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Told DH the news

March 2nd, 2007 at 07:04 pm

This morning I told my husband that both CC's were paid off, and all we have left is the truck and mortgage. (He makes the majority of the money, and I manage it. It's been like this for over 14 years, and works for us) Big Grin
He got excited, saying he wanted to pay the truck off asap so we can increase the mortgage principle payment.
My question is....once the truck is paid off, shouldn't we have a 2 to 3 month EF before working on the mortgage?
What does everyone think?

15 Responses to “Told DH the news”

  1. JanH Says:
    1172862498

    I think you are right. I would think a small emergency fund would be a good thing to have. You could breathe easier and then those extra mortgage payments would be even more fun to make!

  2. honeichild Says:
    1172863282

    Congrats on the payoffs!

  3. fairy74 Says:
    1172863702

    kudos, you're doing great! I agree with Jan H ge the EF pumped up a little, you need some liquid funds in case anything unforseen happens (which of course it will)....keep up with the good focus on getting things paid off!

  4. rduell Says:
    1172865351

    I agree. I'd do an EF first and then focus on the mortgage.

    Congratulations!!!

  5. princessperky Says:
    1172866817

    congrats on the payoff, and I would split the difference. some to house, or truck, some to EF...

  6. carol Says:
    1172869361

    I vote with the others. EF first then mortgage.

  7. Ima saver Says:
    1172871122

    Emergency fund always comes first!!

  8. creditcardfree Says:
    1172871267

    I agree with you and eveyone else that has posted. I think maybe you start with at least three months of expenses. Once that is done, reevaluate and decide whether to pursue a larger EF or start prepaying the mortgage.

  9. Aleta Says:
    1172879390

    They say debt is number 1 to get rid of. I agree with the Emergency Fund. Are you contributing to a retirement fund? Oh, by the way, a big big congratulations.

  10. jIM_Ohio Says:
    1172882498

    I would fund EF and retirement before paying down mortgage. Several reasons...

    if the mortgage is around 5-15 years old, the pay down does not work nearly as well as if it was in first 10 years.

    For example, paying down my mortgage at 210 th month (17th year) will shorten from 360 months to 311 months (that's only knocking 4 years off). Same money would do better in EF or retirement fund.

  11. littlemama Says:
    1172886631

    Thanks for all the advice and encouragement.
    We do have retirement, but DH's employer does not match.
    Refinanced mortgage almost 4 yrs. ago/ 30 yrs. (hope to shorten it).

  12. jIM_Ohio Says:
    1172888736

    if mortgage is 4yo, pay it down. the sooner the better... compounding works in reverse, so early extra payments (within first 10 years) are worth much more than later extra payments.

    small EF, then accelerate mortgage.

  13. YOUCANDOIT Says:
    1172889943

    Wouldn't it depend on what the interest rate is on the mortgage. I think I would fund retirement before prepaying the mortgage. But, it also depends on the interest rate.
    Great job on getting rid of the bad debt!!!!
    YOUCANDOIT

  14. littlemama Says:
    1172890604

    Mortgage intrest is 5.85%. Thanks everyone.

  15. Aleta Says:
    1172936697

    I would definitely try to max out the retirement plan even if the employer doesn't match. The younger you are the better the compounding works. You can always use your bonuses, or any extra money to pay on your mortgage. Something that my husband did when we were paying off our mortgage is that we paid a couple of payments ahead. This can work out like an emergency fund as well as you'll never be late and if some unexpected thing happens - you're paid up for a couple of months. We also paid extra on our mortgage. My husband has irregular income so this worked out for us.

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