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    Debt Free next year? or invest?

    I know this totally a first world problem, but I'm struggling with a decision.

    I am currently paying about twice my monthly mortgage payment and was planning on paying off my house next year in a lump sum (2 years left without the lump sum). If I switch to just the minimum monthly payment, it'll cost $2,500 more and take 5 years. I am highly considering that option for two reasons.

    1. I can help fund a cabin my in-laws are restoring. If they have the funding fast enough, they can get it rent-able after memorial day next summer. If they don't, it gets ruined when the snow falls and it isn't ready (they get so much snow, kids get hired to shovel off roofs so they don't cave in!).

    2. After the cabin is funded I might buy a gold coin every other month as I think it will appreciate more than whatever else I would do with the $2,500 I would save on interest.

    If you think about it, $2,500 is a low premium to pay to spread out our remaining mortgage out over 5 years instead of 1.

    Am I crazy? I could be debt free next year, but might throw away the opportunity.

    Other information:
    I believe in high inflation in the next 2-5 years. My household income will likely rise slower than inflation, but I think my husband will keep his job in even an extreme situation. Our mortgage is fixed rate. We are in our early 30's. We spend about 45% of our TAKE HOME household income on living, 10% on giving, 30% on investing (mostly additional principal on mortgage and occasional precious metals), and set aside 15% for big things that don't happen often (for example a new washing machine or water heater would be covered in our living expenses, but paying cash for a newish car would come out of savings).
    -Milly
    Personal Finance Blogger, Mechanical Engineer, and Mother of 3 Toddlers
    milly.savingadvice.com

    #2
    Who owns the cabin? Unless you are the owner, you shouldn’t be putting money into it.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

    Comment


      #3
      I would stay on track for the mortgage payoff.

      Nothing else you said was convincing enough to delay the mortgage payoff.

      Comment


        #4
        Originally posted by Jluke View Post
        Nothing else you said was convincing enough to delay the mortgage payoff.
        Unless she is at least part owner in the vacation home I agree. Although the fact that it won't be ready for another year, assuming everything goes well (which it never does) isn't great.
        Steve

        * Despite the high cost of living, it remains very popular.
        * Why should I pay for my daughter's education when she already knows everything?
        * There are no shortcuts to anywhere worth going.

        Comment


          #5
          Whats the interest rate on your mortgage? Most online saving accounts are paying 1.6% so factor that in...all of that money could be sitting in a savings account generating something to soften the blow. Do you have enough in your EF?

          Dont fund a property that isnt yours. Your in laws can fund the renovation fast enough...its called borrowing from a bank.

          I dont have much to say about the golf coin purchasing. I dont understand it. I wouldnt want something worth that much sitting around in my house/safe. No one knows what the markets will do in the next 10 years...its all speculation.

          Comment


            #6
            Have you worked out the Risk/Return ratio? What is the background on cabin? Where is the business plan that suggests this is a viable, reliable, profitable, long term project? Why did in-laws choose to upgrade a cabin without funding in place? Are In-laws experienced landlords? Does FIL have the skill sets to do the work needed within season parameters? There are so many ongoing costs for off season, bad weather, marketing errors, tenant cancellations/ destruction.

            Experience taught, paying off mortgage in 13 years allowed us to redirect mortgage contribution and interest [not taxes, insurance, repair, updates, seasonal landscaping] to various retirement and non retirement investment streams.
            Last edited by snafu; 06-23-2018, 02:26 PM.

            Comment


              #7
              I am a big fan of using debt to leverage and grow wealth, but the wealth-building opportunities must be compelling. I don't see that in your particular case.

              Buying gold coins is a very expensive way into precious metals, because you have to pay the store a mark-up when you buy, and then a mark-down when you sell. It's not a good way to go.

              If you want to invest in precious metals, buy the ETF that represents the metal (SIL, GLD). Save up until you have a few $ hundred and buy the ETF and pay 5 or 10 bucks in commission.
              How can you have any pudding if you don't eat your meat?

              Comment


                #8
                I vote for DEBT FREE

                also I'd suggest buying silver rounds or bars from apmex.com, I've been doing that for almost 20 years and holding long.
                Gunga galunga...gunga -- gunga galunga.

                Comment


                  #9
                  Originally posted by greenskeeper View Post
                  I vote for DEBT FREE

                  also I'd suggest buying silver rounds or bars from apmex.com, I've been doing that for almost 20 years and holding long.
                  Greens I am curious, what do you think your average annual total return has been with the precious metals?
                  How can you have any pudding if you don't eat your meat?

                  Comment


                    #10
                    Last edited by corn18; 06-24-2018, 07:43 AM.

                    Comment


                      #11
                      Originally posted by disneysteve View Post
                      Who owns the cabin? Unless you are the owner, you shouldn’t be putting money into it.
                      The cabin is an old family cabin, but legal garbage forced my in-laws to sell the ground out from under it. Once it wasn't on the river anymore, it was too emotionally involved for them, so they've decided to just hand it off to the kids. They've offered to sell it and some land for it to set on for the price of their back taxes.

                      We are still discussing with the 12 other siblings (13 living kids!) how "shares" in the cabin will operate, but they must always be available for purchase in either time fixing it up or money for what it needs. It is important that people who aren't set up to buy in today still can buy in later. Otherwise, 3 of us will be the only owners as we are the only ones able to put money into it today. They see this as giving us an inheritance, so it can't be just taken by a few.

                      It's pretty messy, but the people involved are level headed and long term thinkers. This can be a whole different thread though. The important thing is we need to get it moved at any cost and we need it moved now before the snow falls. Whatever happens, I'm sure it will be worth more than the back taxes, cost of setting up a trust, and cost of pouring a foundation. With mostly family "renting" it, it will take a long time to get the initial cost back though. We'll see what happens.
                      -Milly
                      Personal Finance Blogger, Mechanical Engineer, and Mother of 3 Toddlers
                      milly.savingadvice.com

                      Comment


                        #12
                        Originally posted by Milly View Post

                        We are still discussing with the 12 other siblings (13 living kids!)

                        It's pretty messy, but the people involved are level headed and long term thinkers.
                        Good luck.

                        Comment


                          #13
                          Originally posted by rennigade View Post
                          Good luck.
                          Agreed. I love my family but no way would I get involved with that. I don’t invest in gold but if you feel like you’ll earn a better return than putting the money towards your house I’d do that. Otherwise I’d just keep paying extra on the house.

                          Comment


                            #14
                            Originally posted by Milly View Post
                            We are still discussing with the 12 other siblings (13 living kids!) how "shares" in the cabin will operate

                            It's pretty messy
                            OMG! I would absolutely, positively, 100% without hesitation be surrendering any and all interests I had in this endeavor. I don't care what your 1/13 share is worth. No way in hell would I essentially go into business with my 12 siblings (or any 12 people for that matter).

                            This is a family disaster waiting to happen.

                            Let them all figure it out and come up with a rental fee structure that you could use if you wish to stay there sometime.
                            Steve

                            * Despite the high cost of living, it remains very popular.
                            * Why should I pay for my daughter's education when she already knows everything?
                            * There are no shortcuts to anywhere worth going.

                            Comment


                              #15
                              Originally posted by TexasHusker View Post
                              Greens I am curious, what do you think your average annual total return has been with the precious metals?
                              I've never bothered to calculate it.

                              I like physical silver for a bunch of reasons, mainly that it's an asset that's now "off the books" and I can cash it in at any time.

                              Again though, I'm long on silver and that probably won't be happening for another 3-4 decades.
                              Gunga galunga...gunga -- gunga galunga.

                              Comment

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