for health (so that we stop skipping routine appointments) and then work on boosting our efund.
Congratulations!!! It is such a good feeling to only have a mortgage payment left and the rest of the loans paid off.
Have you all thought about putting some money aside each month for the next vehicle? If that will (hopefully) be a long time in the future, you could at least be setting yourselves up to pay for it cash.
What about throwing some extra money to principal on your house in order to pay that off early? I'm assuming your loan rate is pretty low, so you could probably do better annually with investing. But the emotional satisfaction of paying your home off early (or at least boosting the equity) is worth it for some people.
Last, but not least, I also recommend you all loosen up your budget a little and add in some goodies that you all have maybe been holding off on. You all have worked hard to get where you are and it sounds like you're on a good track for efund and retiring. Enjoy some of that hard work and perseverance!
@hoffse Omg that list is overwhelming! I'd say we're doing a decent portion but not all of it so these are definitely some goals to write down.
@cbee817 Good to know my husband isn't the only person out there like that. He has definitely gotten better, but we definitely provide a good balance to each other. He's brought me more towards being more money and savings conscious and I've gotten him to lighten up a little bit.
I know the feeling well! After owning my home for 5 years, I JUST broke the "$100 of my payment is going to principal" barrier
. It's a $790 payment, with about 45% going to escrow, 40% going to interest, and less than 15%...my sad little $100...going to principal.
I don't pay anything extra toward it, but that is only because it is more advantageous for me to use my extra monthly funds to pay down my HELOC faster. After that, I'd pay down my other real estate loan, which has a higher interest rate because it is non-owner occupied.
My loan officer for my investment real estate loan had wise words for me that I remember well, "You will never find cheaper money than with a personal home loan."