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I recently bumped up the amount of extra we pay on our mortgage every month. if I play my cards right, the house will be paid off by the time i'm sending a kid to college... hoping that with two kids, at least one of them will be smart enough to go places, olive will someday learn that it's the ABC song and not the EFG song, you can't just pick your favorite letters and repeat them...

So I don't have college savings funds going for the girls yet and sometimes I wonder if that's a mistake, but with savings interest rates being what they are, shouldn't I pay off the house first? and in my head, it doesn't matter anyway, it's all money, the point is saving it somewhere, right?

Poll #2010763 savings

do you put away or save money every month? where does it go?

nope. spending every penny.
a boring savings account
less boring stocks or investments
retirement fund
healthcare savings account
paying extra on a mortgage
paying down student loans
paying down car loans
paying down some other debt
someone's college fund
stuffed under my bed in a safe. the combination is...

Posts from This Journal by “personal finance” Tag


( 22 comments — Leave a comment )
May. 11th, 2015 03:25 pm (UTC)
We do the "pay one extra mortgage payment a year to make a 30 year mortgage be 23 years" but I think that pays it off the year the kids would be graduating college so I should probably think about trying to pay it off 4 years earlier...

We haven't started college funds either but I want to.

I also want to be adding at least $100/month formally into our emergency fund and maybe something each month into a vacation fund.

Retirement is a given. We save 10% and job matches another 10%. I think that should not be slacked on unless health are costs require slacking on it.
May. 11th, 2015 03:27 pm (UTC)
The only reason I save for retirement is that I am fully vested in a Fortune 100 Company that takes it right out of my paycheck. My wife doesn't save, my kids don't have college savings. It's not paycheck-to-paycheck around here, we generally have some extra and everything we need, but saving is hard!
May. 11th, 2015 03:40 pm (UTC)
The only debt I have is my student loan, which is structured more like a graduate tax (UK student loans are a bit odd); it's the cheapest loan I'll ever take out and giving the student loan company the full amount right now (I have it, in fact I've always had it, because my parents are a)rich b)generous) isn't necessarily sensible and the money might be much more useful as a deposit on a house (in US English "down payment" I think?). I am paying it off at the required rate, but no faster. (I also have a credit card, but I clear it every month)

I have a boring savings account, a tax-free savings account, and a tax-free tracker fund thing that I don't really understand. Oh, and I have a pension through my job. The bank is currently paying more interest than under-my-bed. But not by much. Grump.

If you can pay off the mortgage and *then* save for college you'll end up with more money for the same total payment (less interest paid); but if you pay off the mortgage and don't have time to save for college you may end up borrowing for college at a worse rate and pay more interest in total.
May. 11th, 2015 04:41 pm (UTC)
It's hard to save. We have a retirement/401k/plan through hubby's work - so that's automatically done and until recently we maxed whatever we could in both our names. Otherwise we probably would have just kept it in our regular savings account. I am a strong believer though to have cash in hand. So, we have some money going into our savings account so in case either of us loose our jobs we can continue our life for at least 9-10 months (I know 6 months is the suggested amount, but in the job market today, I aim for a year).

We did a prepaid college savings 529 thing for D but that's because we have one kid. I doubt we would do that we had two - because we couldn't afford it. With the way college rates are going, it's good idea? It will never cover it all but at least some help.

I think though if we had mortgage on our head, that would be the first to be taken care of. I don't like debt sitting on my head. It just makes me nervous. The first few years, we worked to get all debts of N paid off!
May. 11th, 2015 05:03 pm (UTC)
Before I moved I had a monthly payment to my boring savings account, but now I just make some payments as and when I get some money in. My living expenses are all covered in my current job, so salary is all discretionary, which is nice. (I spend it all on holidays.)
May. 11th, 2015 05:29 pm (UTC)
We invest rather than pay down extra on our mortgage because our interest rate is so low (4.25%). Our investments will return a higher interest rate (on average) than what we'd save by paying off the mortgage. Some of them are my 401K, which comes out of my paycheck, and then both my husband and I have Roth IRAs.

We also save money automatically each month - a portion goes into our emergency fund, which we never touch unless absolutely necessary. This is for really big catastrophes, like losing a job or the house burning down or having to buy a new car unexpectedly. A slightly larger portion goes into our general savings, which is where money for gifts and plane tickets to see the in-laws and vacations and even 'oops we ate out a little too much this month' money comes from.

We fortunately are debt-free save for the mortgage, which makes this much easier.
May. 11th, 2015 06:41 pm (UTC)
We're in a weird situation. Since I only clear about $40,000 a year and hubs is underpaid to the tune of $50,000, we can't afford a house that fits our needs (you know, an individual bedroom for both kids, two bathrooms and a yard) because a house with that price tag is at least $425,000 in my area, and our income will not qualify us for anything higher than $315,000. So thanks for that, cost of living in California. Our total debt is somewhere in the $8,000 range (I have the exact number on a spreadsheet somewhere) but between our various credit cards, our total credit limit is in the $32,000 range. So on paper, it looks like we're operating at around 25 percent, debt-wise, though with approximately $5,000 of the $8,000 being student loans, that's not totally accurate.

