This month we have quite a bit of money leftover in our budget. I flip-flopped back on forth trying to decide if I should apply the whole amount towards an extra principle payment or add it to our savings. I found a ton of pros and cons for both when searching the internet for a reasonable answer. While both sides represented strong arguments, I think you have to decide what is best for your family!!!
I consider us pretty disciplined. If we put the money in savings, the money stays in savings. With me being mostly a stay-at-home mom and my husband being in construction (some weeks he has 40 hours, some less and some more) I decided that I didn’t want to tie up our money in our mortgage. If there is an incident where we need access to a large sum of money, I want to be able to access the money! Soooooo, I decided to meet in the middle and do both! I have our amortization table saved on the computer to help me determine what amount to pay to follow the payment plan.
When I sent in our mortgage payment this month, I used the table to view next month’s principle portion of the payment and tacked that on to the total amount. In a sense, I just took a month off our overall loan. I plan to add an extra principle payment each month and leave the rest in savings!
What works for your family?