Hi Money Minder,
We just snagged a second property up in northern WI, and I’m buzzing with excitement! But now the reality of finances is starting to hit me. Here’s the lowdown: we refinanced our primary residence in 2020 on a sweet 15-year 3% loan and used a chunk of that to put down 25% on the lake house with a $75k home equity loan. Can you lend me your expertise on this one?
Our monthly net income clocks in at $14550 USD.
HOUSING:
– Primary residence mortgage = $1885 (11 years left)
– Secondary residence mortgage = $2200
– Home equity loan = $750 (will be cleared when primary mortgage is done)
– Utilities/internet for primary residence = $400
– Utilities/internet for secondary residence = $350 (give or take)
– Streaming services = $60
– Biweekly house cleaner = $175
DEBTS:
– Car payment (Rav4 from 2017) = $515 (3 more years to go)
– Other car is all paid off
– Car insurance = $110
– Student loans = $785 (8 years left)
– Husband’s agent fee = $800 (ends in November)
MONTHLY OBLIGATIONS:
– Daycare for younger child = $900
– Gym membership = $110
– Summer camp for oldest child (ending in August) = $600
SAVINGS:
– 10% of my 401k
– 12% of husband’s 401k
– Emergency fund of $10k
– Morgan Stanley brokerage account = $500/month
– Oldest child’s 529 = $350/month
– “Fun money” account = $500/month
– Lake house maintenance fund = $500/month
Additionally, we usually shell out about $3000/month for the usual expenses like eating out, groceries, and household bits and bobs.
With around $1500 left over each month, how should we divvy this up? Do we increase contributions to the brokerage account, retirement, or the lake house repair fund? I know we’re lucky to be in this position, but I’m keen to hear from those who’ve been through something similar. What should I keep in mind regarding the Wisconsin property?
Farewell,
Financially Frantic
Response from THE MONEY MINDER:
Hello There,
Congratulations on securing your second property in northern Wisconsin! It’s wonderful to hear about your excitement and love for the area. It’s clear that you’ve put a lot of thought and planning into your finances, which is commendable. Looking at your detailed breakdown, you are in a strong financial position given your monthly net income and current expenses.
In terms of handling the extra $1500 every month, it might be beneficial to consider a balanced approach. Firstly, ensuring that you have a robust emergency fund is crucial, so maintaining or even slightly increasing that fund could provide you with additional security. Additionally, increasing contributions to your retirement accounts is always a smart long-term financial move. Since you already have a significant amount going to your brokerage account, you may want to consider allocating a portion of the extra funds towards retirement savings.
Considering the lake house maintenance fund, it’s great that you are already setting aside $500 every month. However, you may want to assess your anticipated maintenance costs for the property and adjust this fund accordingly to ensure you are adequately prepared for any unforeseen expenses.
It’s also important to continue enjoying life and budgeting for fun activities and expenses. Allocating some of the extra funds towards your “fun money” account can provide you with the flexibility to enjoy vacations or make larger purchases.
When it comes to the Wisconsin property, one aspect you might want to consider is property taxes, insurance costs, and potential seasonal maintenance expenses for a lakefront property. Factoring these additional costs into your budget can help you plan effectively for the future.
Overall, it’s evident that you are diligent in managing your finances, and with some adjustments, you can continue to strengthen your financial foundation. Congratulations again on your new property, and remember to always stay mindful of your financial goals and priorities.
Best regards,
THE MONEY MINDER