What's frustrating about our situation is that we just don't make enough to qualify for a loan for the kind of house we need. We also don't earn enough to save a significant amount towards a down payment which could mitigate the gap between our income and a loan. So I am putting money into savings for other things instead. My daughter has an account with $2,000 in it, and I recently opened up a savings account for our retirement because husband's asshole bosses (also known as his parents) don't have a 401K or life insurance policies or anything remotely helpful towards the interest of retirement to help justify him being so underpaid. It only has $500 right now, but it's a start. I put away about $300 in savings between these two accounts each month and the rest of my disposable income that isn't set aside for living expenses goes towards paying extra on my student loans. For the last year, my focus was on totally paying down the debt husband had accrued prior to our marriage on cards with closed credit lines. Those lines are all paid off now, and husband has been re-establishing his credit through new lines with larger limits.
May. 11th, 2015 06:54 pm (UTC)
Here's the thing about saving for college when you have tiny children... You are essentially paying college tuition's worth of money for their childcare. Right now your husband doesn't work for money. There's no difference between that and paying tens of thousands of dollars for college out of pocket. When your girls go to college, and you'll hand over his entire salary to the college it won't be any different. (This calculation is the same if you both work and you pay for day care). This is a greatly under-discussed fact I think - that childcare for tiny children (whether you pay for it or one spouse stays home) costs pretty much the same as college tuition and we just expect parents to shell it out, out of pocket with no special savings plan.
May. 11th, 2015 09:00 pm (UTC)
The expectation being that after years of being out of the workforce, you'll be able to get a reasonable salary out of the gate...

When my mom went back to work, her compensation as a substitute teacher definitely did not pay for my college. Before having me she was in biotech and supported my dad through law school, but being unemployed for long stretches of time kills your employability.
May. 11th, 2015 09:06 pm (UTC)
Ok totally valid point about going in and out of the workforce. My point, however, is that paying for child care for little kids is EXPENSIVE. If you are judicious with that money once you no longer have to spend it, it can cover college at least in part.
May. 11th, 2015 08:38 pm (UTC)
We are (OK, I am) saving for a possible down payment. I'd like to save enough for a 20% down payment in addition to an emergency fund, then pay off my student loans as rapidly as possible.
May. 11th, 2015 08:58 pm (UTC)
My parents paid off their house, then had to re-mortgage it again to pay for my university education, so...

May. 11th, 2015 10:40 pm (UTC)
My credit union has a "money market" account that earns much more than a basic savings account and serves as my quarterly expenses/emergency fund. I have a ROTH IRA account I put a pitiful amount in monthly, but it is better than nothing. The boys have accounts that I chuck their birthday/whatever money they get from relatives and occasionally I am able to put something in them too.

I am also trying to get the truck paid off by the end of the year, which will make saving much easier and maybe I'll have a nice downpayment or even be able to pay for the next vehicle in cash.
May. 11th, 2015 11:52 pm (UTC)
Before I started saving, I paid off all my debts not including mortgage). I paid off the one with the highest interest rate first and worked my way down (of course, paying them all off so nothing went into default). I also have to put back $x each year that I borrowed from my retirement savings - it's a special program here - to "pay it back".

Once that was all paid off, I'm now putting some away for retirement and some goes into saving up for our priorities (new car - saving up so we can pay cash, then we have 2 renovations planned - bathroom & kitchen). I'm not putting any extra towards the mortgage, but we do pay weekly which accelerates paying off the mortgage by a few years. The way I figure it - I'd rather have the money to do things around the house than paying down the mortgage.
May. 12th, 2015 01:48 am (UTC)
We are contributing 10,000 each per year for each kids college fund. If they decide not to go to college or if my parents somehow decide to pay for it, this will end up being a huge mistake. But it still makes me feel better to put the money away.
May. 12th, 2015 10:41 am (UTC)
It all goes into a savings account, because until now, we've only had debt for a period of 5-6 years (student loans for when we moved overseas), and as soon as we could afford we paid them off in toto.

We will, however, most likely be getting keys to a house this week, which means we'll have a mortgage. The way mortgages work here (I don't know if US mortgages also have such a provision) is that you can only overpay a certain amount, and after that you get charged a fee. The amount differs from mortgage to mortgage, and I think ours is some minimal amount which we may or may not do. Rather, it makes more sense for us to take the terms of this mortgage as they are for the first two years and then when that mortgage runs out, we'll pay off a chunk of capital before switching to a new one.

