where to park ~$30k cash

[cars+FIRE]

Hi all,

I recently decided to downsize our 3 car household to 2 cars.  I sold two of the three cars and bought one that combined the needs of the two I sold.

I owned the two cars outright so when I sold them, netted about $37k in cash.  I then secured a loan at 1.74% over 3 years and purchased a $37k car. (yes, I know, I didn't choose to buy a $5k MMM-approved car with that cash windfall, but that is not the topic of this discussion!).  I put about $7k down, so I have roughly $30k left over in cash after all is said and done.

Some thoughts:

1.) I am currently in the process of refinancing my house to a 3%, 15-year loan.  I owe ~$272k and the house is valued at roughly $650k
2.) Prior to the cash influx, I was already fine on cash.  Meaning, roughly 6 months of emergency expenses.  My burn rate is approximately $6k/mo so this $30k represents another 5 months in expenses
3.) I max out my 401k and in addition to that, contribute $800/mo to a non-retirement index fund, and $800/mo to a cash savings account.  I was also putting $400/mo into the house although that strategy is open for debate once the new loan closes at 15 years at 3% (instead of 30 years at 4%)
4.) no other debt besides house and car.

Options that I can see so far:

1.) put the cash towards the house that is being refinanced so the principal start (and therefore monthly payment is lower).  BTW, PI would be approx ~$1850/mo against roughly $13k/mo gross income should I not put any additional cash into the house
2.) pay off the car that I just bought instead of paying it off at 1.74% over 3 years
3.) keep the cash in savings at 1% (seems silly)
4.) put it in the market (do I get over fears of a big cash input when we are at/near historic highs?)
5.) ??

I usually am debt averse and just pay off/pay down loans as quick as possible, but on the house at 3% and the car at 1.74% it's getting increasingly hard to justify "peace of mind" on such cheap loans.

Thanks!

[Apostrophe]

If the car you just bought was paid for, would you get a title loan for it at 1.74% so you could invest with that cash instead?

Why didn't you do that with the two cars you owned outright pre-sale?

I think 'peace of mind' matters more than you think.

[BigHaus89]

You are in a very good position. Have you maxed out your IRA for the year? If not, do that. Otherwise, my suggestion is to put it in your taxable account and buy some VTSAX(what you call a non-retirement index fund).

[cars+FIRE]

If the car you just bought was paid for, would you get a title loan for it at 1.74% so you could invest with that cash instead?

Why didn't you do that with the two cars you owned outright pre-sale?

I think 'peace of mind' matters more than you think.

I personally wouldn't, but I'm sure many people would say I should if I can really borrow and leverage money for that cheap.  We are (theoretically) talking about loans at or below inflation, so I am questioning killing them off.

But yes, peace of mind has always been important to me which is why I typically haven't carried much in the way of loans, especially for cars.

[cars+FIRE]

You are in a very good position. Have you maxed out your IRA for the year? If not, do that. Otherwise, my suggestion is to put it in your taxable account and buy some VTSAX(what you call a non-retirement index fund).

I haven't - I am relatively new to the FIRE mentality and therefore don't have a lot of pre-"traditional" retirement age money.  I've been funding the taxable accounts at the expense of the tax savings in an IRA to get it a little more balanced with what I've got saved up in my 401k.  I often question this strategy though...

I had been fully funding an HSA though.  We recently switched to an HMO plan and I am in the middle of calculating how much I want to contribute to an FSA.

[cars+FIRE]

any other opinions?

[Northwestie]

any other opinions?

Ginne Mae funds  http://www.morningstar.com/funds/XNAS/VFIIX/quote.html

[JCfire]

All your taxable cash and investments are fungible.  All of your debt is also fungible (if you do not default on any of it).  What you really have is an investment portfolio funded by a combination of debts and equity (equity here = your net worth).  Don't think about $30k in isolation, think of this entire balance sheet as one entity.  The source of particular funds doesn't matter.

To pay back $30k in 3 years with interest you need to pay back about $900 per month.  You have apparently $2000/month of free cash flow after maxing out your tax advantaged investments.

If I were you I would probably not have taken out this car loan, and I would probably pay it back immediately.  My second choice would be to use it to reduce the size of my mortgage (this might be first choice if you do not itemize deductions or if your itemized deductions are just barely above the standard deduction even w/ your mortgage interest).  I would not really consider using it to invest with leverage (it's only 3 year financing, that's too short for my risk appetite), and I certainly wouldn't take out a 1.7% loan to have cash earn 1% in the bank.  So to me the loan seems pointless.