Opinion on paying off Mortgage / financial opinion

[Klaus]

is that the new tax law makes that deduction less

But there is still a deduction. Would rather that amount go to the IRS?

Also, it is not binary. You can put more torward your mortgage payment now and revert back to min payment if life throws you a curveball. Same with car payment. Google the rule of 12.

 

[VenomVeins]

But there is still a deduction. Would rather that amount go to the IRS?

Also, it is not binary. You can put more torward your mortgage payment now and revert back to min payment if life throws you a curveball. Same with car payment. Google the rule of 12.

**** google. Its all about DuckDuckGo.com

Im also well versed in the Rule of 12, Klown.


OP only mentioned a 401k, and also having an ARM. With that information, it is an EASY call for him to pay off his mortgage, ESPECIALLY with interest rates only rising. **** an Adjustable Rate Mortgage-i've seen multitudes of people screwed by those.

Now if he had six figures in the stock market, it'd be a much different story.

 

[PaxtonShelby]

With the mortgage currently around 100k, refinancing may cost him more than it is worth. Even if interest rates rise, the ARM loans usually have a max rate increase per year. He may be better off putting extra $ toward the mortgage every month when possible, while still steadily increasing his emergency savings.

 

[riche]

This post cracks me up. I would ask whoever is giving you advise what their net worth is and how they got there. The thinking of what car you would buy to give up your $4xx payment a month. Your going to do what you want to.

 

[CV355]

Just going to throw this out there...

Have you fully evaluated your current budget to see if there is any fat that can be trimmed? How about re-assess your tax withholdings, get competitive insurance quotes, check utilities utilization, etc?

The payment I have on my '69 Mach 1 is made fully by lifestyle changes only and didn't impact the bottom line on our monthly budget whatsoever.

Sometimes there are other solutions that can get you the result you're looking for, and they're virtually risk free.

 

[tt335ci03cobra]

Rule of 12 is interesting, but 3 6 9 is my rabbit hole (whole)



Put into a financial discussion, paying interest is the number one way to waste money. This is a waste of a 9 so to speak, and the way of earning a 9 is through a triangulation of cost, time and energy. It costs money to hold a job (gas, clothing, transportation, hygiene, etc all can be considered costs of being employable). Time is completely obvious. When trading time for money to then pay xxx interest, you are defrauding yourself by actually devaluations what your after tax income can buy. A $28k car with interest reflects $33k over 5 years. You are now telling yourself that your time is better spent not saving $28k to buy it outright, but instead working the next 5 years to pay $33k for a $28k car today which will be worth $15k by then if not less. Moral: buy a $15k car today in cash and sell the $28k car. This roughly will mean you are now using after tax income closer to a 1:1 proposition, and if invested closer to a 1:1.1 or 1:1.2 buying power et. Always shoot to be beyond 1:1 in your purchasing and expensing as possible. Energy is best described as respecting your autonomy. Why silence it by registering the future energies of your life to cover today’s luxuries. Luxuries are best enjoyed when they do not infringe on tomorrow and are paid for with yesterday and today’s energy as a reward to yourself for disciplined responsibility. The real problem in society comes from the media telling us to live like our neighbors now on tomorrows borrowed energy. I’d rather suggest live like no one else today so that we can guide others (if we desire which I do) like no one else tomorrow.

See about selling the ~$500 a month (payment and insurance) car, getting a used Camry or Tacoma for $5-10k in cash, and refinancing the remaining $100k of your house on a 5-10yr bi monthly fixed rate. You’ll basically be spending the same money you are now between house car and car insurance, but will easily finish the house very quickly. Also, since you say you are paying sometimes an extra payment on the car some months, putting that into your house is a great idea.

One avenue you can pursue so that you gain access to a better rainy day fund than $4k is to setup a home equity line of credit to roughly $25-50k, and basically lock up the info on it in a personal safe and forget about it lest disaster hits. This will cost you less than $100-250 a year in fees, and allocate a great back up plan. Because you are otherwise setting yourself up to pay down the remainder of your house very quickly, you will be in effect putting the money you could otherwise save up as a rainy day fund into your house.

By paying down an additional $10k a year vs the current plan you are on, having a potential to pull up to $50k a year on your house of catastrophe hits becomes less and less of an upending proposition. Obviously after the 5th year, you would be beyond that.

I’m not a licensed or professional financial anything, and in no way claim to be, this is all just speculatory considerations based on what you asked.

 

[riche]

What are your two cars that are paid for and what are they worth? You might be able to solve a lot of these issues with just getting rid of the vehicles!

 

[Coiled03]

These financial threads on SVTP crack me up. If I ever forget what site I'm on, all I have to do is read one of these.

Everyone here either knocks down 7 figures a year, owns multiple houses, and pays cash for everything...

OR

Makes 50K, and still manages to do the above.

 

[riche]

Someone should post up a net worth thread!

 

[ON D BIT]

The OP seems to have the finances to pay off both the car and house he owns, as that was his original question. He does not go into how much he has or where’s it’s currebtly located, only to say he gained inheritance a couple years ago.

1. A basic efund. That’s done.
2. Pay off all other debt. So pay off that car, yesterday.
3. 6 month expenses in savings.
OP retirement and college funds our is strong.
Then work on paying down house.

 

[03cobra#2]

Thank you for the responses. So I don't plan on having any more children, my money is invested as follows between my wife and I.... $135k in Ira rollover, $37k in 401k at current job, $300k in inherited Ira, and $75k in Roth Ira....4k in savings.

If I was gonna pay off the house and / or car... it would come from the inherited Ira. No penalty to take as much as I want but it is taxable income.

I'm not hurting for money but I like the idea of having much lower monthly obligations. Slowing down at work a bit and spending more time with family. Less hours, less income, less stress, less monthly bills, more time with my loved ones. On the flip side if I do it.... It's gonna cost me.

Edit:

I don't really see advice threads as a bad thing / problem. It's not like I'm going to make my decision based strickly on what is said here..... I just like to hear people's opinion.

 

[riche]

Don't take out of your ira or 401k. Not worth the cost of being taxed. You can do this, you just need to want to do it and pay off stuff. That will require selling some stuff and not trying to keep up with the Jones.

 

[Brutal Metal]

^this. Don't forget the interest on your mortgage is tax deductible so it is an embedded asset. Giving that up would be a mistake.

You need more cash/liquid savings - 6 months to a year of income worth.

I don't think a large % of SVTP'ers use the 1040 long form with itemized deductions, haha....

 

[03cobra#694]

Someone should post up a net worth thread!

There would be no lies in that thread. Lol

 

[03cobra#2]

Looks like the consensus is don't do it and build up my emergency fund more.

Sent from my Pixel 2 XL

 

[chinchilla]

Pay off everything, take a portion of the inherited IRA, set some cash aside for 3-6 month emergency fund, payoff the car, pay off the house. It will be an amazing feeling to not owe anyone a dime. Then you can stash away a massive percentage of your income to invest every month.

 

[03cobra#2]

Pay off everything, take a portion of the inherited IRA, set some cash aside for 3-6 month emergency fund, payoff the car, pay off the house. It will be an amazing feeling to not owe anyone a dime. Then you can stash away a massive percentage of your income to invest every month.

Right now my total debt with house and car is about $135k. With my payments I make my total debt goes down about $1, 000 per month. I'm thinking get it down to under $100k total then just wipe it out. It's very exciting thinking about absolute $0 debt.

Edit... Also after a couple years when my little one is in school I'll go back to a GSM / GM position at work and have $$$$ rolling in. I think I'm in good shape as nothing bad happens / don't do anything stupid lol

 

[Klaus]

Looks like the consensus is don't do it and build up my emergency fund more.

Sent from my Pixel 2 XL

*And see a pro. Your financial life is far too important to make decisions based on on a poll of SVT forum.

If you had a nasty looking mole, you would see a doctor, right? This is no less significant.

 

[03cobra#2]

*And see a pro. Your financial life is far too important to make decisions based on on a poll of SVT forum.

If you had a nasty looking mole, you would see a doctor, right? This is no less significant.

If you look a couple posts back that is a point I made. I'm not making a life decision based on what I hear in a car forum lol. This thread is for fun, and opinion only. Thank you for the advice.

Sent from my Pixel 2 XL

 

[Coiled03]

Why does everyone always push going to talk to some kind of adviser?

You realize if they had any kind of real knowledge that could give them an edge, they wouldn't share it with anyone else, right? They'd be sitting on a beach somewhere, sipping mai tais, watching their cash grow. If you just want to bounce ideas off someone else, that's one thing. But I damn sure wouldn't do what they tell me just because they're supposed to be "smarter".