About six months ago we refinanced our mortgage. And decided to keep paying what we were paying before so we could pay it off faster. Great idea since we wouldn't be missing that money.
Well, with the economy getting worse and Hubby nervous about his job we decided to use that extra amount as an emergency cushion- just in case. Right before we refinanced I would write bonus checks to our mortgage by figuring up every extra bit of money I made from rebates, ebates, or our t-shirts sales on cafepress. Sometimes it was just $25 a month and once I even made up to $100. That gazelle intensity went away after the refinance and now we're reducing our payments too. It seems as if we'll never be debt free.
Right now, we're firmly entrenched in our house having made the decision not to downsize to a cheaper home. We've made the decision to stay put until kids are out of school unless we're forced to sell. So, moving down isn't an option right now. We've got to work with what we have.
Now I'm wondering what the best strategy is for us. Do I continue to scrape up bits of money here and there to send towards the payment? Do I save those bits and scraps for our emergency fund? Do we cut back even more?
3 comments:
My thought is it depends on your goals... is your emergency fund healthy enough that if something happened you'd be ok for several months (or longer if it makes you feel better)? Being debt free in X years because you paid more on the mortgage now won't help a lot if someone is sick or out of work this year and there's not enough cash on hand to get the groceries (or keep paying the mortgage...). I think in this economy planning for the emergencies might take precedence, but everyone is different. It's a really good question.
Hi!
I've read your blog for a long time and figured I'd introduce myself for once. This question is so right where we are :)
We have taken a new direction with my husband's career and it makes this financial control freak girl more than a little nervous at times. When faced with the build up more emergency fund or pay off this house so we no longer owe money to ANYONE dilema here's what we chose...
1. We picked a number that is enough for about 8 months of living needs with very little wiggle room. Focused like crazy on getting to that number.
2. We've gotten there, are still feeding it as much as possible and now are looking at the account once a month to determine if we are still above and how much above we are.
3. Anything above our number is going towards the house principle in a separate check that we send in. The regular mortgage is taken out of that emergency/money market account automatically.
Good luck deciding! It was a decision we had to talk out till we both felt comfortable that we were 'safe' and were working towards being debt free too.
Heather
I agree with Amy and Heather. get a healty emergency fund (I agree with 8 months, I am not there yet but am at 6 months and will be much happier at 8) and then start throwing money at your principle. That is--if your other debts are paid off. Cash flow is king in bad times so having fewer payments going out makes me feel more comfortable so no car payment and no credit cards can assure me my emergency fund will go a lot further and protect our home should the need arise.
Good luck and good for you for being proactive about this.
Andrea
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