What to do with extra money each month?

[MACreditRevo]

Have you built up an emergency fund? Something that would cover your expenses for 3-6 months?

[disneysteve]

Have you built up an emergency fund? Something that would cover your expenses for 3-6 months?

Welcome to the site.

I realize you're new so you haven't gotten to know the regulars yet. Yes, we have an EF. We have a million dollar portfolio and about 5% is in cash and another 3% is in mature I bonds so we're fine that way.

[bjl584]

I have two more monthly tuition payments to make in March and April and then college expenses will be complete.

Once that happens, we will have at least 3K/month extra in our pockets. We owe 13K on our HELOC so my first order of business will be to pay that off. That will take about 4 months. So once September rolls around, I need to figure out what to do with the extra funds going forward.

I'm currently contributing 10% to my 401k. Along with funding our Roths, we're putting about 17% into retirement accounts. I could bump up the 401k contribution which would reduce our taxable income.

I could accelerate paying off what's left of the mortgage - 28K. At 3K/month, we could be mortgage-free in about 9 more months.

I do want to direct at least some of the excess into cash savings for short term stuff like my next car. My current car is 12 years old and although it's still under 100,000 miles, it has some issues that will either warrant repair or replacement probably sooner than I'd otherwise want to get another car.

There's also a some maintenance on our house that will need attention at some point. I know our roof is nearing the end of it's lifespan, for example. So building up the cash reserve definitely needs to be part of the plan.

Any thoughts on what you would do in this situation? I know that it doesn't have to be an either/or kind of thing. With 3K/month to deal with, I can certainly split it up and address several things.

Get rid of HELOC ASAP. (4 months)
Split the 3000 and do 1500 to cash savings and 1500 extra to mortgage.

18 months after paying off the HELOC you will be mortgage free and have 12,000 in extra cash savings.

If your car and your roof can make it that long you will be sitting in a good place. Plus, at this point you won't have a mortgage, so add 1500 + your current mortgage payment = new amount of extra funds each month.