Financial Picture

[Jluke]

Do you still have the car loan? I know earlier you didn't want to pay that off due to you not having cash flow issues but now that you are trying to max the 401k I wonder if it would make paying off the car more appealing. Right now cash flow is stopping you from maxing the 401k. Just something to think about.

Thanks for the reply. I'm always looking for suggestions and opinions on my financial situation. I keep going back and forth on how I am handling it but I am finding I have little patience for debt - even the 0% debt. The car loan would be easy but for some reason I am dead set on eliminating the mortgage before the other 2 loans.

Mortgage: $902/month minimum; 1200 usually ($74k balance is now 48k)
Escrow: $600/month
Car Loan: $463/month minimum; 500 always ($19k balance is now 15.7k)
HVAC: $150/month minimum; 200 always ($8k balance at 0% is now 4k)

Cash: 80k is now 60k. Used to pay down debt in lump sums as shown above.

Upcoming annual "big" bills include: 2k; 1k; and 4k

maxing roth; 401k is on track for around 15k - need to re-do the math in the next month or so after raise and bonus to get it closer to 18k

[Goldy]

What is it about the mortgage that makes you want to wipe it out over the other debt? Along those same lines, what made your finacial views change from your first post?

I have found that my own views have been changing over time especially when it comes to the invest or pay down mortgage question.

[Jluke]

What is it about the mortgage that makes you want to wipe it out over the other debt? Along those same lines, what made your finacial views change from your first post?

I have found that my own views have been changing over time especially when it comes to the invest or pay down mortgage question.

I do remember your post in the mortgage thread by randomsaver on your changing views.

I think my views are changing from reading the different experiences on here. I originally thought with only 3, low interest loans,totaling about 100k, I was in good shape. I did say that I'd rather invest or attack the mortgage before paying off the car or HVAC loan. So I've stuck to that minus paying extra on the HVAC.

After increasing the Roth and 401k contributions, that minimized my cash flow and soon the debt became a focus point to get some of that cash flow back.

By 2018, all 3 loans should be gone. This is where I need to be patient, but easier said than done.

For the mortgage, I think it is for the peace of mind of having it paid off and to say that I did it before I turned 41 (in 2018)... It just feels like a good use of my money now. Then I think I'll have a good number of years to really save up and invest "care free" since I have no mortgage payment.

The flip side is that the mortgage is "only" 900/month. when all loans are paid, that will free up 1600/month. But we all know life throws curveballs our way so nothing is guaranteed. That's why I'm reluctant to go much lower in my cash reserves.

Seems like there is no right or wrong answer here; I just seem to be chipping away at all 3 loans - so while none are completely gone they are much less than before.

Definitely appreciative of everyone on here who will take the time to share their ideas/experiences

[tripods68]

I do remember your post in the mortgage thread by randomsaver on your changing views.

I think my views are changing from reading the different experiences on here. I originally thought with only 3, low interest loans,totaling about 100k, I was in good shape. I did say that I'd rather invest or attack the mortgage before paying off the car or HVAC loan. So I've stuck to that minus paying extra on the HVAC.

After increasing the Roth and 401k contributions, that minimized my cash flow and soon the debt became a focus point to get some of that cash flow back.

By 2018, all 3 loans should be gone. This is where I need to be patient, but easier said than done.

For the mortgage, I think it is for the peace of mind of having it paid off and to say that I did it before I turned 41 (in 2018)... It just feels like a good use of my money now. Then I think I'll have a good number of years to really save up and invest "care free" since I have no mortgage payment.

The flip side is that the mortgage is "only" 900/month. when all loans are paid, that will free up 1600/month. But we all know life throws curveballs our way so nothing is guaranteed. That's why I'm reluctant to go much lower in my cash reserves.

Seems like there is no right or wrong answer here; I just seem to be chipping away at all 3 loans - so while none are completely gone they are much less than before.

Definitely appreciative of everyone on here who will take the time to share their ideas/experiences

You're doing good Jluke! It does certainly helps me knowing how people approach and manage day-to-day finances.

