Well today I took my own advice and transferred about $6,000 that I had laying around in my ING Direct account and used it to pay down my HELOC. Some of this money is spoken for (2007 Roth IRAs), but either way I am better off putting any money that isn’t immediately needed towards my HELOC and then when Jan 1 comes around next year I will simply just write the checks from my HELOC for the IRA contributions.
Now this does kind of put a hitch in my system, because up until this point I had been having $153 deposited into my ING account each week to make sure I had $8000 at the end of the year for the IRA deposits. Was kind of nice because I didn’t have to worry about saving, it just happened each week. Unfortunately I can’t schedule payments to my HELOC, so I will just need to add $666 onto my monthly HELOC payment. My required payment is usually around $100 and I usually pay $200, so I’ve decided $875 a month should get me in the right direction. In fact I believe if I continue with the $875 payments I will actually have temporarily eliminated my HELOC at some point in 2007 until I write the checks for the 2008 IRAs.
Anyway enough boring details, but just an example of how allocating your money a different way can make a difference in your overall performance. It’s always best to reevaluate your current allocation periodically to make sure your system is still the right one for your current situation. ING had served me well for a number of years and that’s probably why it just felt natural to keep making my IRA savings payments to that account, but turns out I was just throwing money out the window each month by not using that money to pay down my HELOC.