What would you do with extra $

[yogiii]

Let's say you have an extra $1,000-$1,500 at the end of each month. How would you save it?

Assume maxed out Roth, 401k. No car loans, student loans, cc debt. EF with 6 months sitting in a low earning savings account. No regular contributions to 529 but one exists. No taxable account. Not interested in being a landlord.

[swamp]

I'd get a taxable investment account. Or I'd spend it on hookers and blow, depending on my mood.

[HoneyBBQ]

Taxable accounts. Or pay down mortgage faster (sorry Phil!).

[thyme4change]

I'd second the hookers and blow.

But, if you still have some left over, the taxable account is the way to go.

I like having one because my money is doing more than sitting around at .000009% interest (or whatever my bank is paying), but I can access it for anything - an emergency, a new car, remodeling, the kids' college, starting a business, retirement - or not - it can hang there as long as I don't "need" it.

[cronewitch]

I use taxable investment accounts they are almost as good as tax deferred accounts because the money you earn is mostly long term gains and dividends where 401K is ordinary income.

[Savoir Faire-Demogague in NJ]

I have $2K burning a hole in my pocket... I do the same as the others.

[thyme4change]

Wait - I take it all back.

Why not send it to me? (You, too, SF!)

[swamp]

May 19, 2011 11:00:18 GMT -5 Savoir Faire-Demogague in NJ said:

I have $2K burning a hole in my pocket... I do the same as the others.

How much do your hookers cost?

[swamp]

May 19, 2011 11:00:51 GMT -5 thyme4change said:

Wait - I take it all back.

Why not send it to me? (You, too, SF!)

Because you hog all the blow.

[Savoir Faire-Demogague in NJ]

How much do your hookers cost?

Minus the hookers...LOL

[yogiii]

May 19, 2011 10:59:56 GMT -5 thyme4change said:

I'd second the hookers and blow.

But, if you still have some left over, the taxable account is the way to go.

I like having one because my money is doing more than sitting around at .000009% interest (or whatever my bank is paying), but I can access it for anything - an emergency, a new car, remodeling, the kids' college, starting a business, retirement - or not - it can hang there as long as I don't "need" it.

So you use a taxable for college savings instead of a 529, or both? I understand that a taxable account is just all around more flexible. I guess my problem is that I feel I'm risky enough with my retirement, I don't want to lose my savings but I suppose I could just adjust the risk down until I stop being such a chicken.

[yogiii]

May 19, 2011 10:59:33 GMT -5 HoneyBBQ said:

Taxable accounts. Or pay down mortgage faster (sorry Phil!).

We just refi-ed from a 30 into a 15 with a slightly lower payment because we had been paying down the mortgage. I don't really want to do that angle anymore. Now the interest is low enough that even I feel I could probably make more money somewhere else.

[phil5185]

Taxable account, definitely. Use a no-load company, and buy tax efficient funds. That would be an Index Fund where the return is tax-deferred, it gets favorable cap gains tax when/if you sell, and very little annual tax/expense. The long term return (30-yr) history is about 11%/yr (altho it doubled in the last 24 months .

And it is a good fall-back EF, your money is available in about 3 days. Personally, I would move much of the 6-month low return EF there too, we cap our EF at about $5000.

[dancinmama]

May 19, 2011 10:59:33 GMT -5 HoneyBBQ said:

Taxable accounts. Or pay down mortgage faster (sorry Phil!).

I'd open a taxable account and stack the cash so that IF at some time in the future I wanted to pay down the mortgage, I'd be building up money to do so. With mortgage rates at historic lows, in the future your mortgage is going to be a hedge against inflation and we all MIGHT need all the "hedges" we can get.

[thyme4change]

I haven't yet set up a 529 - but I really should. I wasn't comfortable with our savings accumulation as a whole, so I didn't want to guarantee my children funds for an education before I secured our retirement, even if there were tax benefits. I'm starting to get to a more comfortable point with our net worth, as a whole, but I will be short on earmarked college funds. So, they will just have to take some of our money and spend that instead.

[phil5185]

I don't want to lose my savings but I suppose I could just adjust the risk down until I stop being such a chicken.

Yes, risk and return are directly proportional, you can dial in whatever level of risk that you need to accomplish your goals. We use a stock index fund and a bond fund. The index averages 11%/yr, the bond fund about 5%/yr. So if you want 8%/yr, you would use a 50/50 mix. (11+5)/2 =8. If you are young and want to grow it a bit faster, you might use increase the risk to 75/25, if you are near retirement, you might want the safety of 25/75.

Good job on the loan - mortgage rates are at a 50 yr low, definitely 'keepers'.

