need help deciding what to do with extra money

[Snydley]

Hi-
I convinced my employer to pay me at 100% effort (was stuck on a mommy track working at 50, then 75% effort, then the responsibilities piled up until I said enough- pay me 100% salary). It's a real game changer for us as it increases my salary by $29K per year, roughly $2000 more per month take home.

I'm 43, DH is turning 49 next month. No student loans, cc debt, or car loans. One child who is 10- nothing saved for her college (if she goes to the school where I teach she will go for free, no guarantees that that will work out however). We have $360K in retirement accounts, we are on track to contribute 50K in 2017 (including employer contributions). The plan is max retirement contributions beginning in 2018 (DH contributing 18K this year, I am contributing 12K). If we keep contributing at 37K/year with 5% average growth we should have ~2 million when I am 62.

We have ~70K in savings right now. 45K is 'emergency fund' (6 months of expenses) the rest for home improvements.

We have a mortgage of 240K, 3.5% interest on the loan. Home value is ~550K. We are currently overpaying on our 15 year loan by $800/month so the house would be paid off in 7 years.

We are thinking of maxing retirement first, then paying more aggressively on the house to have it paid off 5 years from now. It should be noted that DH is not happy in his current line of work and ideally would like to go 1/2 time in a different position..he sees the mortgage being paid off as his key to freedom.

If DD does need help with college tuition, if we are debt free, even with husband at 1/2 salary (he makes 150K now) I think we could cover her college payments with my salary alone (I now make $116K).

Thoughts appreciated.

[scfr]

We are thinking of maxing retirement first, then paying more aggressively on the house to have it paid off 5 years from now.

I think this sounds like a great plan.
In addition, what about a "next car fund"?
Also, if your husband goes to 1/2-time, would you have a harder time replenishing the EF if you had to tap it? If so, you might think about increasing the EF.

[Snydley]

I think this sounds like a great plan.
In addition, what about a "next car fund"?
Also, if your husband goes to 1/2-time, would you have a harder time replenishing the EF if you had to tap it? If so, you might think about increasing the EF.

One car has ~85K miles, the other is over 150K and will be replaced in the spring with stock options that DH has that will be vested and he has to cash out. It is probably a good idea to start saving to replace the car with 85K miles.

I'm getting concerned that we are losing $$ with all this cash sitting in savings. I need to move some of it to Ally savings/Ibonds for starters, but part of me thinks with ~300K in equity in our house (could get a HELOC if we need $$) then why stockpile a savings account at 0-1% interest?

ALso, I wonder if anyone thinks that we should hang on to the mortgage for longer and invest a lot of the extra income instead. But after maxing retirement contributions, is it worth it to set up taxable IRAs?

[scfr]

why stockpile a savings account at 0-1% interest?

Right, you wouldn't want to do that! If you have a larger EF, aim to keep pace with inflation by including Treasuries or CDs to help balance out the low savings account rate of 1.30-1.40% (current rates).