Wow, what a week! I created the $1000 a month challenge where I try to increase my portfolio by $1000 a month. Then, I learned that the next two months of work will NOT be as stressful as I feared. What a relief. I imagine that it is kind of like an accountant realizing in April that the tax deadline has moved to July 15, 2020. But, despite the good news, I didn’t think things could get much better. Then it did! I found a $1000 check in the mail from February 2020 that I did not expect to get. Specifically, the check was for $1158.05! Let’s talk about what happened and how I plan on using the Money.

How I Found The Check

I was so happy about my work situation that I decided to clean my room. As I was doing that, I came across a mail from February 2020. I glanced at the mail, saw that it was from my mortgage company and tore it up into about 5 pieces. One of those pieces was a check that I accidentally tore perfectly, so I didn’t tear the check. The amount turned out to be $1158.05 for escrow overage.

Despite my initial excitement, I was concerned that this check was a duplicate of a more recent check I received for $1160 from my mortgage company. Also, I recently re-financed my mortgage, and the check I found in the mail was sent to me before the re-finance took place. The more recent check I got for $1160 was after the refinance. So, I didn’t know what to make of it and I didn’t want to cash a check that I wasn’t suppose to.

So, I called my mortgage company. After speaking to someone in the escrow department, I verified that the check I found in the mail was NOT a duplicate and indeed I could cash the check. Hahahahahahaha!!! I promptly deposited the check in my account via mobile deposit.

Now the big question is, what do I with this newly ‘found’ money?

What To Do With This Found Money?

There are several options. I could boost my Emergency Fund, pay down debt, save the money, spend the money, or invest. Let’s explore.

Emergency Fund

The account I’ve designated for my emergency fund has only $900 in it. I could contribute enough to bring that amount to $1500 or to my goal of $2000. However, notwithstanding the coronavirus and the importance of having an emergency fund now more than ever, I chose not to do that for several reasons.

For starters, I technically already have an emergency fund. Dave Ramsey recommends having a starter emergency fund of $1000 before paying off debt. I wanted my starter emergency fund to be $2000. If I had a $2000 bill tomorrow, I would be able to pay it from cash I have in various accounts. I wouldn’t need to borrow money from a credit card or sell my stocks to do it.

However, in an effort to practice what I preach, I’ve designated one account as my emergency fund. I’ve decided to build that account up to $2000 over the next several weeks and months. Then, eventually, I will build emergency up to cover 3-6 months of expenses.

I realistically won’t know what my expenses are until around August or September of this year. By then, I would have closed on the condo and relocated to a more affordable state. By the way, depending on how I close on the condo, I anticipate having an extra $10,000 on the side to cover about 3-4 months of mortgage payments and condo related expenses should they occur. I’ll explain all these options in future posts. But, overall, I anticipate my monthly expenses to be far less than what they are now.

Pay Down Debt

Paying down debt is a solid option. The faster I’m able to get rid of debt, the more cash flow I’ll have on a monthly basis. If I ignore mortgage payments, the only three remaining debts I have are my auto, student and 401k loans. There’s one BIG caveat that I’ll explain blow in the Murphy’s Law section.

It doesn’t make sense to pay down my auto loan, which is about $20,000. One of the banks that have approved me for the condo loan requires me to pay off my auto loan completely as a condition of getting the loan. That would bring my debt-to-income ratio in line with that bank. That is the bank that I will likely use and so the auto is likely going to be paid off anyway.

Regarding my private student loans, which are about $8000 total, I don’t think it makes sense to pay this down either. The monthly payment on my student loans is a WHOPPING $19 per month. I do pay $130 per month anyway. Furthermore, Congress might act to provide relief. So, I’m in a wait and see attitude. The interest rate on my student loans is 2.625%. One way or another, this will be gone in 4 years or less. The debt obligation is just not stressful enough for me to want to use the extra $1000 to pay this down.

Finally, I recently took out a 401k loan to help fund the closing cost and other requirements (like paying off the auto loan, if necessary) in an effort to get this condo. I’ll write about this decision in future posts. I borrowed A LOT of money and so, I could put this $1000 towards paying that back. But, much like my student loans, I’m going to wait and see what happens.

Once the dust settles with the condo, and I have a clear understanding of what my monthly obligations are, I will create a plan to pay this off early. Currently, I’m on a plan to pay this back in 5 years, but I hope to do it in about 2-3 years. It seems very apparent to me that I will be completely debt free in 5 years or less of all my debt obligations except my mortgages.

Save The Money

I could save the $1000, but I think I won’t. Honestly, I’m not too good at saving money. Other than buying gifts, I don’t really need to save. And, when I buy gifts (which is only for my mom), I just use money from my paycheck. If I want to go on a vacation, I would save for that over a few paychecks, but I don’t just have an account where money is piled up waiting to be used months later.

What I’m saying is that I fund my lifestyle paycheck to paycheck. But, as I am writing this, I think I can see the value in having a savings account. So, later on, I might have a mini savings account to be used for vacations and the like.

Technically, I do use Qapital and I have goals there set up to use for Christmas spending, etc. However, I just mainly use that app to help prevent me from over drafting in my regular account. I definitely could save more, so I’ll work on this.

Spend The Money

I have to admit, this is really not that tempting. There aren’t that many things I want. If I wanted it, I would have already bought it. That being said, whenever I get money, I hate to use 100% of it for one thing. So, since the total amount of the check is $1158.05, I’ve decided to spend $158.05 of that amount.

I was running low anyway on the amount of money I need to buy groceries and the like. So, $158.05 will help fund my lifestyle for the next week or so throughout the rest of May. I will bring my credit card balance back to $0. It is currently sitting at $58.14. I’ll use the remaining $100 or so to help buy groceries. I’ve been cooking more, so I’ve been spending a lot less money eating out.

And The Winner is: Invest

You guessed it. I’ve decided to invest $1000 in my dividend portfolio. Although I have adopted Exxon Mobile (XOM) for the month, I certainly won’t put all $1000 into that one stock. I only allocated about $50 to buy an extra share of XOM. I will deposit the remaining funds into the entire portfolio.

There is one downside. Since the portfolio balance is so close to $4000, I’m going to be forced in June to raise the portfolio balance to $5000 to meet my $1000 a month challenge. Initially, I thought I would only have to get my dividend portfolio balance to be around $4000 by the end of June. I suppose it’s not a bad problem to have.

Murphy’s Law

Well, apparently, the universe wanted to bring me back down to Earth from Cloud 9. I realize that a piece of furniture that I need for the condo is going to cost me around $3000. It’s a queen-size sleeper sofa and love seat in one. It’s also bit more expensive than I would have liked.

I was going to use the the $1000 check I found to help pay for that, but I decided to give the universe my middle finger instead – figuratively speaking, of course. Also, I kind of budgeted for that furniture expense anyway.

Ultimately, I will have to borrow money to fully furnish the condo. That expense will likely be paid off in 1-2 years (depending on financing terms). I also don’t plan on borrowing money for anything ever again, except to buy real estate.

You can’t win them all, I guess.

Final Thoughts On Finding $1000

This was probably an unnecessarily long post. I’m just excited. It’s not everyday I come across a check for over $1000 while cleaning my room. I was so overjoyed that I wanted to share it. It’s almost like getting a second stimulus check.

What would you do with $1000 that you did not expect to get? What did you think of this post? Think I made the right decision?

Let me know your thoughts by commenting below.

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