My mother in law is planning on retiring very shortly and will be moving back to Taiwan. She currently owns two homes – her primary residence and a rental property. She is contemplating selling the primary on the home while she is in Taiwan and continuing to rent out the rental home. Mr. and I have helped her out quite a bit in fixing up the rental property, forfeiting lots of weekends last summer and this spring. Apparently, she has told Mr. that if he would like to manage the rental home for her, she will give him $200 every month to help. She’s looking to rent it out at $900 a month and after giving Mr. the $200, she will keep $700. Mr. has been busy meeting with potential renters and working really hard to get the property in shape and more attractive to renters. Anyhow, he told me last night that he should have renters moving in there the next 2 weeks.
We discussed it a bit and we decided that we for now we would save the $200. We really want to buy a new house in the next few years. We also want to pay off our debts but are uncomfortable not having a good chunk of change in savings in case one of us loses our jobs. I know most people would recommend us using the extra $200 to pay down our debts but I want to pay off debt AND save money at the same time. To compromise, we will be saving the $200 until we hit $5,000 in our Emergency fund. As of today (pay day!) and an automatic transfer of $625 to our ING account, we have $2,606 in our emergency fund plus an extra $1,000 in our regular savings account. I’m estimating that by the first of September we will hit the $5,000 mark. Then we’ll snowball the $200 to my student loans. Of course, any money that I can free up from our budget now (like not going out to eat, no shoe shopping (sad face), no espressos (another sad face), no picking up house decor items (super sad face) will be used to go towards Sallie. My goal is to pay the $13,000 I owe them off within the next year. My minimum payments are $190 (at 6.8%) and I need to free up $1084 a month to pay them off in that time frame. Considering that my eating out costs use to be so high that I felt like I actually ate a car, I think I might be able to find the extra $894 per month to reach my goal.