Let's say you were about to be handed a significant amount of unexpected cash...

[beansprouts]

...and you are concerned about the economy and would like to use the money strategically. Would you:

a) pay down your mortgage or other debt

b) stash it someplace where it can be liquified easily

c) enjoy it now before the sky falls

d) some combination of the above

or...

e) other ideas

[Just Me]

I would pay off debt, then pay down mortgage as much as possible.

[Marie in Oh]

I would pay off debt, then pay down mortgage as much as possible.


:iagree:

[elegantlion]

We would probably...

pay off our car (only 3 payments left)
buy me a used jeep for cash
buy a used class A motorhome (that's already on our list)
set up some in a CD account as a "forced savings"
if it were substantial enough we would pay off our mortgage (we have a good amount of equity, but no payment would allow us freedom)

call a dentist and make them very happy:D
give my dh an extended vacation while he has surgery for carpal tunnel on both hands

Getting out of debt and keeping some money liquid would be our top priorities .

[Unicorn]

I would put half into my money market, and use the rest to pay down debt. I wouldn't "blow it" on anything frivolous, but I would also consider spending a little of it on something nice for the family. So maybe a combo of 50% savings, 40% (or more) toward debt, 10% (or less) on something fun. Enjoy!

[Twinmom]

Pay off all available debt here! Best to completely own what you have in this economy. Any left over would be stashed in the safest possible investment I could find.

That's all after tithing, of course. That's got to come first no matter what the economy looks like.

[susie in tx]

10% tithe
then debt, other than mortgage
retirement and/or college funds for children
mortgage

[Anne]

I would pay off non-mortgage debt first.

Then I would be sure my rainy-day emergency account was fully funded.

Then I would begin debating between mortgage paydown and something more frivolous! :D

Anne

[Tammyla]

:lol: Could you do a little bit of each?:lol: We still have no stimulus check here, and I haven't a clue what to do with it.

...and you are concerned about the economy and would like to use the money strategically. Would you:

a) pay down your mortgage or other debt

b) stash it someplace where it can be liquified easily

c) enjoy it now before the sky falls

d) some combination of the above

or...

e) other ideas

[beansprouts]

Getting out of short term debt (credit cards, etc.,) makes sense. It would mean not having a payment on those debts while money is tight. However, unless the windfall is enough to pay off the mortgage, it will not reduce the monthly bill unless one can afford to refinance. So, while it is an excellent long term solution and a worthy goal, it won't help ease short term financial difficulties. Am I thinking this through correctly?

I need to think worst case scenario. I am not an alarmist, just trying to be realistic. If gas prices continue to rise as they have, it could become very difficult for dh's business.

[WendyK]

I would probably do a combination of the three.

[beansprouts]

And tithing is a given ;)

[susie in tx]

I forgot about the 6 month expenses sitting in a money market. I would do that after the tithe. Then the debt. You might need more than 6 months of expenses due to possible job volatility.

We've recently run into a similar issue. Lots of people say not to pay off the mortgage. However, if you pay off a portion of it, you will pay it off more quickly. Then, you can use the money you used to pay for the mortgage to invest.

[CookieMonster]

...and you are concerned about the economy and would like to use the money strategically. Would you:

a) pay down your mortgage or other debt

b) stash it someplace where it can be liquified easily

c) enjoy it now before the sky falls

d) some combination of the above

or...

e) other ideas


Whether I would do A, B, or E would completely depend on my personal financial situation.

Paying off/down debt other than mortgages is usually the best course of action. Car loans, personal loans, student loans, furniture loans, taxes owed, credit cards, and other small loans should be dealt with first.

If there is no debt other than a mortgage then building up an emergency fund would be my recommended course of action.

If it's enough money that you could pay off all outstanding debt (minus the mortgage) and put back four month's income in the bank, your options abound.

You probably could, in good conscience, spend a wee bit on yourself. You could build up - or start - a college savings fund. You could add toward your retirement. You could save toward a vacation. You could do needed home repairs. But I wouldn't recommend any of these until the debt and emergency fund have been dealt out their share.

If you have no debt other than mortgage, and you already have an emergency fund of four month's wages, and you don't need to do any home repairs or start a college savings account, I would say to put the huge chunk of money toward your mortgage.

Do, of course, in any of the above scenarios, set aside from the money itself whatever it is you'll have to pay in taxes.

See, I told you it totally depended. :001_smile:

Edited to add: I think you are right about not putting $ toward the mortgage if you have other debt (credit cards especially). Pay off that other debt first!

[Elisabeth in IL]

I would pay of debt, save some, and spend a little so I didn't feel deprived.

[missplacedalaskan]

I think we would pay off all consumer debt first, then car loans...though Dh used our Economic Stimulus check to pay off the car first.
After that I would probably put any other monies in an investment account that would be easily accessible. Gas is getting so expensive now and groceries seem to be increasing every day also.

[Susan in TN]

First I'd set aside a bit of it for something fun or long-wanted. Then pay off debt. Any left over I might put into an emergency fund, college savings, or retirement.

