Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Hitpoint will not be able to drop MIP for another 4 1/2 years regardless of how much equity he has in his home.
I would take a different route than numbers 5, 6, and 7. I would not move...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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He could always refi into a 30yr fixed conventional if he has enough for 20% down and if the interest rate drops to or below 3.5 within the next few years.
Agreed on the rest of your post.
...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Not sure on your tax situation but here's my thoughts on what you should pay off in order:
1.) Pay off car loan. This is your highest interest and it's not deductible. Clearing out this monthly...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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What city is the house in (or general area of the state if you're not comfortable with sharing the exact city)?
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Draw up an amoritization schedule for your remaining mortgage to see the cost savings in continuing what you're doing now vs taking that money and investing it. You really have to do the hard math.
...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Exactly. That $200 - $300 dollars is after all the bills have been paid. Currently contributing $140 to my Roth 401k. Also I direct deposit 100$ every month into a investment account doing some DCA...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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If I woke up tomorrow and found myself in your situation, I would stop contributing to the account at Edward Jones and take that newfound money and put it towards the Roth or your other, higher...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Put it in the 401k then take a loan out of your 401k to pay the mortgage off with :), I would do neither and hold it for emergency money till it is to 20k
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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The article has holes. Most companies have a cap at what percent they will match, my company only matches 50% of the first 5% I put in. So if you are already contributing to a 401K an extra mortgage...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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They are variable. My last company matched 4% after the first 1%. As long as you put in 1%, they would match it 4 to 1. In essence, they were giving you 3% for free. After that, they matched...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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If you're handy in Excel, you can set up an amortization schedule for your mortgage, car loan, and student loan, from which point you can use Solver to determine precisely how much of a hypothetical...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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+1 saved my mom when my dad died unexpectedly at 50.
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Around $2,000 take home each month.
After my $1,000 mortgage, I have $1,000 to pay all of my bills.
I live alone, so lets say all of my bills/food come out to around ~$700.
So 200 - 300...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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How much is your employer's match?
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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it makes sense to invest the money in something that will accumulate over time such as your 401K
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Textbook would say the 401k. Common sense and reality would say the Mortgage. I say pay the mortgage.
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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depends on your tax deduction situation
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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I currently have a 160k Mortgage on my first house with a 3.5% interest rate. I pay my mortgage every month, and pay an extra 1/12 in principal so at year end I pretty much made an extra mortgage...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Are you paying PMI on your house loan? I don't know much about FHA loans. If you can get rid of that, I would say work towards that goal.
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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There seems to be a disconnect here. If you paid off the house, you only have utilities and living expenses, if it is not paid off, you have utilities, living expenses AND the mortgage. So with a...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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:iagree:
Not having a mortgage trumps theoretical returns in my opinion.....
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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I do believe I have PMI on my FHA loan.
According to http://homeguides.sfgate.com/long-pay-mortgage-insurance-fha-loan-9441.html
"It can be dropped when the loan is paid down to 78 percent of...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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You have a loan of $1 million dollars at an interest rate of 2%.
You have a loan of $10 thousand dollars at an interest rate of 100%.
Which loan do you pay off first? and why?
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Yep, being a dick to somebody seeking help in a forum woke everybody up, you did your job! :wave:
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Absolutely, I know the statistics.
I think the problem starts with student loans. The government guarantee behind education loans shouldn't be in place and never should have. More risk for...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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sorry, but your way of thinking is incorrect. You do not go by the exact dollar amount in interest it is costing you each month. You have to use the interest Rate. In this particular case, he...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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I would, also, recommend contributing whatever your company matches to 401k first (what they match is free money/instant return).
Second I would stop paying extra towards the mortgage and pay it...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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My post was meant to be offensive. People need a wake up call. Did you know that households headed by a person under 35 has an average net worth of only $3,662, down 68% from '84 after adjusting for...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Historical house appreciation is in the 3% range and we are far from that again.
Yes, I am flat in investments but I still have that same 100k sitting there waiting.
Without savings he will...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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I think you're doing great work. I would like to point out one flaw in the list, however. #1 and #2 are definitely backwards. A couple of examples to show you why--your car loan is approx. 7.5%.
...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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I'm really glad the general concensus on my situation is pretty much the same. I am going to follow this advice to the T. Sounds like I was taking the wrong course of action on this, so I am glad I...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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I'd say put in as much as you can get your company to match in your 401k (mine is 3%). Keep the extra money from the house payments in a bank. 401k isnt really doing much right now, and house values...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Max out your 401k!
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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So, you have an additional $200 - $300 per month above and beyond what you're already contributing to your 401(k)?
If you reply to the individual post, the person who you quote will reply faster...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Pay off your home loan first. Based on the numbers you provided, you have 228k principal in home loan. Given that, you are paying over $600 a month in interest to the bank. Your auto loans and...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Pay off your higher interest debt first. Car and or student loans.
Are you contributing to your 401K already? You should certainly contribute *something* to it. Whether you want the satisfaction...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Just a single account with Edward Jones.
Have Nike and Intel stock in there that I recieved from my father 13 years ago.
Currently we are just purchasing...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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pay off credit card debt,car payment debt
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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Wow, thanks for all the responses.
I will provide a little more information about my home loan if others are interested.
I am 23 years old, I built the house new, closed in November of last...
Invest in 401k as opposed to paying off mortgage early?
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Thread created 05-21-2012 by Hitpoint
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63 Replies
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No question, put your extra money toward your retirement.
You will earn more than 3.5% over time in a well-diversified portfolio. Don't waste this opportunity. If you put all your extra money...
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