So, we are in the midst of refinancing our mortgage, to take advantage of HISTORICAL LOW RATES on account of…. dun dun DUUUUN, THE ECONOMY. It’s weird to be in the position that we can refi and get the low rate and have a mortgage guy be like “you guys are doing AWESOME” when it was so not that long ago that I was CCCSing my way out of a big hole. We were initially going for a 15 or 20 year, but the rate for a 30 was the same for a brief window of time yesterday (4.75!) so we did that, and are now planning our next move, financially.
Our payment goes down by $150. Our long term plan is to pay off the house much faster than 30 years, it always has been, but by lowering our payment/interest/dropping PMI, we are now considering what to do with this ‘found’ $150. There are three options/considerations:
#1: In case you hadn’t HEARD, we want a second child, and the biggest obstacle to that is the cost of daycare. Socking away that $150 in some far off savings account would soften the blow of our best-case scenario timing wise, of double daycare for a year.
#2: tacking that 150 onto my student loan payment, which is at 6%, and about a 19k balance.
#3: Just adding it to the mortgage payment as extra principal.
Also, we’ll have some escrow returned, plus our tax return, etc, and thinking about what to do with that money is also burning up brain cells:
#1: Finish off the window project. That would be about $1300. #2: Replace the fridge (18 years old, and an energy hog, I’m sure, but still technically running) anywhere from 600-1200 (I really like the LG french door fridge — we are restricted to a 30″ wide one) but definitely want a bottom freezer, which are more than top freezers. #3: drop it into a CD as a daycare stash for hypothetical kid #2. #4: Throw it at the student loan
SIGH. Any opinions?
My vote would be against paying extra towards the student loan, for 2 reasons:
1. Your balance right now is still big enough that even with this extra $$ you won’t have it paid off any time soon. So it’s not like if you accelerate the payments for a year or two you’ll see the benefit of not having to make them any more (like if it were a CC or car payment).. Unless you have multiple loans? If you have multiple loans it might be feasible to start working on one of the smaller ones to have that paid off and that monthly pmt gone in time for kid #2.
2. Student loans are a great type of debt because they can be deferred in times of trouble. Not that you’re heading towards a time of trouble, but again, my conservative standpoint is maximize savings and minimize monthly obligations.
I’d probably do some combo of stashing $$ away for daycare and finishing the windows/new fridge. Did I tell you about http://www.dollarsavingsdirect.com? 4.0% online savings account, affiliated with Emigrant…
Blahblahblah, my two cents. Happy New Year! My new years resolution is to comment more on your non-financial posts because I do actually have other things to say!
xoxo
I would stash the monthly $150 away towards daycare, because it’s clear by reading your posts of this year that you are SO ready for baby #2, and that the daycare costs seem to be a major sticking point.
For the escrow/tax, I’d do either the fridge or windows, or some combination, as kellyrae suggested. I’m guessing that both would represent some savings in your energy costs, so more “found” money–yay!
Happy New Year!
I vote for baby 2! You will always have some debt to manage and you’re wise about it. Having another kid is something you guys want, and it makes sense to have the new one and Ingrid close together. What a great turn of events!
The fridge and windows would both create more savings (saved energy) so I saw tax return on those and extra money to day care!