Here's my ultimate financial plan....
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| Tue, 10-05-2004 - 10:18am |
I figured out it will take us until Sept 2005 to pay off the last cc ($5300)and my student loan ($4000)-as long as we get some income tax money back (which we always do.)
Then we'll use all the snowflake money to put in savings- once we have around $10k for downpayment, we can start building the new house (land is free from his parents.)
I will then use the money from the sale of our current house to buy a few pieces of furniture and pay off SUV which will free up $325/mo. Now all of our bills, spending money and 401K will be covered with DH's pay. All of my money is extra and I broke it down monthly to:
$300 will go to strict savings in a cd or money market
$300 will go to extra principle on new home (roughly $120K mortgage)
$200 will be in a "spendable" savings (car repairs, unexpected bills, Christmas, clothes)
$200 split between our 2 kids college funds
$100 extra on DH student loan
Of course we will have to be extremely disciplined with this part, but it will benefit us so well in the long run. I also calculated that if we pay that $300/mo plus 1 extra payment/year on the new mortgage, we will have that sucker paid off in 10 years instead of 30! I could use income tax to do that- or even send in half with the 2 extra pays DH gets a year. We could be mortgage free at the age of 42!
This motivates me even more writing this-- If I didn't take the time to sit down, use Bankrate's calculators and actually budget this far ahead I would never have known the savings. I suggest everybody try this! Nicki

* After your build up your spendable savings to a good size (not sure what that is, but I'm guessing after a year you'd have $2,400 and that seems good sized) you can use the $200 toward your dh's student loan.
* It's good to have some money accessible in a money market or similar account. But the interest you get on a CD or money market does not keep up with inflation, so over time your losing money. After you have enough, say 6 months of living expenses saved, start thinking about other diversified investments such as a variety of mutual funds, bonds, stocks, etc., focused on long-term growth.
Nicki - great that you are planning!!
You might want to do some research about whether or not it's better to pay down the mortgage principal or put that money toward the children's college funds.
All my best,
Danni