Scenario Calculation

What if I pay my $9736 mortgage as usual for April?  Granted, this would be kinda stupid if my company shuts down soon.  But let’s just run the numbers.

Checking Account: $2,255

Savings: $16,451

Money I’m owed: $2000 (not sure when it will be returned, but likely before April?

Remaining March Expenses: $700

April Expenses: Mortgage payment + $1563

Needed cash:

$700 + $1563 + $9736 = $12,000

= $6,706 – $8,706

So remaining cash would be 2-3 months of emergency fund.  That’s… tight.

But wait!  My first 401k payment was from the *mid* March paycheck.  Therefore, the April 30 paycheck I would use for May’s mortgage payment would still ALL be going to 401k.  Even a big chunk of the mid-may paycheck is going to 401k.  So if I did this, my expenses would actually have to include the $2000 from the first part of May, leaving me with $6706 savings max.  I’m pretty sure I can get reimbursed for any BM tickets by May.

What would this accomplish?

  1.  Keeps me on track for the mortgage paydown through April, but I won’t have the $9736 for the May payment.
  2. Deplete savings to uncomfortable level during job uncertainty (blegh).
  3. Max out my 401k as fast as possible.

However, after I finish maxing the 401k, I still have the problem that my mortgage paydown plan requires $3700 of monthly cash *beyond* what I make in salary, and the first bonus check wouldn’t be until April.  So not only would I not pay extra in May, but I wouldn’t pay extra in June either because I need to build back the emergency fund and my first bonus check isn’t until July.

So it’s pretty clear, I need to just chill out with my cash for a while.  If I don’t make extra mortgage payments, then I’ll only be spending $2700/month ideally.  So starting with $20,706.00, I need $700 for March and $2700 each for April and May.  That gets me to $14606.  Then for June I can save around $5000, putting me at $19606.  For the July 1 payment, I can probably resume the payoff, especially because I’ll get the extra $6000 that month from a bonus.  Given that I have to skip the extra mortgage payment for April, May, and June… the 401k maxing delays my mortgage payoff for 3 months in the short term, and then later in the year I may have to slow down the payoff by $3700/month if my emergency fund gets too low.

To make myself feel better… if I stick to the budget, my net worth (assuming it is $402k now and the market doesn’t drop) will be +$5800 per month, so ~$420k by July, ending the year around $455k.

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