Gwen has her own savings account where I've deposited everything she's ever received in terms of gifts, including the $1000 we gave her when she was born. It's not much, but it is earning interest, and once we've got the house sorted out, next in the "being an adult" priority queue is to put at least some savings into some sort of stock market.
May. 12th, 2015 11:25 am (UTC)
I'm putting away as much as I can in a regular savings account. I have no money left from my last job, and my current one will end in probably less than two years. I know I'll need money for the transition to the next job: if nothing else, moving expenses, new apartment expenses, that one month of working before my first paycheck. And if I don't have a job lined up, I'll need enough to live on until I get one. Suze Orman says that any money you're going to spend within 7 years should be liquid: regular savings account, under the mattress, etc. So that's what I'm doing. I can't afford to pay off my college loans faster or to start saving for retirement yet.
May. 12th, 2015 02:15 pm (UTC)
We pretty much follow the Dave Ramsey plan. We contribute 15% to our retirement funds. We're debt free except the house. We've been paying extra on our mortgage for 2 years (like, 2.5x our amortized payment amt each month) and have less than 2 years left until it's paid off. Meanwhile we periodically step back a bit from the house payoff to do home improvement projects, go on nice vacations, and right now we're also saving to replace my car (will pay for the new one in cash). We also contribute a generous amount to our nieces' and nephews' 529 plans each year on their birthdays since we have no children of our own. We don't do as much charitable giving as I'd like (sticking point between my husband and I) but we do some, usually at Christmas time...

Paying off all our consumer debt (cars, credit cards, student loans) 5 years ago was the best thing we could have done for our marriage and our finances. It was a huge sacrifice at the time, but totally worth it.
May. 12th, 2015 04:03 pm (UTC)
The only thing I'd say is that our kid's college fund is doing a lot better than the interest rate on our mortgage, so "just saving it somewhere" depends a lot on what exactly funds you're putting things in and how well they perform. I'd check out options for college funds, plus sometimes grandparents (at least our kid's) put money into the college fund, and they don't pay off our mortgage...
May. 12th, 2015 05:54 pm (UTC)
We have no money to save. We live paycheck to paycheck. My husband is the only one gainfully employed (I'm a SAHM) as childcare is too expensive. If I got a job, all the money would go toward that. Of course, now that our daughter is in school I *could* get a job, but there's nothing in my area that would let me work only during school hours.

My car is paid off and his will be paid off either the end of this year or the beginning of next year, so hopefully we'll be able to really start saving then.
May. 13th, 2015 04:40 am (UTC)
I highly recommend getting a financial adviser you trust and having them help guide you. As a saver married to a saver but with neither of us having much of an interest in markets/investing beyond "yes, we should do that", it's AMAZING.

That said, we do the following:

-Automatic deposit to ROTH IRAs for both of us each month. We nearly reach the annual cap ($5400), but not quite. We've been doing this for 7 years now and at our last check up, her projections showed that even with $0 from social security (we don't trust it), that continuing to save at that rate will allow us to have enough in retirement. (Hooray!)
-401K though my office. I put in 3% PURELY to get the 3% matching from my company. Our adviser reviewed the funds and advised us on which ones to select.
-Emergency Funds--We don't actively fund this since we reached our goal years ago and haven't had an emergency (thankfully!). This is invested mostly in bonds and other good return, not horribly high risk investments.
-Maternity Funds--Again, we are no longer actively funding this, but it's in a money market fund which has seen 11% growth (!!!) over the last year.
-Mortgage--We were paying about $200/month extra but our insurance went up and that turned into $40 a month extra. We need to shop for new insurance. Our adviser recommended that we stop paying extra on the mortgage and put any extra on student loans since they have a higher interest rate.
-Student loans--we are working to pay these off early but in order to be flexible, we tend to stash money each month in...
-Savings accounts--and when we reach a milestone or a lump sum amount, then pay down the loan. Usually, I would wait until we had $2-$3K. Lately though, we've been letting it accumulate so that we could figure out where we want to spend the money/have money for household purchases/etc.
-Everything else is budgeted into bills or disposable income type buckets.

Our adviser recommended that we open college funds for the boys as soon as we have SSNs. She said we can open them with as little as $250 each and that we don't need to worry about contributing to them yet, but that they are a good catch-all for excited family members who want to celebrate their births/holidays/birthdays; especially while the kids are too young to get presents. So we'll probably do that. : )
May. 16th, 2015 09:05 pm (UTC)
We tore through our variable-rate mortgage in case rates went up, and contributed enough to the kids' RESP (college fund that gets a 30% top-up on the first $2500/(kid*year) in Quebec) to max out the top-up. We're also kind of cheap, don't own a car, and don't have child care costs. Now, a sizable chunk of my pay goes into an account from which house renovations, Elizabeth's spousal retirement account and tax bills come out of, and soon we'll be saving for three kids' post-secondary education…
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