So, you got some extra money laying around

Have you tried talking to a Nigerian prince? I hear they know how you can double your investment many times over.

Deathwing_sl said:

Not a whole lot. But we've got more than enough in savings to put a substantial down payment on a new car and still have 6+ months of income saved. Plus, there's some wiggle room in the monthly budget. It's enough that we should really do something with it instead of just letting it sit around in the savings account.

What I can't figure out what's the best way to "spend" it. My student loans are paid off but my wife still has some, they're ~5% interest but we've been paying them off for ~3 years already. I know loans are interest front loaded, so I don't know if paying extra on loans we're already 30% into is worth it.

We have a mortgage, but it's only 3.75%. It's still in PMI range, but since both PMI and interest are tax deductible, I don't know if that's worth paying off early to get the PMI off.

No car loans, but both our cars are old(2000 and 2003), so we anticipate having to buy a new car relatively soon.

I have a 401k account with Fidelity, would it be best to just put $X/month into that account in a Vanguard index fund? Post tax(so I can pull it out if needed) or pre tax?

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This sounds kind of lame, but you need to do the math on everything. Put everything into an Excel spreadsheet and go from there.

Your wife's student loan gets a spreadsheet.

Your mortgage...the same.

Et cetera. Really, there's no way for me to give any kind of advice about your financial position unless I know all the details about it. You shouldn't want to give that out, so learning Excel is your best option, and your best friend.

Just a few things though.

If you must buy a new car, buy a popular model from Toyota or Honda. They have high resale values, virtually across all their offerings. Camry or Accord...VERY safe buys. Buy a low-midrange model, and pay exactly no more for a down payment than you have to if you have good credit. Even the base model Honda Accord is a nicely equipped hot rod these days. The 4-cylinder Accord is a FAST car, and even the base model comes with the stuff you want. AC. Electric this/that. You are not missing out on anything with a base model Accord. Same for the Camry. $23k and change. Your wife will be driving it, so she picks. Just make sure to avoid top option cars unless there's lots of cash off.

Beyond that, save so much that it makes your gums bleed. I'd be royally FUCKED as an early 40's guy if my early 30's self didn't learn to save.

Camry is what I drive. It's a great car. I got the V6 fully loaded 2010 model because I bought it during that whole "OMG Toyota cars breaks don't work and gas pedals are haunted!" scare. Got one hell of a deal on that thing including 0% financing for 5 years and no money down. I recommend it. I do mostly highway driving and it's got 96k miles on it and has never had an issue. The thing even still has factory breaks and last oil change they were still at something silly like 50% wear. It's the best vehicle I've ever owned.

Deathwing_sl said:

No, that's kinda the advice I'm looking for. For example, I know enough that paying off my house early is stupid because the interest rate is so low, probably below inflation. But my wife's are likely above inflation, so paying those off *might* make sense. I don't know how to calculate those though. I don't know enough about financial mathematics to take X years into a Y term loan at Z percent interest rate, here's your real current interest rate.

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Google is your friend. I'm not trying to be pithy or rude, but figuring out everything from the ground up really helps you to get a handle on your finances. It's all simple math, and learning how to use Excel will help you everywhere money is spent.

It's financial planning, and anyone can do it...no guesswork involved. Your best counsel is fact based upon math.

You are a smart guy. I've read your posts...you can easily wrap your mind around this in a few nights after work.

Khane_sl said:

Camry is what I drive. It's a great car. I got the V6 fully loaded 2010 model because I bought it during that whole "OMG Toyota cars breaks don't work and gas pedals are haunted!" scare. Got one hell of a deal on that thing including 0% financing for 5 years and no money down. I recommend it. I do mostly highway driving and it's got 96k miles on it and has never had an issue. The thing even still has factory breaks and last oil change they were still at something silly like 50% wear. It's the best vehicle I've ever owned.

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The Camry/Accord cars are just fantastic cars. Lots of value, even in the 24k base models. Base model with these cars leaves no one with a sensible mind wanting for more.

If your current cars are fine... you don't need to upgrade. Maintenance is almost always less than depreciation if you're concerned about saving money, unless it's a worse case scenario of new engine.

Silence_sl said:

This sounds kind of lame, but you need to do the math on everything. Put everything into an Excel spreadsheet and go from there.

Your wife's student loan gets a spreadsheet.

Your mortgage...the same.

Et cetera. Really, there's no way for me to give any kind of advice about your financial position unless I know all the details about it. You shouldn't want to give that out, so learning Excel is your best option, and your best friend.

Just a few things though.

If you must buy a new car, buy a popular model from Toyota or Honda.

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uhh don't buy a new car.

Deathwing_sl said:

We have a mortgage, but it's only 3.75%. It's still in PMI range, but since both PMI and interest are tax deductible, I don't know if that's worth paying off early to get the PMI off.

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I have little advice to offer other than, you're thinking tax deductions work in a way they don't (no worries, super damn common mistake), so this shouldn't even factor into your thoughts. Would you spend $100 to save $15? Of course not, you're still out $85. (Maybe you would if it's something you wanted to buy anyway, but do you WANT to buy PMI and interest? Thought not!)

I realize it's popular to not want to pay off your mortgage early because if you have a good rate you might be able to beat that rate on some other return, plus future payments will be cheap in today's dollars, but when you're paying PMI, I have to wonder how that changes the equation, and if getting to the 21% equity mark IS worth jumping ahead on.

Deathwing, do you have an FHA loan? If so I think federal guidelines require you to have paid towards the mortgage for 5 years before you can get PMI removed.

Dollar inflation is above 3.75% or did I understand that wrong?

Google says it's 1.7%

Yea, the new FHA loans seem like a losing prospect unless you plan on buying a rental property and income generated > money lost on PMI for however long it takes to get it removed or you can refi out of it.