Paying my house off or keeping cash ?

[Helpinvesting]

I need some advice.

I own a house in AZ and I have saved enough to almost pay the house off.

I am wondering if it's better to pay it off or to use the cash to buy another property later.

I'm just afraid to be without cash

Thank you

[Nika]

How much do you have left on your mortgage?

And how long did it take for you to accumulate this amount? And what is the interest rate on your mortgage?

I know that people can be very conservative in believing everything should be paid off first, but it is hard to get to the pile of money where it has its own momentum and starts growing on its own, and this is very helpful in accumulating more. Plus, you have a definite edge as a "cash only" buyer when looking for real estate. So if your mortgage interest is low, this is not an easy question.

[riverwed070707]

In addition to Nika's questions, how old are you and what's your current retirement savings look like?

[Nutria]

I need some advice.

I own a house in AZ and I have saved enough to almost pay the house off.

I am wondering if it's better to pay it off or to use the cash to buy another property later.

I'm just afraid to be without cash

Thank you

You can buy more property and retain some cash. (Interest rates are pretty darned low, so a small mortgage won't hurt.)


Nika is right, though: you need to answer some fundamental questions before we can advise you.

Another question: how's the real estate market where you want to buy? If it's overheated, you might be spending way too much.

[Helpinvesting]

Confused

Thank you so much for all of your replies. This forum is great!

I currently live in San Francisco with my boyfriend, but our relationship isn't stable so, that's why I have so many fears about my future.

I'm 42, the house that I own is in AZ, the house is worth 150k and my loan is 125k... Interest rate 4.25%

I have saved in the back 74k and have about 20k in cash

I don't know what to do .. Should I continue saving ? I might move back to AZ but I don't know when ....

Please advice me on this.


Thank you so much !

[Nutria]

Thank you so much for all of your replies. This forum is great!

I currently live in San Francisco with my boyfriend, but our relationship isn't stable so, that's why I have so many fears about my future.

Lots of cash in your own cash, in your own bank, in your own name always calms the nerves in situations like this.

I'm 42, the house that I own is in AZ, the house is worth 150k and my loan is 125k... Interest rate 4.25%

That's a reasonable rate.

I have saved in the back 74k

I don't know what that means. The bank?

and have about 20k in cash

Then where's the $20K? Please don't tell us it's under the mattress. (You'll make us think you're a hooker and he's a drug dealer!)

I don't know what to do .. Should I continue saving ? I might move back to AZ but I don't know when ....

Please advice me on this.

This is the situation where cash (or conservative investments) is very important.

Effective decision making requires clear priorities, which, obviously, you don't have now. So, I recommend that you keep saving until you do decide on your priority: stay in SF or move to AZ.

[disneysteve]

Effective decision making requires clear priorities, which, obviously, you don't have now. So, I recommend that you keep saving until you do decide on your priority: stay in SF or move to AZ.

I agree. Cash provides options. Owning a house free and clear in AZ when you live in CA doesn't really help you.

Until you know where you will be settling long term, I wouldn't use the cash to pay off the house.

Who lives in the house now? Is it rented out? If so, does the rent fully cover your expenses? If so, great. Just leave it be. If not, I would seriously consider selling it.

[Helpinvesting]

Thank you

I'm not a hooker and he is not a drug dealer ...

I teach a language and i sometimes get pay by check.

My house in AZ is currently rented and yes it pays for all of the expenses. I break even.

[Helpinvesting]

I'm just very insecure because I have only $5600 to my name in retirement funds ... I have it in etrade and it is just sitting there ... Because I don't know how to invest it ..


I guess I ll just continue saving until I decide what I wanna do with my life ....so confused

[Helpinvesting]

I'm new to this forum and I'm a bit confuse as to how to response.

I saved in the bank * 74k and it took me 7 years.

And it does calm my nerves !

I like all of your advice ... I reall appreciate the time that you all take to answer.

[snafu]

Generally, growing your money by investing needs a 5 year timeline supported by a 5 year plan. Are you working in a stable job? Does your employer offer any type of retirement plan? Is there any type of employer contribution to their retirement plan?

