Pondering My Next Extra Mortgage Payment

My renters showed up with half of the rent today and promises of the other half next Thursday plus the late fee. I have been itching to make another extra mortgage payment so I was thinking about making the payment now instead of waiting until next week. But when I checked my spreadsheet I saw that if I made my payment of $1,136 I would have a mortgage balance of $40,202. My tenants owe me $300 which would have pushed me under the $40k mark. I can only make one extra principle payment online although I can go in to a bank and make another payment if I want, but I prefer online.

So I decided to wait...but then I kept thinking. Part of my emergency fund will hatch out of it's CD tomorrow along with $65 in interest that it has accrued. I can use that money to help pay for a share of my neighbor's well that they will be drilling, or I can put it in another 12 month CD at 2%, or I can use it to pay down my mortgage.

I have already planned to use it for the mortgage later on, maybe when I am 2 or 3 months from paying it off. But now I am feeling a little more secure about my finances and willing to take some small risks. My 401k is on the mend and I know that if I lost my job I could cash out enough money to pay off my mortgage. I suppose I am using my 401k as my back-up emergency fund.

Although the well share sounds good, I would rather use the money for my mortgage right now. Buying drinking water only costs me $1 or $2 a week so it is hard to justify spending $10k for a well share right now. Plus I only have $5k not $10k so I don't know where the other money would come from.

The interest I would receive on a $5k, 12 month CD at 2% would be $100 minus taxes. The interest I would save by putting $5k towards the mortgage would be $264, no taxes taken. So I would gain more than $164 but lose a little security by not having so much cash in reserve. I do still have my 3 month emergency fund tucked away though.

I'll keep thinking about it for a few days but I think I like the idea of using it for the mortgage now instead of later.