It’s hard to believe that it’s already been a year since I paid off my mortgage. What have I done with the money previously going towards that expense? Read on…
Since I used some of my savings to pay off the remaining balance of my mortgage, my first priority was replenishing those accounts. I was able to do this within a few months, thanks to a bonus at work that was far more than I anticipated.
Once my savings were at a more comfortable level, I increased my 401(k) contributions. Instead of maxing out the entire $18,000 limit for 2015, which would result in fairly small paychecks, I decided instead to prepare myself to max out my contributions for 2016. This gives me a chance to get used to the modified paycheck now, rather than later. I calculated the percentage of pay by dividing $18,000 by 26 paychecks and then dividing this by my bi-weekly gross pay. I’ll end up contributing just over $15,000 this year and get a match on the first 4% from my employer.
I spent time this summer learning more about HSA accounts. I’d had one for 4 years but didn’t contribute more than what I expected my medical expenses to be for the year. What a mistake. I wish I had known sooner about the benefits of an HSA. Similar to how I updated my 401(k) contributions, I used the same method for my HSA. While I won’t max out the contributions for 2015, I will for 2016 and I’ll already be used to the amount being taken out of my paycheck.
My car is quickly aging (it’s 7 years old already) so I set up automatic transfers to a Car Fund each payday. I’m hoping to drive this car for many more years but want to be prepared in case something happens and that won’t be possible. I expect this account to be fully funded by the end of 2016, partially dependent on getting a bonus early next year. If the bonus doesn’t pan out, it’ll take more time to fully fund the account. This shouldn’t be a problem, since I’m planning to keep my car until it’s at least 10 years old, if not older.
I also set up small automatic transfers each payday to a Fun Money account. This is used for travel, new electronics, etc. I have a couple trips planned for 2016 so I want to be prepared for the expenses.
While I haven’t used the excess funds for anything exciting, I have used them for something that makes me feel very confident about my future — attaining financial independence.
If you didn’t have a mortgage payment, what would you do with the extra money?