[True Blue]

That's hard for me to answer. What is the significant amount? We have no debt or car payments just the mortgage. I might pay some of it but if I was truly worried about the economy affecting us I'd keep it fairly liquid. Right now though the reality is that all our extra money goes to retirement and college investments.

[beansprouts]

That's hard for me to answer. What is the significant amount? We have no debt or car payments just the mortgage. I might pay some of it but if I was truly worried about the economy affecting us I'd keep it fairly liquid. Right now though the reality is that all our extra money goes to retirement and college investments.

The amount is just about enough for that four month emergency fund...

The only debts we really have are our mortgage and a home equity loan from which we made some improvements last year. Both are low-interest. Cars are owned outright (I vowed some time ago to never again finance another car.)

[Wendi]

...and you are concerned about the economy and would like to use the money strategically. Would you:

a) pay down your mortgage or other debt

b) stash it someplace where it can be liquified easily

c) enjoy it now before the sky falls

d) some combination of the above

or...

e) other ideas

Pay off all debt except the mortgage, then set aside six months' worth of living expenses in a savings account. Put the maximum allowed for the year in a Roth IRA. If there's anything left after that, college savings.

Yes, I listen to Dave Ramsey! :001_smile:

Wendi

[Wendi]

The amount is just about enough for that four month emergency fund...

The only debts we really have are our mortgage and a home equity loan from which we made some improvements last year. Both are low-interest. Cars are owned outright (I vowed some time ago to never again finance another car.)

You will want to have it set aside in case of a job layoff, medical needs, car repairs, or other emergencies.

Wendi

[Amy loves Bud]

Getting out of short term debt (credit cards, etc.,) makes sense. It would mean not having a payment on those debts while money is tight. However, unless the windfall is enough to pay off the mortgage, it will not reduce the monthly bill unless one can afford to refinance. So, while it is an excellent long term solution and a worthy goal, it won't help ease short term financial difficulties. Am I thinking this through correctly?

I need to think worst case scenario. I am not an alarmist, just trying to be realistic. If gas prices continue to rise as they have, it could become very difficult for dh's business.

I think this is probably true. I would pay off all debt except for the house, and then be sure to have an emergency fund. Beyond that I would take care of any maintenance items that need to be taken care of - if things get difficult you don't really want to replace an air conditioner or repair a car. An ounce of prevention is worth a pound of cure, you know.

Hope this helps!

[beansprouts]

So which venue do you use for an emergency fund. Is it a standard savings account? I think someone mentioned money market? I confess I am dreadfully ignorant on these matters "I know nothing, I am a child I tell you, a child..." :blushing:

[susie in tx]

So which venue do you use for an emergency fund. Is it a standard savings account? I think someone mentioned money market?

You'll want it to get as much interest as possible, while still being easily accessible. A high interest savings account or a money market is your best bet. I have accounts with e-trade and Washington Mutual. Neither one has ever gotten more than 5% interest, but they can be accessed quickly if we have an emergency.

You may also want to put your emergency fund into a child's name, along with your own, so that there are fewer tax consequences on the interest.

[Amy loves Bud]

I would personally do a Money Market Deposit Account (http://www.investorwords.com/5665/money_market_deposit_account.html). Your bank can set you up with one. The risk is almost non-existent (but it is there), but you'll earn a decent bit of interest. And it's liquid should that emergency actually arise. You don't want to have difficulty getting to your money when you really need it!

[Sara R]

Assuming you are pretty certain that you will be staying in your house, and if you have the storage space, I'd put some of that money into non-perishable food and toiletries and stockpiled yard sale clothes. I'd also make sure I had a garden growing. Maybe some money for a bike if that would help you save on gas. Look around for other ways you can save money on gasoline and utilities.

If you are worried about inflation, you could put some of that money in precious metals...

[PinkInTheBlue]

I would pay off your debts (probably not house included) and then invest in non American dollar related things; like gold or hard foreign currency. I'm odd man out I'm sure. :)

[lynn]

...and you are concerned about the economy and would like to use the money strategically. Would you:

a) pay down your mortgage or other debt

b) stash it someplace where it can be liquified easily

c) enjoy it now before the sky falls

d) some combination of the above

or...

e) other ideas

Enjoy some, invest some.

[kalanamak]

...and you are concerned about the economy and would like to use the money strategically. Would you:

a) pay down your mortgage or other debt


A, although even I have raised the amount of crisis-fund I have set aside.

[Sara R]

Everbank.com, a US bank, offers CDs and money market accounts denominated in foreign currencies. They are FDIC insured against the risk of bank failure, not against currency risk (the risk that the dollar might actually quit falling one of these days). I think the risk of the dollar continuing to fall is severe (our country is in a huge amount of debt, and inflation is good for debtors), and Everbank is a moderate way to deal with that risk.

[Tracey in TX]

1. mortgage
2. 6 months emergency cash
3. kiddos' college funding complete
4. TRAVEL!:auto:

You didn't say how much money, so the spending would go in the above order.

[Joanne]

1) Pay debt
2) Fund emergency fund
3) Help others
4) Give my kids a small allotment of "fun money" and spend a day spending it with them