I'm Stressed About Money and Need YOUR Insight
I often become stressed out about money. At least once a week I evaluate my financial situation. I don't necessarily live paycheck to paycheck-I am smack dab in the middle of Middle Class American. However, I constantly make myself think that I am poor and cannot afford various things. (aka my friends call me "cheap."). I am going to paint a picture of my financial life to hopefully get some feedback on suggestions that have helped YOU out personally. I no longer want to be stressed or have those sleepless nights.
I bank with an online credit union to get better rates than my local brick and mortar institutions. My checking account pays 2.27% interest, but only on the first $5000. I try to keep my balance sitting right at that mark, which means constantly moving money back and forth from checking to savings. As for savings, I make 1.25%. I receive the interest from both of these accounts monthly.
As for the local bank, I make 0% interest on my checking and 0.05% on my savings. Hardly no funds sit in these accounts, and they are just used for convenience to transfer money from my pocket to higher-yielding places.
I also have a small amount in peer-to-peer lending. I started off excited with the promises that came with it. However, after several loans defaulting, I am not so eager to lend any more money out. (It reminds me of "that" friend that I use to have in high school that always needs money but never could pay me back. Agh).
I have one of those pretty blue/green Citi 2X cash back cards, which I also use, and pay off immediately. I like the idea of making money when making purchases. I made over $300 in cash back rewards last year. I never hold a balance on the card. The idea of paying the high interest rate scares the heck out of me.
I reevaluate my goals all the time. I am aiming for 6-12 months in emergency accounts. I realize this is well above the typical range of 3-6 months, but I live in a rural community where finding a comparable job could take time. I split the funds up between two different accounts. The first six months of emergency expense funds is located in an interest bearing money market/savings account. All the rest of the funds that are allocated for long-term are in a brokerage account, where I invest in index funds. I understand this is more risky, but I am willing to take the risk of investing in the S&P given the potential rewards (dividends, gains).
Last year I started maxing out my Roth 401K, and I put an additional 15% in my 401K. I know I could do better, and I am constantly asking myself where the best ways to allocate my investment funds. I'm a partner in a rental property. Yes, only one. I am just getting started in this venture, and am looking for other places/partners. I'm hoping this risk will pay off. Right now, it seems like its been a money pit with tenant-based issues though. Do you have any experience with rentals? How did you get started and what is your advice for a newbie?
One of the things I constantly struggle with is figuring out what to do with my mortgage. My mortgage rate is relatively low-3.37%. I would like to hammer out the payments and pay it off years early, but I am at a constant argument with myself if I should be paying it off fast or putting that extra money towards other investments, such as 401K/rental properties. What are your personal thoughts on this? I would love to know!!