Here's a brief description of my situation.

I'm 26, have 2 houses, few side businesses and a normal w2. One house is rent-free since family lives there and pays half the taxes and keeps it maintained. I rent out rooms in my house and I live in the master. I'm debt free aside from one mortgage at 169k @ 3.85%, $1150/month. I pay $1300 monthly.

After taxes, W2 is $3250 and rental income is $1800 for a total of $5050/month. I don't pay myself from the business since I don't need the additional income.

I spend about $2500 a month on my overall expenses.

I'll normally throw $1300 into my investment account each month. I have ~37k in a diversified portfolio, and have stopped contributing to my Roth IRA since I can actually pull this money out when I need it when I found another deal on a house. I'm trying to get into real estate more but the market is too good right now and there are very few deals in my area, so I'm just saving and waiting for it to come down.

That leaves me with an extra $1200/month that I'm not sure what to do with. My credit union gives me 3% on up to $15,000, which I keep around $16,000 to maximize the interest I can get. It comes out to ~$450/year. Anything more than that doesn't benefit me. This can cover months of bills in case of an emergency, otherwise I could pull money from the portfolio if need be.

Any advice on what I should do with this extra money?

  • 2
    Philanthropy? – Lawrence Aug 15 '19 at 15:22
  • 1
    Pay off the mortgage (low risk), or add to your portfolio. – Martin Bonner supports Monica Aug 15 '19 at 15:26
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    Pretty sure you could have a sep 401k if you structure the side income correctly which gives you some tax free growth – xyious Aug 15 '19 at 19:44
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    You should still be contributing to the Roth IRA. Contributions can be withdrawn penalty-free (and then you're no worse off than if you hadn't made the contribution for a past year, which is your situation now) and the gains made meanwhile can be left in the account to grow tax-free. And if you find out you can leave some of the contributions in too, even better. – Ben Voigt Aug 15 '19 at 23:48
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    Also realize that your next real estate purchase will be completely different from the two you have now. With no family living there to maintain it, you'll either have to take time away from your other work for maintenance, or pay someone. At that point you're not getting any better profits than REITs, but with much less diversification. You already have very poor diversification, because over 100% of your wealth is tied up in real estate (due to the leveraging that a mortgage provides). – Ben Voigt Aug 15 '19 at 23:53

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