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Ask Dave

Military Mover

John has some cash set aside, and not sure of what to do with it.

QUESTION: John is with the armed forces and will be moving in seven months. He has an emergency fund of $41,000 built up, but also has a rental house with a $27,000 second mortgage balance on it. He has about $20,000 in equity in that home. Should the emergency fund be used for that or a down payment on his next house?

ANSWER: I would get my house deal done and then look at my emergency fund. If you’re sitting there with $40,000 in an emergency fund, you can drop that down to $13,000 and pay off that second mortgage after you're in your new house, then build it back up. I'm all right with that. But get your house deal done first.