Ask Terry Questions Pay off Mortgage or invest?

Pay off Mortgage or invest?

By Terry Savage on May 18, 2018 | Housing / Real Estate

This is a follow up for my question on 4-18 should a pay 50,000 from my savings on my mortgage or invest it. We (wife sill works 500$ a month clear) we have 100,000 in my deferred comp.(nationwide) have around 25,000 in IRA and 10,000 in a roth and would leave us another 50,000 in bank. I think we should pay it toward mortgage or buy government bonds. But my wife is worry about doing that.our mortgage rate is low 3.25 va. I’m retired and have to start drawing from deferred at 69 I’m 68 . Should we get more Roth while wife is still working. And pay what’s left on mortgage? We still owe 120,000 on house. Thanks for all you have already help us with. Jim

Terry Says

Gosh, this is a tough one for me to answer -- because it's a close call.  I understand the desire to pay down your loan -- but it is at such a low rate. Still, at the moment you can't earn that much on your savings.  But putting half of your liquid cash into your house doesn't get you very far -- and takes away a lot of flexibility.  Here are my two thoughts: First, yes, your wife should continue to put money into her Roth IRA -- up to the max if possible -- and invest it very conservatively. Second, the REAL solution is for you to find some kind of work (uber??) to make just enough money to make the monthly mortgage payment (after taxes) so that you are staying even instead of falling behind in your finances.  That way you won't have to dig into your retirement savings -- and can keep the flexibility of having cash on hand for an emergency.   In fact, if you can make DOUBLE the mortgage payment, you can pay extra toward the principal every month and get out from under that burden the right way--paying it down asap.



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