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1. put aside 12 months living expenses
2. pay off mortgage
Don't worry about paying off any non mortgage debt. If TSHFan who cares if you default on credit cards or whatever. As long as you have a roof over your head and years living expenses in the bank you're in really good shape to handle just about anything.
Plus, I've never in my life met a person who paid off their home and said they regretted it.
1. put aside 12 months living expenses
2. pay off mortgage
Don't worry about paying off any non mortgage debt. If TSHFan who cares if you default on credit cards or whatever. As long as you have a roof over your head and years living expenses in the bank you're in really good shape to handle just about anything.
Plus, I've never in my life met a person who paid off their home and said they regretted it.
SO TRUE !! everyone I know who paid off their mortgage is relaxed as hell.
SO TRUE !! everyone I know who paid off their mortgage is relaxed as hell.
Absolutely! I don't think there is any better feeling than owning your house free and clear.
I think the answer to the original question depends on your stage in life. A younger person, who still has a long career ahead of him, may want to invest the money rather than pay down a mortgage. A mid-life worker who has a nice portfolio and a decade or more of employment ahead of him may want to divy up the money between the mortgage and investments. A retired person on a fixed income might want to go ahead and pay off a mortgage with the windfall.
Last edited by formercalifornian; 11-01-2009 at 04:59 PM..
Personal opinion. Mind you, it's based on California and other states where houses are overpriced, not places like Detroit where you could put a house price on a credit card.
Non-revolving expenses, i.e. utilities: $500
Insurance of whatever kind: $500
That leaves you with $500 a month to keep yourself/your family fed, clothed, and entertained.
If I lived somewhere where my utilities were $500 a month and insurance (home/auto combined) was also $500 a month, I'd move.
1) Pay off any outstanding (non-mortgage) debt I still have, including a HELOC if I have one of those.
2) Put the equivalent of 12 months' expenses aside for savings if I do not already have this.
3) Put any remaining money toward my mortgage.
Yep, I have no other debt and bought new cars outright last year so won't be replacing those for a while.
I owe about 85k on my house which is worth 275k or so and I have about 85k in savings right now. I will proably put 20k down on my next payment since I have to put at least 10k of repairs into it in the spring. I have a target bonus of 15k or so this spring and if I get that I will put that into the mortgage too. (very iffy)
I have college for my kids mostly taken care of, they get social security until 18 due to the death of their mother and my mortgage payment is 1500/month at 5.5%. So, with the 20k extra payment this month I will have it paid off in about 4-5 years if I put no more down.
If I lived somewhere where my utilities were $500 a month and insurance (home/auto combined) was also $500 a month, I'd move.
Electric: $60
Water/Sewer/Trash: $50
That's it for me. Now, if you want to include some others as "utilities":
Internet: $140 (one hard line, two portable lines)
Satellite: $50
Wireless: $60
Total $360
I actually over estimated on the utilities by a significant amount and my internet is higher than what is standard for a single family household. If anyone has bills higher than what I've stated, you're doing something wrong; doesn't matter where you live.
Auto Insurance $ 100
Health Insurance ~$20 (employer)
Dental Insurance ~$5 (Employer)
Vision Insurance ~$1 (employer)
Life Insurance $0 (employer)
Renter's Insurance ~$25
Total $151
If you're single with no kids, employed, and you're paying more than $300 for all of that (assuming homeowner's insurance instead of renter's insurance, for some), you're doing something wrong.
If I lived somewhere where my utilities were $500 a month and insurance (home/auto combined) was also $500 a month, I'd move.
Totally agree.
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Originally Posted by revelated
Electric: $60
Water/Sewer/Trash: $50
That's it for me. Now, if you want to include some others as "utilities":
Internet: $140 (one hard line, two portable lines)
Satellite: $50
Wireless: $60
Total $360
I actually over estimated on the utilities by a significant amount and my internet is higher than what is standard for a single family household. If anyone has bills higher than what I've stated, you're doing something wrong; doesn't matter where you live.
Auto Insurance $ 100
Health Insurance ~$20 (employer)
Dental Insurance ~$5 (Employer)
Vision Insurance ~$1 (employer)
Life Insurance $0 (employer)
Renter's Insurance ~$25
Total $151
If you're single with no kids, employed, and you're paying more than $300 for all of that (assuming homeowner's insurance instead of renter's insurance, for some), you're doing something wrong.
While its lovely that you are getting good deals on these things, a very large percentage of people don't have good (or any) insurance through their jobs. For example, my husband and I are both employed at otherwise good jobs, with absolutely no health insurance available. As a result, we have catastrophic only (no vision, no dental, no life insurance, high deductable) and it still costs over $220 per month for just the two of us. With car insurance and homeowner's insurance, we are definitely over $300 per month. Of course, that is two people, but one person would be more than half the cost, since the 2nd person is cheaper than the first on most insurances, and home insurance doesn't matter how many people. Also, in my opinion, for insurance like ours, any medical expenses not covered by insurance would also get included in this amount, including prescription drugs, dentist visits, etc. That would take us far over $300/month. I think we are far more typical than your situation. I think most single people who have no health insurance through work would be thrilled to have under $300 in insurance and medical expenses each month.