Sorry so many questions but it's helpful to set aside a specific amount 'tagged' as an emergency fund which is sufficient to pay basic expenses if you become unemployed or unanticipated problems cause financial emergencies.

From that point you might explore a retirement account of some type.

[TBH]

I'm just very insecure because I have only $5600 to my name in retirement funds ... I have it in etrade and it is just sitting there ... Because I don't know how to invest it ..

Well, you've certainly come to the right place.

Here's what I'd do if I were you.

1. Since the house in Arizona is rented out and not costing you anything, and since you may want to move back there, I'd leave it alone. Don't pay down the mortgage. Don't sell. Just leave it be.

2. Since you are 42 and have only $5600 in retirement savings, that should be your main savings priority. Is the Etrade account an IRA? If you don't have a Roth IRA, I'd open one immediately and put the maximum amount in for 2015, which is $5500. It sounds like you have plenty of cash so you can do that easily.

3. As someone else said, if you have a workplace retirement account you should start contributing to it immediately, at least enough to get the full company match. Clearly you're good at saving money--so if you can, see if you can find a way to max out your workplace retirement account if you have one. You can contribute up to $18,000 to a 401k or similar workplace account in 2015.

4. If you don't know anything about investing, I would suggest putting your retirement funds in a target date fund. These funds are pegged to an expected retirement date, and the fund manager chooses a mix of investments that gradually adjusts as you get closer to retirement. You said you're 42. Let's assume you're 25 years from retirement, which means you should be investing in a target date fund pegged to retirement in the year 2040.

5. Since you living situation feels unstable, after you sock some of it away for retirement, I would just hang onto the rest of that cash for a little while until you know what's going to happen. You don't want to sit on that much cash indefinitely, but I'd just do nothing for six months or so. You may need some of that money to move, or to tide you over while you find a new job in Arizona, or or or. Then you can come back here and get some advice about how to best invest that money.

Hope this helps.

[Helpinvesting]

Thank you

I want to thank all of you who take the time to write back !

It helped a lot !!

[Helpinvesting]

Well, you've certainly come to the right place.

Here's what I'd do if I were you.

1. Since the house in Arizona is rented out and not costing you anything, and since you may want to move back there, I'd leave it alone. Don't pay down the mortgage. Don't sell. Just leave it be.

Thank you, I ll do that ...

2. Since you are 42 and have only $5600 in retirement savings, that should be your main savings priority. Is the Etrade account an IRA? If you don't have a Roth IRA, I'd open one immediately and put the maximum amount in for 2015, which is $5500. It sounds like you have plenty of cash so you can do that easily.

I have an ira account with etrade ... I need to give them a call but they don't give you any advice. I ll read about transferring the 5600 to a good low cost mutual fund company like Vanguard or Fidelity if etrade doesn't have a comparable option.

Or a Roth IRA for 2015
Target date fund

3. As someone else said, if you have a workplace retirement account you should start contributing to it immediately, at least enough to get the full company match. Clearly you're good at saving money--so if you can, see if you can find a way to max out your workplace retirement account if you have one. You can contribute up to $18,000 to a 401k or similar workplace account in 2015.

I don't work for a corporation ... That's not an option right now

4. If you don't know anything about investing, I would suggest putting your retirement funds in a target date fund. These funds are pegged to an expected retirement date, and the fund manager chooses a mix of investments that gradually adjusts as you get closer to retirement. You said you're 42. Let's assume you're 25 years from retirement, which means you should be investing in a target date fund pegged to retirement in the year 2040.

5. Since you living situation feels unstable, after you sock some of it away for retirement, I would just hang onto the rest of that cash for a little while until you know what's going to happen. You don't want to sit on that much cash indefinitely, but I'd just do nothing for six months or so. You may need some of that money to move, or to tide you over while you find a new job in Arizona, or or or. Then you can come back here and get some advice about how to best invest that money.

Hope this helps.

Thank you so much

[Helpinvesting]

Etrade IRA account help

I'm sorry to ask so many questions. I don't know much about investing.

I will call etrade on Monday, what do I need to ask them ? They really don't give you any advice.

If I transfer the 5600 to vanguard mutual fund .. How do I go about doing that without penalties ?

And how do I know how to be conservative. This is so confusing to me.


Thank you !!!!'