My goal is to reach financial independence. For me it isn't about necessarily retiring early. Rather it is about having the option to retire if I want to or perhaps choosing a part time or lower paying job that I enjoy more. That and to have an emergency fund that will protect me against unforeseen problems.
Seeking advice after unforeseen changes
- Thread starter Chris918
- Start date
My goal is to reach financial independence. For me it isn't about necessarily retiring early. Rather it is about having the option to retire if I want to or perhaps choosing a part time or lower paying job that I enjoy more. That and to have an emergency fund that will protect me against unforeseen problems.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I never had an emergency fund while working.... but I did have some taxable investments that I could sell if needed. I figured that most emergencies could be covered by our credit card credit limits and then that would give me 20-30 days to figure it out.... as it turns out, we didn't have many big financial emergencies and it all worked out.
The PMI adds about 0.7% to the cost of your mortgage, bringing your effective rate to about 5%.
Unless the 403b has a match I would ignore it for now.... if it has a match then contribute enough to optimize the match. If not, then do some Roth contributions but there is no need to max out.
On the debt, I would probably focus on the car loan and keep an eye on house values and equity towards refinancing at a lower rate with no PMI at some point in the future.
Even if you did 1/3 each... 1/3 to retirement savings (403b to match and/or Roths), 1/3 to additional car loan principal and 1/3 to additional mortgage principal that would probably all work out ok.
Chill.... you are on the first few laps of a long race... and slow and steady wins the race.
P.S. Have you played around at all with Quicken and Quicken Lifetime Planner? I highly recommend doing a plan in QLP and then using Quicken to monitor your progress.
The PMI adds about 0.7% to the cost of your mortgage, bringing your effective rate to about 5%.
Unless the 403b has a match I would ignore it for now.... if it has a match then contribute enough to optimize the match. If not, then do some Roth contributions but there is no need to max out.
On the debt, I would probably focus on the car loan and keep an eye on house values and equity towards refinancing at a lower rate with no PMI at some point in the future.
Even if you did 1/3 each... 1/3 to retirement savings (403b to match and/or Roths), 1/3 to additional car loan principal and 1/3 to additional mortgage principal that would probably all work out ok.
Chill.... you are on the first few laps of a long race... and slow and steady wins the race.
P.S. Have you played around at all with Quicken and Quicken Lifetime Planner? I highly recommend doing a plan in QLP and then using Quicken to monitor your progress.
Cassius King
Recycles dryer sheets
Relax, you're doing fine, and are ahead of most at your age. You've gotten excellent advice on what to do next.
The only thing I would offer is not to beat yourself up too much. Unplanned and unforeseen expenditures are going to happen again. Learn to expect them and plan for them. A new roof, new HVAC, etc. These things WILL happen, best be prepared for them both financially and emotionally. Cheers!
The only thing I would offer is not to beat yourself up too much. Unplanned and unforeseen expenditures are going to happen again. Learn to expect them and plan for them. A new roof, new HVAC, etc. These things WILL happen, best be prepared for them both financially and emotionally. Cheers!
How much LTV your state requires for home equity line of credit (e.g. Texas need less than 80% LTV to allow home equity loan/line of credit)? If you pay down 20% and/or refinance with more than 20% of equity, do you have enough home equity line accessible to cover your emergency fund? If answer to former question is yes then I would pay down more than 20% on mortgage using the emergency fund and treat the home equity line of credit as my "emergency fund". This is what we have personally done for a number of years while we were thin on cash flow and cash reserves.
Home equity line is best way to keep emergency fund since
a. You can keep it open for long period of time without any cost, and
b. You interest income from emergency fund would be typically lower than your mortgage rate.
And yes, don't beat yourself up. Balance life and saving: don't sacrifice one for another and vice a versa. You are in this for a long haul. Your finances will get better over time as your investment seeds from years ago will start producing cash flow. My financial needle seemed to have had stuck for the first decade since I seriously started saving/investing. But financial picture started to brighten up quite rapidly after the first decade. Compounding really IS magical. You will see the snowball, just hang in there.
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How old is your current mortgage? I would check and see if it makes sense to do a cash out refinance to use the cash the pay off car and get rid of PMI if the house value has gone up... and the other way if the house value has gone up to equal to 25% ish equity( different mortgage company might be different), you can get the house reappraise and get rid of PMI.
And interest rate are very low now..my friend just refinance from 4.25% to 3.6% saving $300 a mont with a $500k mortgage... but cash out refi will have a higher interest rate but will still be better that the car loan.
Good luck!
And interest rate are very low now..my friend just refinance from 4.25% to 3.6% saving $300 a mont with a $500k mortgage... but cash out refi will have a higher interest rate but will still be better that the car loan.
Good luck!
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