What to Do with the Money???

Wow, that's alot of information :) I can tell you've done your homework. Honestly, I would put the $7k in an interest bearing account and forget about it. Within a few years, you will have accumulated enough interest to do what you want (down payment on a house, buy a car, etc) and still have some leftover.

Most financial experts will tell you that paying off a car or house is the last thing you want to do with extra cash. Homes and cars usually have low enough interest rates that your payments are a majority towards principal. They recommend paying off credit card debt (if applicable) because of the extremely high interest rates.

You might want to consider refinancing your home. You said you closed at a rate of 6.25% five years ago, but the Federal Reserve has reduced rates significantly in the last year - you can find a 30yr fixed with a rate as low as 3%!!! Don't forget though, that you will have closing costs, so unless you can get 2% or more lower than your current rate, it may take some time to "break-even". Usually you can get a cash payout if you refinance at a reduced rate. You can either put that money towards the principal so you'll have more equity in your home when you sell it, OR you can use the cash to fix up your home so you can have a higher asking price when you sell.

Don't forget, the real estate market is at an all-time low right now, which makes it great for buying a house, but not selling. My husband and I had to move to Dallas for his job. It has been over a year and our old house still hasn't sold - and it's a beautiful home (I miss it). So, we are paying 2 mortgages, utilities on 2 houses, etc.

Believe me, my pockets are ON FIRE when I have extra money, but since my little one has arrived, I really am making a huge effort to save and put money away. The economy is so screwed up right now, I feel I'm best off just burying money in my backyard :)

I hope some of this helped. Congrats on your bonus, but more importantly congrats on your pregnancy. Maybe you should put $6k away in an account, and take $1k for a great vacation for you and your hubby!

Hi D.,
Seems like you have a tough cookie in front of you :) If I were you, I THINK I would pay off hubbys car IFFF int rate on it is too high... if not I'll probably fix the items that need to get fixed int he house. And w/ remaining money, (and sell your car) to buy the minivan. Either way It's a tough one. The only reason I'm planning on going back to work now is so we can save to build on the land we own in Rockwall (our dream is to move there before my son stats school) We'll see how well that works :-\
Good luck with whatever you decide.

It is so easy to justify spending newfound money as in a bonus but I am a firm believer of saving. You mentioned your savings was low. I say put it in an account where you can earn some interest and let it grow. FORGET about it. You might be able to find some bonds or other avenue that is stable and reliable for earning more interest then a regular savings account.

Bottom line, SAVE SAVE SAVE and continue to cut back/budget like crazy until you get a firmer ground to stand on financially.

Congratulations on your pregnancy.
Susan

Hi! I can sympathize with having a very complex situation and feeling like you HAVE to do this, this, and this. What I've been learning is that with a little out-of-the box thinking you can really come up with more options than you thought you had! So here's an idea. I thought we would HAVE to buy a minivan when I started keeping my friend's daughter. With our two, that made a total of three car seats. I was shocked to find out, when I tried it on a whim, that three car seats actually fit in the back seat of our car. It is tight (really tight), but it works, and it's safe. You might try it just to see!

Hmmmm....if you don't have any debt, I'd pay off the cars then just live on your income and keep the savings in the bank. Sounds like your income is sufficient. If you choose to stay in the house (which may be a good idea because of the housing slump), you can always do the floors another time. Sounds like you and your husband make a substantial amount of money and there's no problem, you just don't know how to distribute it. Our cars are paid for, we have very little (less than $8,000) in savings, have credit card debt up to our eyeballs, and live week to week. I hate it and I'm constantly worrying about money, credit, and the future. I sometimes get physically sick from worrying so much. I have a 16 yr old son who has to work part-time for his spending money and I hate that too, although he likes his job. His dad rarely pays child support (which I have been putting in a savings account for my son for later)and teenagers are expensive! I'm thinking of going back to work full-time after summer, but would like to land that job that pays at least $30,000/yr. Where do people finds jobs that pay so much?
Our electric bill is $350 - $600 during the summer and keep it around 72. We can't get on with TXU or another company because we are tied into Garland Power & Light and we are not in a area to be able to change. Use ceiling fans and wear shorts and t-shirts....that's what we are going to do this summer. It'll be hard on me because I have asthma and can't breathe well if it gets too hot, especially in the house. But I'll try. I guess money is important to some who want the most they can get, but sometimes you have to make a sacrifice to stay at home with your kids. I only got to quit working after I remarried 3 years ago, and I wish I could stay home again, but it's just not feasible, thus the part-time job. I'd say you have it pretty good. Cut out the premium cable channels if you have them, don't eat out as much, turn off the lights when leaving the room, wear more or less depending on the weather instead of turning up the heat or turning down the a/c, fill up your gas tank when you gas up...it lasts longer. Good luck to you. You are lucky to become a stay-at-home mom.