[LivingAlmostLarge]

Congratulations! Sounds like amazing planning.

[Jluke]

seeking advice on my latest consideration:

mortgage is at 46k.

I want to put 33k on it, then I can have it paid off in Nov 2016.

My EF will be at 31k.

crazy?

I figured that the 33k is just going to sit there earning 0.75%; not really "working" for me.

[corn18]

This question comes up a lot on many fora. There are a lot of replies equally split between pay it off, debt free is awesome and what is your mortgage rate? There isn't a wrong answer unless you have a high mortgage rate. Do what makes you feel good.

Tom

[tripods68]

JLUKe,

Personally I wouldn't pay off the extra mortgage payment just yet. I rather pay off the car and HVAC loan. After that have at it.


Nice to see your making excellent progress. Great job!

[Jluke]

Tom and tripods- thanks for your thoughts.

Mortgage is 2.875%. Interest this year will be 500 to 1200 depending on whether I do the big payment. Not much tax advantage. Payment is 900 but I usually do anywhere between 1200-2000 so I could really improve cash flow. I know this would be going against the grain as it seems a lot of people don't think about paying off the mortgage. Hence my hesitation bc I feel like I may be missing something here in my decision.

HVAC is 4k at 0% (150/mo)

Car is 14k at 1.9% (500/mo)

[autoxer]

That $33k can either earn you $20/month in savings or reduce your interest cost by $80/month. So putting it towards the mortgage will give you a net gain of $60/month. If you are comfortable with the size of your emergency fund, then go for it.

I want to put 33k on it, then I can have it paid off in Nov 2016.

What are you going to do with the 'extra' cash flow when the mortgage is paid off?

[Jluke]

What are you going to do with the 'extra' cash flow when the mortgage is paid off?

I will put $200/mo to cash savings, then the rest will go to my taxable investment account for future stock/ETF purchases so I can DCA into the market and not have to worry too much about risk since my home is paid off.

ROTH and 401k already maxed.

Thanks for taking the time to reply. I've been staring at/playing with these numbers all weekend it seems.

[tripods68]

Tom and tripods- thanks for your thoughts.

Mortgage is 2.875%. Interest this year will be 500 to 1200 depending on whether I do the big payment. Not much tax advantage. Payment is 900 but I usually do anywhere between 1200-2000 so I could really improve cash flow. I know this would be going against the grain as it seems a lot of people don't think about paying off the mortgage. Hence my hesitation bc I feel like I may be missing something here in my decision.

HVAC is 4k at 0% (150/mo)

Car is 14k at 1.9% (500/mo)

JLUKE--If you been following me here, I follow Dave Ramsey principle. So I will tell you to payoff the smallest balance first regardless of the interest rate because you have so much cash on hand at this particular time.

I understand the logic you are applying here personally because I have done it myself for years playing with the "zero interest game", except it still debt. That's attitude I had for a very long time 'oh its zero interest so I'll just keep it like a pet' took me years to realized my old habit is what kept me from being debt free. so I tried something completely new and it works way better than my old ways.

The point is--I wouldn't play around with zero interest, just pay off the HVAC loan today and be done with (Paralyze by analysis as they say). Next is pay off the car. Enjoy with a little celebration knocking off your consumer debt.

Payoff your home as fast you can. That's where we are now!

[Jluke]

31k to the mortgage. 2k to savings (from original 33k plan). around $600 less in interest; not bad.

200 to HVAC so balance is now $3800. I am 1 year in to a 5 year 0% that started around $8500. It'll wrap up well before the 5 year is up (19 months maximum) so no risk in paying interest.

and I learned that I hate 0% financing options.

[corn18]

How do you feel?

[Jluke]

How do you feel?

Heart is beating a little faster...

Trying to remain indifferent to the fact that I just paid that much money at one shot. though the 15,456 remaining mortgage balance is surreal and still needs to fully sink in.

Ask me again in December when it should be paid in full