What to do with extra income - budget update

[Angel!]

So I have adjusted my withholdings & HSA deductions & increased my takehome by $300/month. Much more than I expected. When I was posting in the previous thread I also had forgotten that I had not recieved my tax refund, which I now have, so my savings is higher.

Current savings: $5500

Current debts:
CC1 - 0% til august $1,950
CC2 - 2.99% fixed $15,500
Heloc - 4.75% variable $19,500
Mortgage - 5.375% fixed $108,500
Student Loan - 2.25% fixed $12,000

Currently putting 2% into Roth 401K

Future big purchases:

Paint house - this is quickly becoming a need as it is getting to the point where I am concerned it will cause other issues. I really wanted to get this done this summer. I have no idea what this will cost, but am willing to do the work myself.

Furnace - It is 32 years old. 6 months ago a guy looked at it & said he saw no major issues, but said a furnace this age could go anytime or last another 10 yrs. I'm guessing $2K-$4K for the cost. I'm not planning to replace it until it goes, but figure I should have this in the budget given the age.

Dishwasher - Mine died 10 months ago. I admit this is a total want, but am putting it on the list anyway. $400


So what do I do with the extra money? How much do I need in my EF? Opinions please...

[illinicheme]

How much do you currently have in retirement savings?

In your situation, as a single mother with potentially big expenses like house painted and furnace coming up, I'd probably keep saving all $300 in liquid savings each month until you build up a much bigger cushion. What interest rate does CC1 go to in August? Are you going to be subject to interest back to the time of purchase if you don't pay it off before August?

[Angel!]

I have ~$19K in retirement & am 31.

CC1 goes to something like 9% in august, but no back interest. I already have a 0% for 12 months with 0 fees from discover that I am going to try to transfer it to & should that fail I have a 0% for 18 months for 3% from some other CC company.

[Wisconsin Beth]

Angel, about 8 years ago we painted FIL's house. They powerwashed it and then used some kind of cleaner on it and then we painted. We had about 5-7 adults working on it and it took all day. This is a 1100 sf ranch. And I used a paintbrush. I don't remember if there was a paint sprayer involved. I'd guess it ran about $300 or so to do most of the house - there's a peak on the front that still hasn't been done because no one is going up on the scaffolding to do it. Fortunately it's not peeling, just fading.

[endofera]

Buy the dishwasher. Then bank the rest for a few months.

[Angel!]

May 20, 2011 14:55:37 GMT -5 @tbird said:

can you reach everything? do you have outdoor painting experience??

Most of the house is low & easy. The sides each have a peak that is maybe 15 ft, I will have to look. I have no experience in outdoor painting, but my Mom always does her own, so I figure it can't be that hard. Maybe I can get her to help.

then save up the 300/month into savings until you have 3 months expenses plus 4k for the furnace.

Ack! That is over $13K. And I was so proud of having over $5K

[Angel!]

May 20, 2011 14:58:47 GMT -5 @tbird said:

I'm assuming you're making regular payments to the ccs and that the plan is to pay of #1 when the rate goes up....then transfer that payment onto#2....

Right now I am just paying the minimum. I could either pay off #1 with my savings or do a balance transfer.

I wasn't really sure if any extra should go towards these balances or not given the rates. I guess this is partly why I asked the question, I was torn between EF, debt, & retirement & wasn't sure what to do with the money.

[phil5185]

I'm guessing $2K-$4K for the cost. I'm not planning to replace it until it goes, but figure I should have this in the budget given the age.

Don't know how far north you live - but if your heating bill is maybe $300/m thru the winter, a new efficient unit will probably save about half of that. So you might save $1000 per winter. If it is a certainty that you will spend $2k - $4k for a new unit during your tenure in that house, you might do it sooner rather than later and get started with the $1000/yr? And have peace of mind next winter.

The only debt that I would accelerate/prepay is the HELOC cuz it's 'variable' - it will get painful if rates go to 8% or 10% in 5 or 8 yrs (I was around in the 1980's, 17%, LOL). The others are keepers and can go full term - that way you can direct your income to things that will do more for your longterm future.

[Gardening Grandma]

Hi Angel
It won't be that hard to estimate the cost of painting the house.... Figure out the square footage and go to a hardware store (or big box home store). The cans of paint will tell you home many sf a gal will cover. On a per gallon basis, a five gallon can is usually a better deal.... Only you will know if two coats will be necessary. I would get a middle of the road quality. The cheapest paints will probably not give you enough coverage in one coat and you could end up spending more. The top of the line quality is nice, but not necessary.
You can rent a pressure washer and use that to prep.

I'd go ahead and get the dishwasher. You are a busy single mom, I believe..

I'd focus on socking away as much as possible. Also research furnaces so that you will know what you want when the time comes. And Phil has a good point about the potential savings if you have severe winters. If you wait til the old one dies, you may have to go without heat until a new one can be installed.

Also, you might check with your power company to see if they have rebates on energy efficient furnaces..... When I replaced our washer/dryer, I received a $200 rebate for selecting models on their energy efficient list.....(and I've seen the difference in our energy bill)
We replaced an old (25+ years) furnace a couple of years ago in our rental house. It was about $3000. (that included labor)

[DVM gone riding]

Angel--you are in a tight spot with a tight budget, I am glad you were able to adjust some things. I would increase the min payments to the CC (maybe add like 50 to each) and put the rest in savings for now. Next time you get a raise adjust the retirement then. you don't need to worry about that yet you need to focus on having a cushion in place for you and your two kids.