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What do I do with the money now that a debt is paid off? - Page 2

post #21 of 25
Hearing that you don't have an emergency fund... I'd make that top priority. Like the pp said, it's not just for job loss, but for any emergency along the way that otherwise would require going into debt. So if you need to replace a vehicle, you want to be able to pay cash. Or if your furnace kicks the dust, or the roof needs repair, or one of you ends up hospitalized and copays/deductibles/coinsurance pile up, or you need to take unpaid leave for a family or health emergency. Unfortunately my family has had multiple occasions in the last few years necessitating that EF and I'm so glad we had it!

So if I were you, I'd start building up the EF to $5-10K... perhaps save for your trip at the same time... and then start saving for renovations, up your retirement contributions, etc. once you have a decent EF.

Actually what DH & I ended up doing was putting most of our savings into one account. We had a set amount that wasn't to be touched except for emergencies, but amounts above $X could be used for multiple purposes (like large purchases, or your trip and renovations). We kept increasing the reserve amount until we had plenty for emergencies. Structuring your savings like that might be something to consider too, since you have multiple short-term savings goals.
post #22 of 25
Thread Starter 

Well, we do have a small emergency fund. A few thousand dollars, but not 6 months worth of income. Enough to cover an emergency like a leaky roof or something.

 

What is income continuancy insurance?

 

Anything in life can happen. We do know that. Neither one of us are at risk of losing our jobs. Either of us could end up in the hospital, or injured and needing surgery, etc. Being in Canada, that would not cost us anything more than some lost wages. And we have pretty good benefits packages to cover those loses. We do not have anything like co-pays or hospital fees or anything like that here.

 

 

We probably should build up our emergency find a bit more.

I like the idea of a savings that doesn't allow to go below a certain point. That may work for some, but for us we would probably just "borrow" from ourselves in the short term.

 

For now I think we will just dump the $1000 per month into savings and decide what to do with it later. All we know is that we do not want to absorb it. We live quite fine without it and have no need to increase our spending.

post #23 of 25

It's protection against the loss of your income. You can choose any percentage of your income to cover, for any length of time. Covers income loss due to redundency or injury/disability.

post #24 of 25

I'm assuming you've got medicare in Canada (like us in Aus)? If you do, then I understand why you wouldn't worry too much about payments for medical emergencies and such. It's a pretty good health care system. I would be more concerned about unexpected renovations. We renovated our 60 year old home and upon deeper inspection found more to renovate than initially planned for. So now I always warn anyone considering a renovation, to plan for unexpected renovations. We changed so much, the house is practically brand new on the inside. You might find after you renovate that you may not want to move out in 5 years time too. Our plan was renovate and move out in 5 years, but lately I've been re-considering (in my mind only - haven't shared those thoughts with dh yet). The house itself is small (800sq ft), but we could always extend.

 

Dumping the extra $1000 into savings is a great idea! Well done on being debt free and good luck for the future. smile.gif

post #25 of 25

Can you save at your bank in different currencies? That can sometimes be a hedge against inflation. DH at one point took some of our savings out of HKD and put them into AUD and NZD.   But, you have to be prepared to see things go down as well as up.

 

Think about other investments - Canadian Govt. savings bonds might be pretty safe - maybe examine their rate of return - see if it's better than just sticking the $$$ in the bank.  Interest on regular savings in HK banks is very low these days.

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