Author Topic: Short term savings?  (Read 2356 times)

cheapdad

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Short term savings?
« on: September 05, 2015, 09:31:59 AM »
My wife and I are hoping to move across the country in 3 years. The place we live now is just not at all where we want to be. We originally moved here because of the cheap cost of living and a great job opportunity but the job wasn't what I thought it would be and the city is worse than we thought it would be.

We currently own a home with about 47,000 in equity. (Owe 235k, value about 300k minus realtor fees). The interest rate on our loan is 4.125%.

We have no other debt besides the house. Cars are paid off and we only use a credit card for the cash back but it is paid off every month.

My wife runs a business from home. The business is growing very quickly but has not had a long enough track record for us to really gauge if it is going to be reliable income. I work in the oil field with no college education but I get paid well to offset the risk of the job I guess.

We want to move to a different state completely, that has a better quality of life for us and our baby. We both feel that we want to do this as quickly as possible but also don't want to set ourselves up for failure. We want to save up enough money that we can buy a house (200k) with cash when we move.  As of right now we are at 72,000 between home equity and accessible investments. This leaves us short 128k.  We want to start funneling all of our saving toward this savings goal but are having trouble figuring out where to put the money for the best return.

With a 3 year time frame, I really don't feel like stocks are a good option.  Normally, I am all for stocks, but with a three year time frame, I just don't think that is smart.

Bonds can provide some interest but could potentially lose value if rates increase. Which seems to be what all the news is talking about lately.

I was thinking that maybe the best place to save would be by paying down the mortgage as fast as possible. This could reduce the amount of interest we pay which could act as a return on investment. We are 2.5 years into our 30 year mortgage so the payments are currently very low principal and very high interest.  Would this be a good way to save money over a 3 year period?  I have played around with online calculators but they all tell me how much I will save over 30 years so I'm having trouble figuring this out.

Where else could I put this money?  Would a "high interest" savings account be my best option?

I really appreciate any help from you all. 

RWD

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Re: Short term savings?
« Reply #1 on: September 05, 2015, 10:14:55 AM »
I was thinking that maybe the best place to save would be by paying down the mortgage as fast as possible. This could reduce the amount of interest we pay which could act as a return on investment. We are 2.5 years into our 30 year mortgage so the payments are currently very low principal and very high interest.  Would this be a good way to save money over a 3 year period?  I have played around with online calculators but they all tell me how much I will save over 30 years so I'm having trouble figuring this out.

Where else could I put this money?  Would a "high interest" savings account be my best option?

I really appreciate any help from you all.

Since you are planning on using your equity to purchase another house I think paying down your mortgage is the most efficient method. I doubt you'll find a guaranteed 4.125% somewhere else. The only downside is flexibility, I would recommend keeping some emergency funds in a savings account (e.g. Ally) which should get you around 1%.

cheapdad

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Re: Short term savings?
« Reply #2 on: September 05, 2015, 10:53:52 AM »
Thank you for the response. Ally is actually the bank I was considering when looking at my options. Right now I have about a years worth of cash available when combined with my wife's income if something were to happen to my job so I could probably risk putting the money into the house.