Dave ramsey people....luck!

[Willow]

We have been Dave Ramsying for some time. We sold our larger house and brought a smaller, cheaper one (we were sad but it needed doing), we sold other stuff, we lived carefully. Yes we had setbacks along the way but we now only have the mortgage and less than $300 on the last bill to go. That will go at the end of this month. We have only a baby emergency fund.

 

Now the luck, dh has just heard he is coming into some money from the UK. (not quite an uncle he has never heard of who left it to him, but the same sort of thing). After taxes etc I have just worked out it is about $800 short of clearing the mortgage!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

Dh says pay the mortgage off, if we are a few hundred short take the money out of the emergency fund and just pay the darn thing off! I am worried this will leave us very vulnerable and would rather do the fully paid up emergency fund thing, put the rest to the mortgage, and work to pay off that last 10,000 like mad.

Dh says the physiological boost from getting rid of the millstone would do him more good than anything. It is, of course, dh's money ;).

 

The amazing thing is...if this had come before the house move, before DR, we would have paid off a few things and then gone on holiday....nothing would have changed. It coming now will change our lives whatever we decide to do.

 

What would you do?

Willow.

 

PS....we don't have it yet....i am trying VERY hard not to count chickens, but it is all legit, its juts when we get it, not if.

[OnTheBrink]

I'm not a DRer, but I'd pay off the mortgage. It's that much more a month you'll have to save for later.

[Joanne]

I am worried this will leave us very vulnerable and would rather do the fully paid up emergency fund thing, put the rest to the mortgage, and work to pay off that last 10,000 like mad.

Dh says the physiological boost from getting rid of the millstone would do him more good than anything. It is, of course, dh's money .

 

DR says to fully fund the larger EF: 3-6 months worth of expenses. To pay off the mortgage without a sufficient cushion ICE is to leave you vulnerable to more debt ICE.

 

I would fully fund a 6 month emergency account, and then dump the rest on the mortgage. I would then take the debt snowball funds and throw it at the mortgage until it is gone.

[MamaAkins]

I would split it...take what you would need to fund a 3 month emergency fund. Then use whatever is left towards your mortgage.

[Julie in CA]

I'd use the extra money for the mortgage, but I wouldn't dip into my emergency fund to finish the payoff. If you do, something will happen that will put you in the hole again. Better off to just take that extra bit of time and do it right, so the payoff will be permanent, not a situation where you may have to go immediately back into debt because you spent every last little bit you had.

 

ETA: I went back and read again, and see that you don't have your emergency fund yet. I'd do that first, then use extra to pay towards the mortgage, then work like you originally would have in order to finish paying off the house.

Edited July 8, 2010 by Julie in CA

[Moxie]

Stick to the baby steps and you'll win in the end.

[Granny_Weatherwax]

If it were me and my DH - I would push to fund a 3-6 month Emergency Fund and then use what ever was left to pay down the mortgage. Then keep making the regular payments until it was paid off.

 

But I am finding out that I am not a strict DR follower. I am not a gazelle but I am on the savannah, by golly (probably more like a dik-dik)!

[qfbrenda]

DR says to fully fund the larger EF: 3-6 months worth of expenses. To pay off the mortgage without a sufficient cushion ICE is to leave you vulnerable to more debt ICE.

 

I would fully fund a 6 month emergency account, and then dump the rest on the mortgage. I would then take the debt snowball funds and throw it at the mortgage until it is gone.

 

I agree. I've heard DR give that advice on the radio to people in similar situations.

[catalinakel]

:iagree:

DR says to fully fund the larger EF: 3-6 months worth of expenses. To pay off the mortgage without a sufficient cushion ICE is to leave you vulnerable to more debt ICE.

 

I would fully fund a 6 month emergency account, and then dump the rest on the mortgage. I would then take the debt snowball funds and throw it at the mortgage until it is gone.

 

:iagree:

[Ginevra]

I am not a gazelle but I am on the savannah, by golly (probably more like a dik-dik)!

:lol::lol::lol: Nicely phrased!

[alpidarkomama]

We would definitely go for the cushier cushion of 6 months of expenses (especially given the financial climate these days), then use what's left on the mortgage. You'll have that paid off in no time and be in great shape!!

[AuntieM]

In this economy you cannot afford to not have an emergency fund.

