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Remember that $2,000 we “saved” from refinancing?

by J. Money on Monday, May 30, 2011

colorful piggy banks - Target
We finally did something with it :) If you recall, one of the perks of refinancing our 1st mortgage was that we got to skip a month’s worth of payments (we had to pay the interest, of course, but it was all included in our closing costs).  So since we didn’t have to pay June’s mortgage this month, it meant we had an additional $2,000 laying around that was previously budgeted for!

We didn’t know what we were going to do with it at the time, but after some good thinking and rationalizing, we decided to break it up in the following ways.  Wanna take a guess before I tell ya?

  1. We finally topped off our Emergency Fund at $10,000. It had gone lower over the past few months due to wiping away our credit cards again, and now we’re back to where we like it. This covers about 2 months worth of expenses instead of the normal “3-6″ experts usually recommend (or 1 year when you’re self-employed), but added to our $30k total from other funds we’ve got laying around, it works out just fine.  I don’t even know what would constitute a true “emergency” these days… although I also don’t want to find out!! Haha…
  2. We increased our “House Savings” account to $1,000! I know that probably sounds weird because I just told you we have over $40,000 in cash right now, but it’s all divided up into different areas. And before now, our House Savings account had $0.00 in it – not ideal in case we ever go over our House Budget. Now we have a cushion! Or really, a DOUBLE cushion because this $1k will come before ever dipping into our Emergency Fund again. It may sound complicated, but it works for us :)
  3. Lastly, we threw the remaining $400 against our new mortgage. Yeah – applying all $2,000 to it would have been the most prudent way to go factually speaking (we’re not going to get 5.5% interest on the money we’re saving instead of paying off debt), but we’re feeling completely SAFE now. It’s quite the savings fortress we’ve built up! And I’d gladly take that any day. I’m all about going w/ the emotions in cases like these…

What would you all have done? If you had an extra $2k to play with which extended your mortgage by an extra month? I think it was pretty divided the last time I asked you in that refinancing post – half said I should save it, and the other thought I should keep plowing away at the mortgage…

The good thing about our choices is that we can always change our minds and pay it off later! So you still have time to convince me if you’d like ;)  And if you’re out celebrating Memorial Day instead, even better!  Come find me when you’re nice and relaxed…  Today was meant for reflecting :)

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(Photo by A National Acrobat – Piggies sold at Target for like $10!)


{ 18 comments… read them below or add one }

1 cashflowmantra May 30, 2011 at 7:37 am

I like the idea of topping off the emergency fund. It sounds like you have everything under control and are doing a great job.

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2 Cat May 30, 2011 at 8:45 am

I would have put it towards my student loans. I just put part of my last paycheck for a side horseback riding gig towards my emergency fund and I finally have over $1,000! I agree with the emotions part though-put the money wherever it will make you feel the best if all your other ducks seem to be in a line.

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3 Jen @ SheBloggs May 30, 2011 at 9:22 am

If I had no debt, I would put it towards my emergency fund.

I’m a big believer in paying off my mortgage as quickly as possible, but I’m also slightly paranoid and one of my goals is to have an emergency fund worth 1 year of living expenses.

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4 LB May 30, 2011 at 12:23 pm

I would have done what you did: filled up other accounts along with putting some towards the mortgage. The only problem I see is I don’t have a mortgage any more. HAHAHAHAHAHA! Sorry, went a little crazy, but it really does feel THAT good.

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5 bleu May 30, 2011 at 12:31 pm

I would have put the majority of it towards an emergency fund and then, of course, put some towards speech therapy for DS. I’m a broken record, I know! LOL.

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6 Brandi May 30, 2011 at 12:56 pm

With Ray being unemployed the last 2 months, (but finally starting to get some traction at his new job!!!) and me preparing to make a huge career move in the next 2 months, we are saving saving saving saving …and saving :)

Once things settle in though, we’re bound and determined to take a vacation together!

It’s been almost a year since we started being all…in love and stuff haha. We need a trip!

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7 Ginger B @ Ask the IRS B*tch May 30, 2011 at 4:19 pm

Great! Glad to see you and Mrs. J Money doing what’s responsible!

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8 katie May 30, 2011 at 6:36 pm

We probably would have taken half and applied it to debt and taken the other half and put it in our savings account. But, that is where we are right now….. trying to get the debt down while also trying to get some savings for the security glands.

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9 J. Money May 30, 2011 at 8:52 pm

@cashflowmantra – Thanks dude.
@Cat – Yeah, it def. helps having your emotions in check :)
@Jen @ SheBloggs – Oh wow. HUGE E-Fund but def. smart! My mortgages are the hardest for me to pay off. As bad as it sounds, I honestly block it out a lot of times cuz it drives me insane! It’s the only part left for us to tackle and it kills me…. hate those damn things ;)
@LB – You suck!!! haha… did you sell your house or did you actually pay it off? You get equal respect points either way ;)
@bleu – Also a woman who knows what she wants ;)
@Brandi – A romantic trip at that! Watch for my post tomorrow, maybe it’ll spark some ideas ;)
@Ginger B @ Ask the IRS B*tch – We try!
@katie – It can be a tough balance sometimes too… sometimes you just want to see huge amounts being tackled, but then if you throw it all one way, the other side is now not as sexy. But you gotta do what makes you the most comfortable!

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10 Evan May 30, 2011 at 9:35 pm

I know everyone talks about that guaranteed rate of return, but there is something to say about liquidity which is obviously important to you 2 right now!

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11 lam91897 May 30, 2011 at 9:53 pm

After my recent refinance I put my $1050 extra to help pay off my car (also used some emergency money, tax refund, and extra pay from work to come up with the $6500). Paid the 48 month loan off in 22 month. I now have no consumer debt.

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12 No Debt MBA May 31, 2011 at 8:40 am

I would have saved it to put towards my degree. I’m saving all the pennies I can pinch for that at the moment!

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13 LB May 31, 2011 at 10:27 am

Paid. It. Off! I had a very small mortgage but either way I really don’t want another one. :)

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14 LLF May 31, 2011 at 12:47 pm

I would bet it all on 00 at the roulette table!!! J/K I would use it for what need fixing around the house. We are getting deposit money back from daycare. Since it’s money already “out” we will use it on a new garage door that needs to be replaced.

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15 Crystal May 31, 2011 at 4:25 pm

We just put the extra $900 mortgage payment we saved from refinancing back into the mortgage, but not because it was the best thing to do…we were just lazy and it was easy. :-)

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16 StackingCash June 1, 2011 at 1:09 am

I like your metaphor of an emergency fund to a savings fortress. I’m glad to hear of your windfall and what you did with it.

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17 J. Money June 1, 2011 at 10:03 pm

@Evan – Yep! Exactly. And if it weren’t satisfying I’d totally go the more financially-factual route ;)
@lam91897 – Rock on!!! That’s so awesome.
@No Debt MBA – I know you are! And doing a good job so far, keep it up yo!
@LB – Me neither. But I think I’d rather have hundreds of G’s in cash than $0 mortgage, haha… at least at the current moment.
@LLF – You know, one day I AM going to do that ;) I think it’s on my Life List actually – to place $500 or so on black just to say I’ve done it and to get that rush!!! I’ll let you know whenever I get the balls ;)
@Crystal – Haha… one of the few times being lazy works in your favor! ;)
@StackingCash – Thanks :) Castles and fortresses always make me feel secure! I swear I’d try and live in one if it were possible… and I had the money like Scrooge McDuck.

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18 LB June 1, 2011 at 10:57 pm

I would rather have hundreds in cash too, but now I can have no mortgage AND hundreds of G’s in cash. :)

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