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[GARY]

Max out your 401k or IRA every year first , nest all on mortgage debt, followed by having 6-9 months salary in Savings. Then in suggest paying mortgage down with extra payments without. Changing your term.

Less debt is ideal. Retirement now and emergency cash is as well.


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[8mpg]

Seeing everyone opinion on this is very interesting. Debt doesnt go away but your investments can. Everyone says invest invest invest but what happens in a market slump? Im kinda wondering if we will see a housing bubble burst as it is. If you look at the market historically it is positive but your year to year is iffy and it really depends on your investment company. I understand leveraging money but I still say the safe thing to do is pay off the house. If you are talking a couple years, I dont think your retirement will take that big of a hit. My dad put a lot of money into the market as he rolled his old 401k when he retired early. This was 2006/2007 time frame. He lost a ton of money

Whoever said paying off the house and getting down to $100k and losing your job....what happens if you paid off your house and lost your job? Better to not have $1k a month mortgage when you are jobless. And what if he was behind longer and lost his house to foreclosure?

One last thing to everyone that said pay off the car...what if the interest on the car is lower? One of my cars is at 1.75% and the other at 2.24%.

[Mike D]

One thing that NO ONE is clarifying on their tax advange posts is that they are assuming you itemize versus taking a standard deduction. The standard deduction is $12,600 for the 2016 tax year married filing jointly. You will most likely have trouble hitting this number with a 175k house financed at 3.25% and property taxes of around 2.5ish %.

So unless you can exceed the standard deduction, there is not a tax advantage to paying interest.

Speak with a financial advisor and an accountant before you make this decision --- best advice on this thread guaranteed.

This is spot on!


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[Razrbk89]

Whoever said paying off the house and getting down to $100k and losing your job....what happens if you paid off your house and lost your job? Better to not have $1k a month mortgage when you are jobless. And what if he was behind longer and lost his house to foreclosure?

One last thing to everyone that said pay off the car...what if the interest on the car is lower? One of my cars is at 1.75% and the other at 2.24%.

I was brought up that way, too. Vehicle interest is next to nothing? ~1%, max? Always pay your land/farm off first. There are guys on here paying more for a pickup truck than my wife and I bought 80 acres for last year.

[Mike D]

I was brought up that way, too. Vehicle interest is next to nothing? ~1%, max? Always pay your land/farm off first. There are guys on here paying more for a pickup truck than my wife and I bought 80 acres for last year.

Never keep money tied up in things that go DOWN in value like vehicles.


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[Landrover]

KILL the DEBT!!!!
Congrats to yall for being smart!!!

https://www.DAVERAMSEY.com

[glpoe1]

Always eliminate debt as fast as possible. its not necessarily about interest rate but about the limitations that debt can put on you. Say 10 years from now, house is paid for, cars paid and in good working order and you decide you want to embark on something new....no debt gives you the freedom to make the move without the burden of paying all the extra $$$.

I think everyone has about the same opinion as me. Get debt free you will never regret it, never. One word of caution though you can and will have a bad credit rating if you pay cash for everything. I tried to get a discount on a truck once and I could not get the incentive because I didn't even show up on the credit report. I have been debt free for about 20 years, house, land, everything paid off. It is a great feeling and quite the accomplishment. Your life will go in a positive direction. Yes, it will.

[glpoe1]

I find it interesting on the thoughts about paying off a car/truck. It does seem to make sense to finance a vehicle for 1% or 2% and leave your money in investments if it is making 4% or 5%+. I never looked at it that way. Use someone elses money and keep yours in bank making a little, doesn't seem you loose anything that way. Re-thinking!!

[8mpg]

I find it interesting on the thoughts about paying off a car/truck. It does seem to make sense to finance a vehicle for 1% or 2% and leave your money in investments if it is making 4% or 5%+. I never looked at it that way. Use someone elses money and keep yours in bank making a little, doesn't seem you loose anything that way. Re-thinking!!

But...the market doesnt always go up. Your investment firm may not get you that 4-5%+ and they also take their cut. Investments are not a sure thing

[2014FusionM]

Well we have made the decision to max out our investments, pay off the two cars, put money back into savings, then start putting more down on the house, while not yet paying off.

The only debt that we have is my truck now and the house (we will add her car to the mix when we get it mid-late summer). She paid off her student loans while working through college. I graduated debt free thanks to the military and also paid off my car (now my wifes for the moment).

Thanks everyone for the inputs it really helped us see different views and sides of the decision we were trying to make.

[batmaninja]

http://www.interest.com/sem/mortgages/calculator/?popup=0&ec_id=m9016141&s_kwcid=AL%211325%2110%217052004%2110930532736&ef_id=WH0PgwAABFcCYtTI%3A20170424165406%3As

This website has some good charts.

I think you are doing the right thing. If you plug in the terms of your loan into the website above. You can see that the first 5 years or so of your loan, your payments mainly go towards paying interest. The longer you make payments on your loan, the more principle you will be paying down. Broadly speaking.

[Rush2Judge]

It sounds like you have a solid plan. The most encouraging thing to me is you and your wife seem to be on the same page. That is not as common as one would think.

But...the market doesnt always go up. Your investment firm may not get you that 4-5%+ and they also take their cut. Investments are not a sure thing

Yes... yes they are. The trick is not putting yourself in a position where you have to withdraw it. The purpose of the other investments/savings are to help smooth out the ups and downs and provide emergency cash. You don't have to be a financial genius as long as your long term investments (10+ years) are in low-cost index funds, you WILL make money. Dollar cost averaging is your friend (right behind compound interest). The closer you get to your end goal, you can start rebalancing but, the trick is to make it on your terms. The "crash" of 2008 was actually a great opportunity as long as you didn't need the money for a few years. If you continued to invest monthly during that time, you came out far ahead of where you would have if the crash never happened.

[gingib]

pay off the house or highest interest rates first!!!

COngrats yall are 2 smart people

[popup_menace]

Less debt is always a good thing

[8mpg]

It sounds like you have a solid plan. The most encouraging thing to me is you and your wife seem to be on the same page. That is not as common as one would think.



Yes... yes they are. The trick is not putting yourself in a position where you have to withdraw it. The purpose of the other investments/savings are to help smooth out the ups and downs and provide emergency cash. You don't have to be a financial genius as long as your long term investments (10+ years) are in low-cost index funds, you WILL make money. Dollar cost averaging is your friend (right behind compound interest). The closer you get to your end goal, you can start rebalancing but, the trick is to make it on your terms. The "crash" of 2008 was actually a great opportunity as long as you didn't need the money for a few years. If you continued to invest monthly during that time, you came out far ahead of where you would have if the crash never happened.

Tell that to my dad who lost a ton of his retirement money. Im not sure what funds hes invested in but hes not managing it himself.