What would you do with it?

[Gina23]

I have an interesting financial situation that I am about to possibly enter into. I'm 33 and about to foray into the world of Management. My salary will increase by at least 15k per year. With that being said, here is my current financial picture:

Pre-tax
401(k) - Maxed at 17500 per year.
401(a) - Mandatory 5%, Employer 10% match
After-tax
Roth IRA - Maxed at 5500 per year.
Total Stock Market fund - 500 per month.
Emergency Fund - Fully funded at 20k

Debt
Home Mortgage(4.25% fixed 30 year rate) - 1557 per month, paying 350 extra toward principal per month totaling 1907

I roughly calculated what my take home pay will be after the raise and it will be an extra 700 per month. Considering I am maxed everywhere with deductions, I'm wondering how to best make that extra money work for me.

Would you pay extra toward mortgage debt? Sock more away in after-tax investing? Split between both?

I appreciate any responses.

[feh]

Might want to look into refinancing. Given your budgetary surplus, I suggest a 15 or 20 year mortgage.

Then start investing the rest in a taxable account.

[greenskeeper]

Whenever I get a raise, bonus, or extra money I put it towards the balance of my mortgage.

My wages have increased since I bought my first home in 2003, but my take home pay has been about the same.

My goal is to pay off my 30yr mortgage (originated in 2007 for current house) by 2020, probably sooner if I keep up with my method.

[UnknownXV]

It all depends on if you feel confident you can average out more than 4.25% interest somewhere else. Paying anything towards the principle of your mortgage is essentially getting that much back.

I would go for paying down the mortgage, but that's me. A lot of others aren't so adverse to risk, and giving you're maxing everything else out anyways, this new money could be used in a risky way. Even if you lost it all you'd still be doing good.

[kork13]

Might want to look into refinancing. Given your budgetary surplus, I suggest a 15 or 20 year mortgage.

Then start investing the rest in a taxable account.

^^ I like this idea. Assuming your credit is in good shape, rates on 15yr fixed mortgages are still as low as 2.75% (or better).

If a refi doesn't interest you, I'd say look at non-retirement investments. You're doing awesome with retirement savings, but how much are you saving toward goals/events that will happen before you're 59.5 years old?

[Gina23]

Thanks to all for the replies... I have been thinking more and more about the refi. And also, great advice about saving for short term goals, an automobile fund or perhaps another downpayment on another property.

All great food for thought...

[Goldy]

I also agree that a refi is a good course of action. Check out Zillow or some other housing/mortgage site and see what type of loans you can get in your area. I would also suggest you sort them by fees since there always seems to be a few compaines offering no or low fees to refi at the same rate as the other lenders.

[grumpter]

1) I would stop paying extra towards a historically low mortgage interest rate.
2) I would stop paying anything over and above the employer match on retirement funding.
3) I would live as far below my means as I felt comfortable with and sock every penny I could into personal investing.
4) I would enjoy life because damn, right now (?) I have got it easy (your life, not mine).