Dear Mustachians,
I would love to hear your prospective on where we should be putting our stash. We live in the US but used to live in the UK, which is why our stash is international! This is our basic situation:
Outstanding mortgage: $390k, 29 yrs left, but overpaying so more like 18 yrs, 3.85% (yes, I know, I know - face-punch-worthy borrowing!)
Home equity: $300k
Other debts: $0
Pensions: now maxing out 401k for DH and paid into various UK company pensions for previous 15 yrs. i have no US pension, but contribute £175 (about $280, or 17.5% of my income) into a UK personal pension scheme (I get 20% UK tax relief on this).
US savings: $60k (sitting in the bank’s startlingly low-yield 1% savings account)
UK savings: £55k (roughly $90k, sitting in low-yield 1.5% cash ISAs in UK. Subject to US tax now we live here)
Other savings: $12k (sitting in checking account as emergency fund), and about $8k in various low-yield pots for new car savings, next year’s childcare costs, unforeseen medical costs, and so on)
Income: $210k, potential bonus of $120-150k this year. I know this is vast and we are incredibly privileged, and probably need more than a face-punch for not being retired already, but this high earning is new due to a big promotion (past bonuses, which were much smaller, were what funded our home equity, one $30k clown car and are where much of our stash comes from. We have never spent those except for clown car.) This income is very precarious, as the work industry DH is in is very volatile.
As you can see, we have a fair bit of cash stashed in various pots, and lots of potential, but our money is doing nothing but depreciate. It is definitely not working for us, though it provides a sense of security.
DH is very risk-averse, as am I but to a lesser extent. He is happy to leave the money where it is ‘just in case’. In fairness, his job is very insecure and future redundancy is more a guarantee than a threat. He has been made redundant in the past. Everyone he knows in the industry has been made redundant or 'managed out' at least once over a ten-year career.
My job is self-employed and low-paid (about $17k) and life-affirming! I work part-time as we have young children.
My feeling is that we should maybe keep $20k in an emergency fund and invest the rest of our savings somewhere. I want our money to make us money so we worry less about job security. I’d love for DH to be able to quit the day job and have more happiness.
The question is, how do we do this, and where do we stash our stash so it earns its keep? I have read all the MMM posts, but would love some input.
Here are the options as I see them:
Option 1: Throw all savings except emergency fund at mortgage, thus halving term and greatly reducing stress.
Option 2: Throw all savings except emergency fund at rental property.
Option 3: Throw all savings except emergency fund at Vanguard hedge funds.
Option 4: Throw money each month from savings at a private US pension for me.
Option 5: Spend $8000 (after tax credits) on solar panels.
Option 6: Do some sort of combination of above.
Option 7: Do something else I haven’t considered yet.
Any and all advice would be appreciated. If there is anything I have left out, let me know and I’ll add/edit.
I haven’t included expenditure as I have only been budgeting properly in the US (and on the new high income) for a couple of months and we are still working our way round a completely new country (with healthcare, different taxes, different daily outgoings). Obviously, I hope to grow the stash significantly over the coming months. My mustache is just a sprinkling of stubble at the moment ;)
Thanks,
LadyMustache