You might be wondering what we’re doing given the current state of the stock market. Are we still putting extra money towards our mortgage? Are we cutting unnecessary spending to save money? Are we even still investing? Likewise, you might be wondering what you should do as well. Do you continue to pay off debt? Do you continue to invest? Do you need to hold on to your money to see how things turn out? Lots of questions that hopefully we can provide some insight into.
Are We Still Putting Extra Money Towards Our Mortgage?
Yes. Since our original plan was to do a 70/30 split. This means we send 30% of our leftover money (after our regular budgeted expenses) to our mortgage. Since the other 70% goes towards other things we may need or want (i.e. random household items, eating out, vacation, car repairs, etc.) technically we could choose to save all that money first.
Another reason that we don’t feel a need to stop putting the 30% towards the mortgage, as opposed to saving that money, is that we do have a fully-funded emergency fund.
Are We Cutting Unnecessary Spending To Save Money?
Yes and No. Lol. At the beginning of the year we were still spending as normal. It wasn’t until recently that I decided to slow down on spending. Why? Well for one, I was getting ready to slow down anyways in order to save for vacation (if we’re able to go anywhere this summer). But the other thing is I do a lot of online shopping. I ultimately don’t want to order a lot of stuff online and run the risk of not getting my package. However, so far that has not happened (although some of them have been delayed recently).
As far as shopping in person, it’s honestly not very fun to go out in these crowds given what’s going on currently (Corona Virus / COVID-19). With talks of social distancing, flattening the curve, quarantines, school closures, business closures, and a lot of people’s jobs telling them to work remotely, we’re just trying to figure out what’s best for us.
Are We Still Investing?
Yes. We’re still contributing to each of our 401k’s, and we’re also still contributing to a Roth IRA and 529 for each child. The reality of the matter for us is that we don’t currently need the money that we have invested.
Although our investments have dropped by almost 20%, we weren’t planning to pull any of this money until retirement age (with the exception of the 529’s). The history of the market shows that there are ups and downs, but over the long term, it always recovers. And investing is a long term plan. So we’re planning to stick with it.
Is This Affecting Our Mortgage Payoff Plan At All?
Yes. While we are still choosing to do our regular investing, we won’t be cashing out the RSUs that were helping tremendously with our mortgage payoff plan. The prices for them are considerably lower. While you shouldn’t try to time the market when it comes to investing, it’s definitely something to consider when it comes to cashing out. Hopefully, the prices will go back up sooner rather than later though.
If we have to stick to our 70/30 plan for the rest of this year, we won’t hit our goal of paying $37k towards the mortgage. If we have to stick to it for the next couple of years, then the worst case scenario is that we will pay off the house sometime before we’re 40 (we haven’t done any new calculations yet). In which case, we’re likely to flip flop our plan and put 70% towards the mortgage or maybe do a 50/50 split. Ultimately, we’ll cross that bridge if it comes to that.
Should You Continue To Pay Off Debt? Should You Continue To Invest? Should You Hold On To Your Money To See How Things Turn Out? It’s kind of hard to give definitive answers without knowing each person’s exact situation. However, there are some things that hold true regardless.
Regardless of if you’re paying off debt or not, you should have an emergency fund. When we were paying off debt we had an emergency fund of $2000 – $2500. During this time, you might not feel like that’s enough. If that’s the case, you could make your minimum debt payments until you have more money saved up. And then after that, you could start back paying off your debt.
If you have money already invested then it doesn’t make sense to cash out now that the stock market isn’t performing as well as it had been, especially if you had no intentions of cashing out when it was performing well. It’s typically said, “You don’t lose money until you cash out.” If you’re cashing out during this current market, you’re definitely losing money. And if you did cash out, but you’re still contributing to your 401k or any other retirement plans, then what was the point of cashing out if you’re going to put new money right back in? If you’re going to start back investing once the market is doing well again, then you have committed the cardinal sin of buying high and selling low.
Another thing to keep in mind is that now is NOT the time to be checking your investment accounts every day. The value has likely dropped, just like everyone’s account has. And if you can’t handle seeing it, it’s best not to check often. As a matter of fact, you probably should only be checking quarterly, if that.
If You Need Some More Encouragement…
If you haven’t cashed out, but are thinking about it, or if you just need some encouragement to stay the course, you can check out JL Collins Stock Series, parts 1- 4 specifically. He shares some facts as well as personal experiences that may convince you to stay the course.
Another place you can also find some encouragement during this time is the #debtfreecommunity and #firecommunity / #ficommunity on Instagram. A lot of people in these communities are still investing because they look at it as “stocks are on sale” and who doesn’t like a good sale?!
At the end of the day, we’re going to do what we think is best for us just as you should do what is best for you. With all that is going on right now, it’s very evident that you should have your finances in order. If you don’t have your finances in order or if you’ve been putting it off and putting it off, it’s time to make some positive money moves (i.e. budgeting, getting out of debt, having an emergency fund, etc.) that will help you when things like this happen. And lastly, stop checking your investments every day, especially now if it’s giving you anxiety (and unless you’re doing it to invest more).
Feature Image: Unsplash