Prime Rate Credit

I had an appointment with a financial advisor recently and asked him, if I had planned on getting a part time job instead of what I am doing now, and pursue my outside business interests more on a full time basis, what should I start doing now, to help ensure I would have a little comfort zone in case things didn’t go immediately smoothly when I made the transition. He advised me to do a couple things differently than what I am doing now.

I told him that I am currently making a couple hundred dollars additional payments each month on my mortgage because I hate paying all that interest for the mortgage, and want to get it paid down as soon as possible. Lofty expectations, since we just moved into the house six months ago, I know, but it’s just how my mind tends to work sometimes!

He said to immediately stop doing that, since mortgage interest is tax deductible, and I should definitely be socking that same money away in an interest bearing money market account, so that the same money I’m putting toward the mortgage will grow with interest, and I’ll also still be getting the maximum mortgage interest benefit on my taxes every year. He said that I should really only be throwing extra money to the mortgage if I just had too much money and I didn’t know what to do with it (his nice way of saying only if you’re stinking rich you should be doing that).

So, since I’m not filthy rich, I decided to heed his advice and start putting that same money I was throwing toward the mortgage to a money market account, which I already have going with my Sharebuilder account now, so that’s easy enough. He also advised me to start adding up what my necessity expenses are every month, and have about six months of expenses saved in that money market account, which is very liquid by the way, before I made any job moves.

This ensures that I have a nice cushion in case we hit hard financial times, and I couldn’t agree with him more there! If you’re looking for a good money market account that you can manage online, try Sharebuilder.com, or I also know that believe it or not, PayPal actually offers a money market account that any balance in your Paypal account goes into without you even asking, so that’s another easy option if you have a Paypal account already.