Mortgage is paid off... Now What?

[Milly]

You might want to rethink that point. You're approaching the period when stuff will start failing and need replacing. Things like the refrigerator, dishwasher, washer and dryer, hot water heater, central air, furnace, etc. tend to have about a 15-year lifespan. Make sure you are setting money aside so that you are prepared when all of those things start dying off.

Good point, I thought you meant the actual house (roof, plumbing etc.). We will definitely need a new garage refrigerator soon. Those types of things wouldn't put us in the hole due to our emergency fund (4 months expenses), as long as they don't all happen at once. If we really need to we can cut back to our bare bone expenses for a month (no extra on our mortgage and no investing) to raise capital in a true crisis.

[Fishindude77]

Good job with the mortgage ! You won't regret having a paid off house.
You will have plenty of excess cash each month after pay-off to easily take care of incidental repairs and replacements, invest for the future, etc.

[disneysteve]

Good point, I thought you meant the actual house (roof, plumbing etc.). We will definitely need a new garage refrigerator soon. Those types of things wouldn't put us in the hole due to our emergency fund (), as long as they don't all happen at once.

I'd suggest backing off a bit on the mortgage and beefing up the EF to at least 6 months of expenses.

Last year, we had to replace our furnace, AC, and refrigerator within a few months of each other. That ran us over $8,000 not counting the nights we stayed in a hotel until the heat was fixed. Better to be prepared for stuff like that.

[Singuy]

How much equity do you have in the house?

It seems you are extremely responsible so here is another suggestion(not very popular here but I think for people who are responsible and know what they are doing..this idea is not terrible).

Lets say your house is worth 180k..you have 40k left. You have 140k in equity and 80% of that can be used so that's 112k.
See if you can get a home equity line of CREDIT from a different bank for FREE and keep the balance at 0. You will not need to pay interest if your balance is at 0. You can pull money out anytime the first 3 years without question asked(since you have 2 more years to pay off the house..this should be fine).

Now you have a 112k emergency fund since MOST of your money is in the house. This will make your cash reserve way more liquid. In case you lose a job beyond 6 months, you'll not lose the house since you will be using home equity line to pay your mortgage (and to put food on the table). Of course this is double interest but it prevents you from losing the house.

In a sense, you have the ability to reverse that aggressive payment you have been doing the last 5 years in case you hit a really bad year.

You have to do this when you still have a paycheck coming in btw. You can't get a home equity line if you no longer have a job.

[scfr]

Congratulations on your progress toward mortgage payoff!

I understand your desire to invest where you have more control.

I may be reading too much in to your comments about wanting to retire to Idaho and about getting a business started, but what is preventing you from starting a business now and possibly making that move sooner? Saving up the capital to start your own business is one thing to consider.

[Milly]

How much equity do you have in the house?

It seems you are extremely responsible so here is another suggestion(not very popular here but I think for people who are responsible and know what they are doing..this idea is not terrible).

Lets say your house is worth 180k..you have 40k left. You have 140k in equity and 80% of that can be used so that's 112k.
See if you can get a home equity line of CREDIT from a different bank for FREE and keep the balance at 0. You will not need to pay interest if your balance is at 0. You can pull money out anytime the first 3 years without question asked(since you have 2 more years to pay off the house..this should be fine).

Now you have a 112k emergency fund since MOST of your money is in the house. This will make your cash reserve way more liquid. In case you lose a job beyond 6 months, you'll not lose the house since you will be using home equity line to pay your mortgage (and to put food on the table). Of course this is double interest but it prevents you from losing the house.

In a sense, you have the ability to reverse that aggressive payment you have been doing the last 5 years in case you hit a really bad year.

You have to do this when you still have a paycheck coming in btw. You can't get a home equity line if you no longer have a job.

Very clever! Things like this make me love this forum. I'm much too naive to think something THAT bad is going to happen (despite my wheel being stolen off my car this morning). The most expensive emergency we've had so far was about $600 (our fridge died).

Pros:
"free" potentiial liquidation of a huge investment

Cons:
Trying to convince the husband (biggest hurdle)
Paperwork hastle
Would this hurt my credit score?

[disneysteve]

I'm much too naive to think something THAT bad is going to happen

To many of us, the biggest "emergency" that we are saving for is loss of income. If the car breaks or the furnace dies or the roof springs a leak, we can cover that stuff. But if I lose my job suddenly, that's a problem. We need savings for that.

I've only been unemployed once in my career, and it was by choice, but I was out of work for 3 months. We were able to maintain our lifestyle essentially the same as always thanks to our emergency fund. And I didn't have to rush in to a new job that might not have been a good fit. I had the freedom to take my time exploring my options.

The most expensive emergency we've had so far was about $600 (our fridge died).

You got a new fridge for $600? How did you manage that? I think ours was $1,200 and we bought a pretty basic model - no ice maker, no in-door dispensers, etc.

[StormRichards]

You got a new fridge for $600? How did you manage that? I think ours was $1,200 and we bought a pretty basic model - no ice maker, no in-door dispensers, etc.

Steve, I just did a quick search on Sears and they had refrigerator/freezers (top) starting at $429.99. I don't recall what we spent on our last one but it was definitely under $600. And although it did come with an ice maker, it is still sitting in a box 5 years (?) later waiting for me to sell it on eBay.

[disneysteve]

Steve, I just did a quick search on Sears and they had refrigerator/freezers (top) starting at $429.99. I don't recall what we spent on our last one but it was definitely under $600. And although it did come with an ice maker, it is still sitting in a box 5 years (?) later waiting for me to sell it on eBay.

I guess. When we were looking, the only things the size we needed that didn't look like they were made out of tissue paper were over $1,000. That was definitely not what we went out looking to spend.

[StormRichards]

I guess. When we were looking, the only things the size we needed that didn't look like they were made out of tissue paper were over $1,000. That was definitely not what we went out looking to spend.

Comparable to what we have. $584 at Lowes.

[~bs]

side by sides cost more steve.

[disneysteve]

side by sides cost more steve.

OP, sorry for this going off on a refrigerator tangent. Let's get back on topic.

[Singuy]

Very clever! Things like this make me love this forum. I'm much too naive to think something THAT bad is going to happen (despite my wheel being stolen off my car this morning). The most expensive emergency we've had so far was about $600 (our fridge died).

Pros:
"free" potentiial liquidation of a huge investment

Cons:
Trying to convince the husband (biggest hurdle)
Paperwork hastle
Would this hurt my credit score?

You may get a credit score ding since they pull your credit. Go to Suntrust and see if they are still giving out free home equity line of credits. Basically they will pay for your closing cost as long as you keep the line open for 3 years(balance can be 0). Yes there will be some paperwork involved, like submitting a w2 and two months of pay stubs. They will also appraise your house, depending on how much you are willing to borrow. You can borrow up to 80% of equity or up to a debt of income ratio of 43%(or 36% depending on the bank).

[~bs]

many retailers do the entire 0 down until 2018 thing. that might be a good way to buy a fridge. make sure to pay off the balance before the due date though, as the interest accrues all the way back, I believe.

[StormRichards]

many retailers do the entire 0 down until 2018 thing. that might be a good way to buy a fridge. make sure to pay off the balance before the due date though, as the interest accrues all the way back, I believe.