Invest vs. pay down my debt

[snafu]

I'd run the figures on a mortgage calculator program to see potential interest savings. Creating a low fee low cost index fund DCA is also a terrific option for 30 yrs.

[coffee]

Debt is bad and you have a great amount in a 401k for your age. I would lower it to whatever the company matches and make a concerted effort to pay off your debts for the next couple of yrs.

[Goldy]

I tend to take a different stance on this one than most. The way I see it, the average length of time spent in a house is 7 years which is nearly 25% of the 30 year term but because interest on a home is front loaded after 7 years you only pay off 17% of the principle. I view extra payments as insurance against higher future interest rates because they are sure to go up from here and if you can attack your mortgage when rates are low your are getting the most bang for your buck. Sitting on a low 30 yr rate mortgage is a good idea IF you know you are going to spend the next 30 years in that place.

I wouldn't do one over the other though, a good mix of investing and debt destruction is the best way to go in my opinion. My wife and I both max our 401k's and our roths and had some money left over so instead of pouring more into the market we decided to attack our mortgage by making double payments even though its only 2.5%. The thought is that when we move next we can either pay cash for the new place or take a small loan. If interest rates spike we dont want to be in a situation where we need to downgrade homes to keep the same payment.

My final thought is that just as how diversification is important in investing it is also important in personal finance. I wouldn't want to have all my holdings in market investments and no equity. A healthy mix will allow you to weather storms that might sink others.

[karenjcarlson]

I agree with Goldy

Why don't you do a compromise strategy? Take 50% of each extra dollar and accelerate debt payments. Invest the other 50%. That way you get to do both.

[TheKayla]

I'd do a balance of both between investment and paying down the car loan. Even though it's a good rate, it's still a debt that's going going anywhere, nor is it really an asset. Once you get the car loan paid off, then it'd be up to you on whether you want to invest or pay off the mortgage. In the end, you'll be building your net worth either way, so it's probably really whatever would make you more comfortable. You could always crunch the numbers to the very last detail to see what would be a greater option.