[yogiii]

We're young 29 & 30, both engineers in a HCOLA. I think we've done well to save our money and not fritter it away on stuff (or hookers), however I don't think the way we've saved has been all that smart. Part of it is that I got scared by the market tanking a few years back. I guess I just need to bite the bullet and do this. I don't expect to have this extra around forever, so I'd like to do something with it now while it is there.

[thyme4change]

Part of it is that I got scared by the market tanking a few years back.

Too bad - right after a tanking is the best time to put money into the market.

Buy low...

[april47]

If you had no debt and are saving adequately then maybe a little to charity. Then I would start another savings account to save for a fantastic trip or a a vacation home.

[yogiii]

I know, I know ... still learning .... although technically I was saving for a downpayment at that time, whether I knew it or not ... I'll just think of it that way.

Actually I have another question. DH has some random stocks with someone (don't remember who) that charges ridiculous fees. Is there a way to move them somewhere nice like vanguard and into an index fund other than just selling the stocks, taking the cash and then opening a vanguard account? Now getting DH to make that phone call ...

[swamp]

May 19, 2011 12:19:54 GMT -5 april47 said:

If you had no debt and are saving adequately then maybe a little to charity. Then I would start another savings account to save for a fantastic trip or a a vacation home.

I wouldn't open another savings. No return on investment.

[973beachbum]

May 19, 2011 12:24:18 GMT -5 swamp said:

May 19, 2011 12:19:54 GMT -5 april47 said:

If you had no debt and are saving adequately then maybe a little to charity. Then I would start another savings account to save for a fantastic trip or a a vacation home.

I wouldn't open another savings. No return on investment.

And there is on the Hookers and Blow?

[thyme4change]

Well - if you want to reinvest the money in an index fund, you have to sell the stock, and buy the fund. But, it isn't like you have to actually have to walk around with a wad of benji's. If you already have an account that holds that stock, you can sell and you will have a cash balance that you can use to buy index. If you have the stock in paper form, sitting in a drawer, then you can use them to open an account by sending them into Vanguard and they will deposit the stock into your account. And then you sell and that turns into a cash balance. Or, you can just keep the stock, if it is a decent company, and use your new cash to buy index funds.

[thyme4change]

And there is on the Hookers and Blow?

Herpes and bloody noses.

[brdsl]

May 19, 2011 12:28:02 GMT -5 973beachbum said:

May 19, 2011 12:24:18 GMT -5 swamp said:

I wouldn't open another savings. No return on investment.

And there is on the Hookers and Blow?

DUH!!!

[Deleted]

I'd be careful about lifestyle creep with the hookers and blow.

How about saving up for a trip to Thailand or someplace where you will have some special memories tied to the hookers and blow, rather than come to see them as a monthly entitlement, just in case you ever need to cut back?

(I have more puritanical interests there, but I really would be saving that money to go to Thailand if it were me)

[swamp]

May 19, 2011 12:28:02 GMT -5 973beachbum said:

May 19, 2011 12:24:18 GMT -5 swamp said:

I wouldn't open another savings. No return on investment.

And there is on the Hookers and Blow?

At least I'm having fun. I don't have fun watching my interest accrue at .75%.

[swamp]

May 19, 2011 12:45:59 GMT -5 @craftysarah said:

I'd be careful about lifestyle creep with the hookers and blow.

How about saving up for a trip to Thailand or someplace where you will have some special memories tied to the hookers and blow, rather than come to see them as a monthly entitlement, just in case you ever need to cut back?

(I have more puritanical interests there, but I really would be saving that money to go to Thailand if it were me)

<<diet pepsi on the monitor>>

[yogiii]

May 19, 2011 12:28:15 GMT -5 thyme4change said:

Well - if you want to reinvest the money in an index fund, you have to sell the stock, and buy the fund. But, it isn't like you have to actually have to walk around with a wad of benji's. If you already have an account that holds that stock, you can sell and you will have a cash balance that you can use to buy index. If you have the stock in paper form, sitting in a drawer, then you can use them to open an account by sending them into Vanguard and they will deposit the stock into your account. And then you sell and that turns into a cash balance. Or, you can just keep the stock, if it is a decent company, and use your new cash to buy index funds.

Actually I'm not sure what form it is (I'm thinking it's electronic and not many benjis) but that we'd want to move it from that place (let's say it is scottrade, not sure though) into vanguard, since our roths are already with vanguard, just to keep things simple. I guess I'm trying to think of something easier than DH making a phone call since for some reason he hates doing that.

[yogiii]

We did go on trips before having a kid, now we just don't have time for that. All my vacation gets eaten up by getting sick or my childcare wanting a vacation