Author Topic: Extra $500 a month - what to do?  (Read 953 times)

Unique User

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Extra $500 a month - what to do?
« on: May 31, 2017, 11:26:46 AM »
DH changed jobs and the new job ESPP does not kick in until Dec.  So we now have $500 extra a month and I'm not sure what to do with it.  We already contribute the max to 401ks, HSA and Roth IRA and have a healthy emergency fund.  I'd like to invest it, just not sure where, how, etc.  I could also just send an extra $500 to my mortgage each month, but that doesn't seem as fun.  Interest rate on the mortgage is 3.5%.   Any thoughts?   

Lady SA

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Re: Extra $500 a month - what to do?
« Reply #1 on: May 31, 2017, 12:47:49 PM »
sounds like you've maxed out your tax advantaged accounts, now the next on the investment order is opening up a taxable brokerage account and putting that $500/mo in there and investing in a vanguard index fund. It's easy peasy to set up and contribute, we have biweekly contributions automatically pulled from our checking account and automatically buy shares of our selected index fund. FYI, I remember you need a $3k balance to purchase most funds, so until you reach $3k, your money will be in a money market fund until that point, then you just sell and buy the index funds you want.

If you are the type of person that dislikes the feeling of debt hanging over you, I could also be swayed in the direction of paying your mortgage off faster, but the math strongly favors investing rather than paying off a 3.5% mortgage (unless you still have PMI).
« Last Edit: May 31, 2017, 12:51:22 PM by LadyLB »

Car Jack

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Re: Extra $500 a month - what to do?
« Reply #2 on: May 31, 2017, 01:13:33 PM »
You will get (likely) 2 kinds of answers:

1) pay off your mortgage

2) don't pay off your mortgage but invest in a taxable account

I'm strongly in the first camp and after paying off my mortgage found that, wow, look at that, I have the amount of my mortgage to invest however I want to.

Scortius

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Re: Extra $500 a month - what to do?
« Reply #3 on: May 31, 2017, 01:19:00 PM »
Definitely throw it into a taxable index fund.  At 3.5% you will likely come out way ahead if you put the money into investments rather than your mortgage, especially paying off your mortgage early doesn't give you a large amount of emotional satisfaction.