This isn't another "should I pay off mortgage or not" thread. I've decided that I want to be debt free. I know the pros and cons of paying off mortgage early and acknowledge that I may be giving up on some investing returns by doing so but just feel being debt free is a solid foundation to be on.
Details that matter to this question:
Debt:
Mortage balance $64,000 @ 3.375%
Credit Card balance $17,000 @ 0% until March 2025
Taxable Assets:
$75,000 in VUSXX
$7,000 between savings/checking/cash earning 0%
-Federal tax bracket this year will be 24%
-Income around $110-115k it's looking like
-Annual expenses with mortgage around 30k, without mortgage 25K give or take
-Monthly mortgage payment only $608 including escrow (paid a bunch toward principal and did a recast last year)
-Free cash after expenses will be around 3-4k per month
-Currently 34 years old
-Investing 15% in 401k
-Home value approx 300k
-Net worth approx 450k
Question: which of the following 2 options would you follow if this was you?
Option 1: Pay off mortgage right away, then save up money to pay off CC before interest starts to accrue and to save up 1 year of expenses for emergency fund, then start investing in stocks in taxable account (figure this would be around early 2025)
Option 2: Keep the money in VUSXX and throw extra cash flow every month toward the mortgage, use money from VUSXX to pay off CC before interest starts to accrue and pay off mortgage by cash flow only (figure this would be around end of 2025) or pay remainder balance at the point where interest rates drop enough on VUSXX (unknown timeline). Then after keep 1 year emergency fund and start investing in stocks in taxable.
Option 1 is straight forward whereas option 2 is more fed/interest rate dependent. Option 1 will probably get me investing into stocks in my taxable faster.
Thoughts?
Thanks.
Details that matter to this question:
Debt:
Mortage balance $64,000 @ 3.375%
Credit Card balance $17,000 @ 0% until March 2025
Taxable Assets:
$75,000 in VUSXX
$7,000 between savings/checking/cash earning 0%
-Federal tax bracket this year will be 24%
-Income around $110-115k it's looking like
-Annual expenses with mortgage around 30k, without mortgage 25K give or take
-Monthly mortgage payment only $608 including escrow (paid a bunch toward principal and did a recast last year)
-Free cash after expenses will be around 3-4k per month
-Currently 34 years old
-Investing 15% in 401k
-Home value approx 300k
-Net worth approx 450k
Question: which of the following 2 options would you follow if this was you?
Option 1: Pay off mortgage right away, then save up money to pay off CC before interest starts to accrue and to save up 1 year of expenses for emergency fund, then start investing in stocks in taxable account (figure this would be around early 2025)
Option 2: Keep the money in VUSXX and throw extra cash flow every month toward the mortgage, use money from VUSXX to pay off CC before interest starts to accrue and pay off mortgage by cash flow only (figure this would be around end of 2025) or pay remainder balance at the point where interest rates drop enough on VUSXX (unknown timeline). Then after keep 1 year emergency fund and start investing in stocks in taxable.
Option 1 is straight forward whereas option 2 is more fed/interest rate dependent. Option 1 will probably get me investing into stocks in my taxable faster.
Thoughts?
Thanks.
Statistics: Posted by upstate90 — Wed Jul 24, 2024 7:18 pm — Replies 8 — Views 576