Emergency Funds

I've seen the idea of emergency funds come up differently lately with the current economic climate. The old 3-6 months worth of expenses rule of thumb is coming with more exceptions. For example, households with one income or where one of the employed has a position that would be hard to replace should have more than 6 months stashed away. The idea of having a year's worth of expenses sitting around in a cash-equivalent kills me, though. So my revised plan is to have the first 6 months in cash equivalents (done) and start working toward having the next 6 months in whatever I want provided it's easily accessible. For me that mostly means a total market index fund with low expenses. I also hold very small amounts in two stocks and a small amount in a more conservative mutual fund. It has always been my plan to build those investments, but now I have a more pressing goal. So that's cool. And I'm already on my way thanks to the first time homebuyer's tax credit.

Tax Refund - Plan B

I recently realized I have an ice problem. In retrospect, I should have known sooner. About the time the realtor and I noticed the air conditioner was damaged and the neighbor said it had been damaged by ice falling from the roof. His solution? Put a board over it so when the ice falls, it hits the board. That sounded easy enough. I didn't think to wonder why there was ice up there in the first place.

After a good amount of research, I've concluded it's a combination of lack of insulation and ventilation in the attic. Anything not addressing those two items is a temporary band-aid sort of solution. I'm hoping the tax refund will cover it. Or mostly cover it. I'm not sure where to start. It's bothering me because that ice up there can cause water damage, it could fall on a small child, it drips and refreezes on my entrance, etc. I don't think a roof rake will reach and I don't foresee myself getting on a ladder and wielding a rake at the snow on the roof. Maybe I should get an estimate ASAP so I can at least start planning. I don't even know if they work in winter. For now it probably doesn't matter. Next week is Christmas, the week after that is New Years. Then it is January and my tax documents will start flowing in. Maybe I can get the estimate January and go from there.

Planning for a Tax Refund

The wheels have started turning as to how I'll spend a tax refund. To be conservative, for now I'm planning that I will get back half the amount I got back last year. If that is the case.. I think I will use $200 toward a computer. I will have enough then for a modest laptop when I add that to the gift cards I'll be getting as a wellness reward at work. I think I'll also make two student loan payments. This will give me a nice buffer in case I have tight months in the future and only want to make half payments. After that I will pay $500 on the balance transfer on the credit card.

If I do get close to what I received last year, I'm not sure what will happen with the rest. I would really like a cabinet for my bathroom (~$200 from Home Depot). I'm also afraid of what the tree will cost me in spring. The neighbors had a similar sized tree timber'ed for a small fee of $1700 (gulp). I'm hoping we can stick with trimming the dead stuff out but if there's extra refund I may keep it around just in case. And if the tree goes well, the possibilities are endless. :) I have noticed there is always something to spend money on when you have an older home. I could refinish the hardwood floor, get some electrical work done, finish refurbishing the bathroom, save for new windows or new carpet.. I could just keep it in savings until the economy picks up. That seems like the best plan. Not much fun though.

Monthly Update

Pay off car loan - 59.9% (Up 21.4%)
Pay off student loan - 11.8% (Up .4%)
Short term fund - 9.4% (Up 8.8%)

It was another good month. I feel like I've gotten a handle on the one-time expenses of moving and turning from renter to home owner so now we're down to regular expenses. The last two months I've been able to make full payment on my student loan, yay! I've been making partial payments because I've paid ahead and could use the money elsewhere. I also was able to make a deposit into the short term savings fund. I had to adjust upward after I received an estimate for puppy's spay. Should have known :) I just hope the tree-trimming estimate in there is accurate. Boy, they're coming quickly. The pup will be spayed in February. The tree trimming can probably wait until April. I'd like to see things leaf out.

December may not be the best. I bought one room full of curtains (ouch, and I went cheapies from Target). I couldn't find what I really wanted for what I was willing to spend but I really wanted to get some insulated jobbies up there for winter since my windows are ancient and I live in the frozen-for-5-months-of-the-year region. I also purchased a Christmas present for myself. They will come in spring, two dwarf cherry trees. I've been wanting one in particular since I knew I was buying a house :) Too bad I have to wait until spring, I'm excited.

Monthly Update

Pay off car loan - 38.5% (Up 2.1%)
Pay off student loan - 11.4% (Up .3%)
Short term fund - .6% (Up .5%)

Rolling along pretty well. Unfortunately this month is the last month I'll have lawn mowing funds coming in. In a way it's okay as I was kind of dreading spending the time away from home. I have precious little time to myself these days with the puppy here so I guard it more carefully. Obviously the extra cash was nice. The short term fund is being neglected while I get everything else squared away. That was interest this month.

I did decide what to do with the $8k. Snowblower's being paid off as planned as soon as I get the bill. I wrote the check out today to transfer $4k to my bank account to pay of the car. That will be at 1.99% till 2011. When that finishes I will pay off the remaining $2k and some change of the car using my refund. Then going forward as I work off the balance of the BT, I will move equal amounts of the refund into my total stock market index fund. Yay!

Present from the IRS

It came. Happy dance! Now I'm getting a little indecisive as far as how to use it. The original plan went like this -
1. Pay off car.
2. Buy snowblower.
3. Set rest aside for new water heater.

I bought the snowblower. But as I was thinking about paying off the car, it seems a shame to have a big chunk of money hanging around in times like these and kiss it "good bye" on a loan at such a good rate. And yet I don't want to go investing the whole chunk in case I run into cash flow issues. I'm fine now but if the winds swirled in the right direction, it'd be close. I think I may compromise and hang onto the money for now. As the car loan goes down I can invest the difference monthly, or biweekly as the case is.. And if the winds swirl in the wrong direction, I can still pay off the car loan and some of the rest will be nestled in an index fund. If I have a bad month I can still choose not to invest the difference.

The other idea I'm toying around with is a pretty balance transfer offer. It stands at 1.99% until 2011. My line isn't enough to cover the remaining balance on the car but I could use enough of the refund to bring it down to a transferable amount. Then pay 1/14th (or whatever) of the amount off each month and have it gone by the time the special rate is up.

Dunno, that's where my head is at for now.. Until I decide the money is chilling in my savings.

Monthly Update

Pay off car loan - 36.4% (Up 2.1%)
Pay off student loan - 11.1% (No change)

I also made a new account for short term goals. For now that includes spaying the dog in early spring and trimming the tree in spring.

Short term fund - .1%

My net worth took a little hit this month due to the dog and some projects around the house. In good news, my first time home buyer's prize should be arriving this month.