I am a single mom and my only debt is my mortgage. It is my goal this year to live on 50% of my salary. I am trying to decide what to do with the other money. I have several choices but am not sure which one will benefit me the most.

1. Pay down my mortgage. (the interest isn't enough to allow me to itemize my taxes, I only get the standard deduction)

2. Contribute more to my retirement.

3. Contribute more to my son's 529 college fund (he is only 4 but I want him to pay a portion of his schooling)

4. Set up a fund to purchase a car with cash in 5-7 years (or can be used for home repairs or improvement)

I can't tell you what you should do but I would like to say, "Good for you!"

If I woke up today in your shoes ... (which is my way of saying everyone would do it differently but this is what I would do).

You live on 50% ... with the remaining 50% I would..

Automatically contribute 15% to your retirement

Automatically contribute 5% to a car replacement fund (we keep ours in an ING savings account called 'car')

Automatically contribute 10% to 529 college fund

Automatically contribute an extra 10% to the mortgage (or if you have more than a 15 yr mortgage, switch it to 15 yr.)

Use 10% for a bit of buffer ... charity, gifts, vacations, home improvement, etc.

I like KathrynHannah's breakdown. BUT, do you have an emergency fund set up already? If not, I would adjust that breakdown to include a major chunk going to set up an emergency fund.

I was wondering that as well. If you don't the very first thing you should do is save 3-6 months worth of living expenses as your emergency fund. Then I would use the breakdown and do a bit here and a bit there, but for me personally I would put more int othe retirment and a little less into college savings. I choose to look at it like this: the kids can always get a student loan (it is an option), who is going to help me retire?

Good for you for being able to do this! That is amazing. Make sure you update us and let us know how your journey is going.

__________________
Life isn't about waiting for the storm to pass~ It's about learning to dance in the Rain

With my husband's commute and the cost of gas and tolls, unfortunately, we don't have any extra - it literally all goes to getting him to work (after paying bills of course!!) Very sad & frustrating.

I do already have an emergency fund set up for about 4 months. I really like the breakdown that Hannah came up with. My biggest concern is that buffer. We all know we have those uncertain expenses that get thrown at you every month and I really want to make sure I allow money for that purpose.

I am afraid of getting too much money tied up in my house and then not having easy access to it. The thought of having my house paid off, though, is really exciting.

Thanks for all your ideas. Anyone got anymore?

Oh, and I want to THANK YOU ALL for allowing me to do this. I have always been quite frugal but after finding these boards and using your ideas I have really cut my spending.

I would try to get 6-9 months saved in my emergency fund if I were you, then retirement and 15 % to car fund. I would not put any to the college fund. I am not sure if I woudl pay down the mortgage...for me I would have to see all the numbers...paying off the mortgage sounds great...but it really decreases liquidity. Someone posted on the Disney boards about their emergency fund....I think it was a single parent who got into an accident...couldn't work for 9 months! Thankfully she had a 12 month or $35,000 emergency fund (don't quote me) which she completely wiped out. After that It really made me think about my own situation! If you have family who can help out in a time of crisis....great but if not it would be awesome to have the emergency fund so that you can get through a major crisis! I think you are very wise to be looking at the best situayion for you and child! Good luck!!! We wish you the best!

I like the breakdown also. I would get your savings up to 6-9 months then start saving for all those things you mentioned in your first post.

__________________

A woman is like a teabag. You never know how strong she is until she gets into hot water.-Eleanor Roosevelt