So hi there. I'm new (just introduced myself in that other thread in general discussion) and I was hoping to get some opinions/advice about what to do with all this extra money we have.
Okay, semi-kidding. We're a low-income family of 4 and we don't have TONS of extra money, but we do live frugally and simply enough to give us some. Once we get our tax refund (we don't get a refund because we're financial idiots, btw, we get a lot more than we pay due to the credits based on our income) we'll be able to polish off our emergency fund (we need about $3,000 more then we'll be at our $10,000/6-month goal). After we finish our emergency fund we want to put every last cent to...something.
Originally, we just wanted to pay off our mortgage early (we bought in 2017 with 20% down, a 30-year fixed @ 4.25%) which we owe around $107k on.
I figured if we get really gung ho, between our checks, tax refunds and medical reimbursements (we double insured, and since we are low-income the state pays for our employer insurance by sending us a check each month for what comes out of *our* paycheck. This is the only "subsidy" we get. We're not eligible for EBT or anything - not that that's bad to use, we just don't get any) we could possibly, hopefully, pay off our mortgage in 10 years (when DH is 46) and then use the 10 years after that to save more on retirement and POSSIBLY (in our dreams!) retire at 56.
Now I'm thinking this is totally backwards, and it makes more sense to spend the next 10 years going crazy gung-ho on retirement, and the following 10 years on the house. You know, being that our money will make more money the longer it sits there. Also, what if DH loses his job (I don't believe he will, but you never can be sure about these things)? I'd rather have money to live on vs. all of it tied up in the house.
We presently put 10% of our income into his employer sponsored 401k at Fidelity. We have 100% of it in FID 500 Index. The employer matches, I believe, about 3.5% of that.
Just a rough guesstimate, once our e-fund is finished, I think we'll have around $477 every month to put towards...whatever...plus once a year, our tax refund of at least $5,000 (at least while our 2 kids, 14 & 9, are minors)....so, about $10,000 a year. Best case scenario. We all know life happens.
So - thoughts?
What should we do? All retirement, all house or maybe both? And if you say retirement, how should we go about that? Use only our employer plan or open a separate account? FYI 10% of our income is less than $70/wk, so that percentage could be upped a LOT.
FYI, we presently have $53K in retirement (it was about $10k more a couple months ago!) and $42k of that is in a separate account (also at fidelity) from a previous employer. We didn't roll it over because it was a ROTH 401k (VPMAX) and our new account is a regular 401k. We plan to leave it just sitting there, probably forever.
I really appreciate your time and help and I'll gladly answer any questions!
P.S.
Please be kind? It's intimidating putting this info out there, even anonymously.