Author Topic: Where would you stash the money?  (Read 657 times)

mrigney

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Where would you stash the money?
« on: July 05, 2019, 09:41:11 PM »
Interested to hear where other mustachians would stash their money. A few quick pieces of information to set the stage.

Male, married, 34, 3 kids < 10. Retirement savings ~$150k (includes some equity in a rental--my former primary residence). Currently live in a house that meets our needs and our stage of life. There is some possibility, though, that in 2-3 years we might need a little more space. Current plan is to stay in the current house, but with the reality that we might feel different as the kids get older. We live in a LCOL area. No debt (other than a couple thousand in student loans at 2% that I refuse to pay off faster than they make me) other than the mortgage on the current house and on the rental. In 2-3 years, will have ~$80k equity in the primary residence that I'm in now. Would be upgrading to a house that would probably be somewhere in the $250k range +/- a little.

Where would you store money that might or might not get used as a house down payment? I don't really want to sock a bunch of cash into a high-yield savings only to decide in 3 years we're staying put. Was thinking of throwing it into a Roth (last tax advantaged savings I have available...maxing 401k and HSA). That would at least let me get out the $11k/yr. Other ideas? Recs? Could stick it in the Vanguard Roth and invest it in something pretty conservative like a bond fund. Just looking for ideas.

Dicey

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Re: Where would you stash the money?
« Reply #1 on: July 06, 2019, 12:24:22 AM »
I have an idea, but I have to go rustle around the forum. Posting so I can find this again in case I fall asleep before I find what I'm looking for.

Okay, here it is. Read this thread. You could totally do this.

https://forum.mrmoneymustache.com/journals/side-hustle-journal-bank-bonuses-churning-tradelines/300/
« Last Edit: July 06, 2019, 12:32:53 AM by Dicey »

Goldy

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Re: Where would you stash the money?
« Reply #2 on: July 06, 2019, 06:41:08 AM »
Is there any reason you wouldn’t just use the equity from your current house as the DP for the new one?

I’d fund the roth as you mentioned and divert any excess to taxable accounts.

mrigney

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Re: Where would you stash the money?
« Reply #3 on: July 06, 2019, 08:48:51 PM »
Quote
Is there any reason you wouldn’t just use the equity from your current house as the DP for the new one?

Good question. Two potential reasons, I suppose. First is that the potential future house will be more expensive. Might just want a bigger downpayment. Depending on rates at the time, might want the option to go with a 15-year mortgage (almost no incentive to go with a 15-year right now w/30 year rates as low as they are, but who knows where they'll be in 2-3 years). $70k would be plenty to get 20%+ down for sure; but who knows...might want to put 40% down. So there's that.

Reason two is that the current primary residence could potentially become a rental if/when we move out. Current rental rates in our neighborhood would make this a borderline rental property if I were to move out and rents are currently trending up pretty quickly. If they continue to go up over the next two years, I'd be pretty tempted to rent this place out and give myself two good to very good rentals. Don't think that'd be a bad place to be at 35.

So those are the main two reasons, I guess.