In addition, different areas of the country have not only different rates on utilities, but also different utilities as the norm. For example, you don't have gas on your list, and probably 90% of single family homes in my area has gas heat. Power/gas combined in the summer/winter are around $150 on a smaller, energy efficient house. Thus, utilities including phones, internet, etc could very easily be more than what you've stated. My household has only 1 line on a home line and doesn't use cell phones, and has basic cable, and our utilities are still higher than yours. My mother's house is larger and I would estimate her utilities are roughly twice what you stated each month. Heck, my grandparent's house was more in heating/air alone each month than you stated for your total, and that was when it was vacant. That doesn't mean that people who aren't getting as good of a deal as you are, are doing anything wrong.
1) Pay off any outstanding (non-mortgage) debt I still have, including a HELOC if I have one of those.
2) Put the equivalent of 12 months' expenses aside for savings if I do not already have this.
3) Put any remaining money toward my mortgage.
As for the original topic, this is exactly what I would do. I understand that credit card debt is unsecured, and the best one to not pay off because you can let it go in an emergency, but that's just not who I am. If I had to, I would work 3 jobs, but I will always pay back my debts eventually. I actually have very little non-mortgage debt at this point, under $5, including the last part of a car payment and the last small amount of a student loan. Those would get paid off first, then top off 12 months of savings, leaving about $320k to go toward a mortgage. Of course, my current mortgage is only $95k, so if I got that much, I would invest the rest, but that doesn't fit your scenerio.
Our homeowner's insurance alone runs $150/month for an ordinary house 40 feet above sea level and that's considered to be a screaming good deal by local standards. (Curse ye, multiple federal disaster declarations.)
While its lovely that you are getting good deals on these things, a very large percentage of people don't have good (or any) insurance through their jobs. For example, my husband and I are both employed at otherwise good jobs, with absolutely no health insurance available. As a result, we have catastrophic only (no vision, no dental, no life insurance, high deductable) and it still costs over $220 per month for just the two of us. With car insurance and homeowner's insurance, we are definitely over $300 per month. Of course, that is two people, but one person would be more than half the cost, since the 2nd person is cheaper than the first on most insurances, and home insurance doesn't matter how many people. Also, in my opinion, for insurance like ours, any medical expenses not covered by insurance would also get included in this amount, including prescription drugs, dentist visits, etc. That would take us far over $300/month. I think we are far more typical than your situation. I think most single people who have no health insurance through work would be thrilled to have under $300 in insurance and medical expenses each month.
I already stated that the insurance is going to vary based on personal situation. What I've discovered though, is that a lot of people who say "My employer doesn't have health insurance" really mean "I don't like my employer's plan/carrier" and then choose not to go for it. That's fine...but it's there for you. I've not met a single person who has worked for a good employer (meaning not some fly-by-night organization) that didn't at least offer some measure of health insurance.
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In addition, different areas of the country have not only different rates on utilities, but also different utilities as the norm. For example, you don't have gas on your list, and probably 90% of single family homes in my area has gas heat. Power/gas combined in the summer/winter are around $150 on a smaller, energy efficient house. Thus, utilities including phones, internet, etc could very easily be more than what you've stated.
I had to comment on this. Doesn't matter if you're using gas or electric. The point is that you're not being practical with your usage. If you're blowing the heater constantly in the winter, you're not being efficient. Put on a jacket, wrap up in a blanket, run the heater during off-grid hours, get a space heater, and there is no way...no way your bill should be sky high. Same with the A/C in the hot times. California is known for periods of heat, my thermostat stays at 80 degrees, and my bill still never exceeds $60/month. That's because I learn to tolerate a certain measure of discomfort if it means I'm not getting ripped.
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My household has only 1 line on a home line and doesn't use cell phones, and has basic cable, and our utilities are still higher than yours.
Not possible. Unless you got ripped off with a full package from the phone company that you don't need, there's no way that phone line should be more than $20. If you're not using VoIP that's another issue altogether. You might think your cable is "basic", but I'm willing to wager you also got some package going on there. If you got both from the same company, you're definitely paying too much. I know if I were with Time Warner for consolidated phone and cable that bill would exceed $80/month. That's why I don't go that route - because I know it's a ripoff.
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My mother's house is larger and I would estimate her utilities are roughly twice what you stated each month. Heck, my grandparent's house was more in heating/air alone each month than you stated for your total, and that was when it was vacant. That doesn't mean that people who aren't getting as good of a deal as you are, are doing anything wrong.
See, more inefficiency. Why are you leaving the heating/air on when the house is vacant? It should only be running when people are in the home, and even then it should be set at the highest possible temperature that is comfortable, usually 75-80. If nobody's home it should either be not running or set 10-15 degrees higher than when someone is home to prevent it from running continuously.
A lot of people don't understand how energy conservation works, how shopping around works and how "live within your means" works. I don't go out of my way to pay the highest possible price for things. I minimize where possible, which is what people should be doing. All these complaints about "my heating bill is through the roof when it's winter!!!" strikes me as excuses, because people don't know how to conserve. Complaints about cable bills and phone bills - please. If folks would just take the time to shop around for the best deal, you would find that you've been overpaying for a long time. Again, you're doing something wrong.
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