What Extra Money Can Do For You

Do you know that feeling when you’ve had something hanging over your head for a long time — and then it’s gone? My husband and I have been enjoying that feeling. We just paid off our vehicle loan. What a relief!

Now we have the happy problem of what to do with the “extra” money that was once designated for the loan. Of course, it is not really extra; it just seems that way because its designated use is finally paid off. There are tons of things we could use it for, so my husband and I decided to put our heads together and make a plan. Here are some of our ideas:

Peace of mind

Ours is not a costly lifestyle: We try to stick to the basics and can often shun the

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4 Responses to What Extra Money Can Do For You

  1. Julie says:

    When I paid my car off, I kept putting the same amount of the payment in a new car fund.(savings)

  2. crazyliblady says:

    I would probably devote it almost entirely to some kind of savings, like a high interest saving account. It will give you a backup if things get tough with your mortgage or other expenses. With the way the economy is going, having some kind of backup plan seems like a good idea. Currently, I have no savings at all. I can’t seem to keep anything in savings, as “emergencies” seem to pop up that suck it all away. Anyone have any ideas about how to make this work??

  3. baselle says:

    Definitely I would bulk up the emergency fund, but even after that, you want to think about the additional investment vehicles you have. The Roth is fine, but if you have maxed that one out, its time to re-visit adding to the 401K/403B, if you are currently under 16K (limit in 2009), and you have a 401K/403B to add to. A lot of financial advice implies maximizing the 401K to maximize the match. (usually 6% or 8%) You can go wayyy further, which will increase the size of your tax refund for 09, or will give you enough of a tax break to think about converting traditional IRAs into a Roth. Time to make hay while the sun shines.

    crazyliblady – perhaps think about funneling some of your emergency money (when you get it) into a savings vehicle that you can’t get at at all. Save some, and when you get to something like 300-400$, think about putting 50$ into an I-bond. Its something, and you can’t tap it for at least a year.

  4. ThiNg says:

    crazyliblady – I sat in the same loop until I create an emergency triage board. It’s a magnetic board on the wall, divided into three sections: On the Radar, Imminent, Critical. When something comes up, we create a note card (with magnet holder) and put it in the On the Radar section. Then when it gets closer to being absolutely required we move it to Imminent. Then finally Critical which needs to be done ASAP.

    The key thing was figuring out what the ‘real’ emergencies were, and what was ‘fluff’. I’ve been playing with seeing how long I can keep things in the Critical section before I action them…

    Basement toilet backing up and overflowing because the pump is broken – Critical. Vacuum Cleaner making burning smell – Not so much.

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