Saturday, May 19, 2012

Help me decide what to do - vote now!

So as you might know, I finally got the news a couple weeks ago I will be getting a small raise. I still don't know how much it will be, but I should hopefully find out next Wednesday when my latest paycheck will be available to view online. I'm guessing it'll be 50 cents an hour.  Before taxes that will be about $80 a month, or roughly $50 after tax.

So I have been debating what to do with this extra money each month.  I was thinking I would increase my Roth IRA contribution from $200 to $250.  However, I looked at my balance yesterday and it had dropped $1,463 since my last net worth update which was only about a month and a half ago. To make matters worse, I had invested an additional $400 since then ($200 on April 15 and $200 May 15), so I really lost about $1,863 - which is about 8% of the value.  I know this can just as easily bounce back in a month, but I get frustrated when I see I lost more money than I make in a month at my job!

So another option that might be a little safer is to increase our mortgage payment.  We are paying 4.5% interest, so this would be like getting a guaranteed 4.5% return. If you look at my post about increasing your mortgage payment to save money on interest, you'll see increasing your extra payment from $100 a month (which we are already doing) to $150 per month would save us $7,856 over the course of the mortgage. It would also shorten the mortgage by 18 months.  That's an extra year and a half of no mortgage payment!

So what would you do?  Put the extra money towards the Roth IRA or the mortgage payment? Leave a comment below and I'll choose which ever one has the most votes by May 31st!


  1. Congratulations on your pay rise.....I would pay it towards the mortgage :)