 

Murphy lurks around every corner....

 

BTW, WELL DONE! This is really a very nice sort of "problem" for you to have!!!

[Tap]

I would figure out how much of an emergency fund you will now need if you have no mortgage. That baby fund may go further than you think!

 

I would also figure out, if you paid off the mortgage, how long it would take to fund a the emergency fund up to full potential.

 

If there is no mortgage, you will have that money monthly for most emergencies except loosing a job.

 

 

Another factor is the stability of dh's job. If he is in a volatile job market, or could be facing layoffs, I would save it all for a while, just to have the cushion if we needed it.

 

 

If you pay off the mortgage, I would start planning you next steps now, not after you pay it off. It is so easy to get side tracked and very, very hard to get back on the plan one you take it easy for a few months.

[chiguirre]

This is not DR, but it's what I'd do if I were you. Since your dh REALLY wants to pay off the mortgage, I'd do that if you still have a cc just in case something goes wrong in the next few months. I'd also only do this if you're confident about his job security. If you aren't 100% about his job continuing or you don't have a way to pay for a new fridge or car repair, then I'd keep some for the emergency fund. It's not DR, but if it made my dh happy and only stressed me out for a few months while we rebuilt the emergency fund, I'd do it.

[Melissa in Australia]

I would pay off the mortgage. the feeling of having it payed for will be unbelievable.:hurray:

Then use the money you are saving on repayments for the fund.

[jenL]

Stick to the baby steps and you'll win in the end.

 

:iagree: And, CONGRATULATIONS!!!! What wonderful news!

[Lawana]

Now the luck, dh has just heard he is coming into some money from the UK. (not quite an uncle he has never heard of who left it to him, but the same sort of thing).

 

I hate to ask this, but are you 100% sure this is legit? Have you had to give any personal information in order to prove your identity?

[Willow]

I hate to ask this, but are you 100% sure this is legit? Have you had to give any personal information in order to prove your identity?

 

 

Yes it is legit, and no we haven't had to prove our identity. We all know who we are, who they are etc. It is family money, just not close family money or anything we knew about or expected, and we are not taking it away from anyone else...sadly there is now no-one else.

 

Thank you for all your advice. Dh's job is as secure as any in this economic climate, and is unlikely to be under any threat, but one can never tell. I hadn't considered how much further the emergency fund would go without the mortgage. (it is a bit more than 1000 at the moment, almost 1500)

 

We have done a lot of talking and if we do a 3 month emergency fund...without the mortgage amount....we are still within $3000 of paying the mortgage off. With that motivation I reckon we can do it in 2 months. The kids are also on board, and very excited and between them we can pay almost 1000 off using their money (not their college money of course, their pocket money/lawnmowing/babysitting savings). Maybe we could do another yard sale...but we have been at this so long there is very little left ;).

 

And yes, of course we will pay the kids back...with love and interest and a small pressie once all is done! :) Maybe we will go out for a meal. My son calculated he had only gone out for a meal once in the last 2 years, and I don't think we have had a take out in five years.

 

Thanks again.

Willow.

[PentecostalMom]

Willow-

 

I am an avid DR person, we have been free once, but had to go back under to fund dh's college and finally bought a house. We are now, about a year after dh graduated and been doing what another poster said about being on the savannah (LOL), diving headfirst back into the DR plan. As others have advised...stick with the PLAN. It really works. Do not rely on a cc, and make sure you follow the plan precisely! We know others who have gone off track after being near the end and it has caused a major collision! Just stay on it, you are almost there! I just made my first sale today toward our snowball (selling everything including the dog) and it feels great! Cannot wait until we have only the mortgage left! Just keep swimming....

 

BTW, there are specific guidelines in the book for whether you should have a three or six month fund. Though my dh now makes really good moolah (after years of being broke), and his job is secure, we will still fund six months because we are a one-income household, which is one of the determining factors.

Edited July 12, 2010 by PentecostalMom

[southcarolinamom]

DR says to fully fund the larger EF: 3-6 months worth of expenses. To pay off the mortgage without a sufficient cushion ICE is to leave you vulnerable to more debt ICE.

 

I would fully fund a 6 month emergency account, and then dump the rest on the mortgage. I would then take the debt snowball funds and throw it at the mortgage until it is gone.

 

What she said!!:iagree: