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    save more or pay off mortgage?

    Hi,
    I am new to this forum. I have a few questions. I am 31 years old i am single and have no kids. I was wondering if i should try to pay off my house as soon as possible? I take home about $3000 a month and have no debt besides my house. I have about $20000 in an emergency fund. And put $300 into a roth ira a month. My mortgage is a 15yr at 3.25% and i owe about 13 years yet. So my question is should i put as much as possible on my mortgage every much to get it wiped out?

    Thanks

    #2
    Put more toward your Roth IRA and make sure that is maxed out each year first.

    Comment


      #3
      It depends...on your risk tolerance. You will make more than 3.25% in a modestly aggressive ETF or MF allocation via USA Index, VSUX, REIT & Corporate Bond Fund. What are you currently holding in your ROTH? I'm guessing the year will have more than it's usual share of volatility. How much did you pay in interest on your mortgage in 2013? Making extra payments directly to principal is a no risk, significant cash 'avoidance' instrument.

      Comment


        #4
        You can think of extra principal payments as earning you a guaranteed 3.25% a year for the next 13 years (the remaining life of your mortgage).

        If you do pay off your mortgage, your basic monthly expenses will drop HUGE. And on the flip side of that, at that point you'll have lots more money to invest or spend.

        These are "for sure" things, which I like.

        I would go along with lorraineb here. Max out your IRA first. Then throw the rest of the cash that's rattling around in your pocket into the mortgage.

        Good luck.
        Retired To Win
        I blog weekly on frugal living, personal finance & earlier retirement at:
        retiredtowin.com
        making the most of my time and my money

        Comment


          #5
          I wouldn't stop with a Roth. Take a step back and examine your overall portfolio. The first question is....have you set a retirement money goal? If not, use an online retirement calculator to help determine how much you should have in your accounts when you reach retirement age. You'll also discover how much you'll need to save each year to reach that goal.

          And as I've mentioned elsewhere, I'm not a big fan of having large chunks of money sitting in a simple savings account serving as an emergency fund. Having a few thousand as feel good money in the account is fine, but I'd rather dollar cost average that money in to 2 or 3 investments such as mutual funds (ranging from conservative to moderate risk, if you prefer).

          Other than that, if you keep debt low you'll be in good shape.

          cheers
          michael

          Comment


            #6
            Originally posted by rockrv22 View Post
            Hi,
            I am new to this forum. I have a few questions. I am 31 years old i am single and have no kids. I was wondering if i should try to pay off my house as soon as possible? I take home about $3000 a month and have no debt besides my house. I have about $20000 in an emergency fund. And put $300 into a roth ira a month. My mortgage is a 15yr at 3.25% and i owe about 13 years yet. So my question is should i put as much as possible on my mortgage every much to get it wiped out?

            Thanks
            First welcome to the forums!

            It really depends on your risk tollerance level as others have mentioned. Some questions though for clarification and getting a better picture of your situation...

            1. What are your monthly expenses? Is there anything you could eliminate or reduce?

            2. How many months of expenses is 20k in your e-fund?

            3. Does your employer offer a 401k or 403b? Or are you self-employed?
            ~ Eagle

            Comment


              #7
              That would last me about a year and i can pay everything for about 2000 a month. We have 401k with no match so I do a roth ira myself.

              Comment


                #8
                Originally posted by Retired To Win View Post
                You can think of extra principal payments as earning you a guaranteed 3.25% a year for the next 13 years (the remaining life of your mortgage).

                If you do pay off your mortgage, your basic monthly expenses will drop HUGE. And on the flip side of that, at that point you'll have lots more money to invest or spend.

                These are "for sure" things, which I like.

                I would go along with lorraineb here. Max out your IRA first. Then throw the rest of the cash that's rattling around in your pocket into the mortgage.

                Good luck.

                I am with them. Max out the IRA and pay down that mortgage.

                Comment


                  #9
                  Originally posted by rockrv22 View Post
                  That would last me about a year and i can pay everything for about 2000 a month. We have 401k with no match so I do a roth ira myself.
                  What percentage of income are you saving in 401k and roth? Are you only doing the roth?

                  Comment


                    #10
                    Originally posted by rockrv22 View Post
                    That would last me about a year and i can pay everything for about 2000 a month. We have 401k with no match so I do a roth ira myself.
                    Have you considered no cost index funds or mutual funds?
                    ~ Eagle

                    Comment

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