Should we pay down mortgage faster.

[skives]

So here is our situation. We currently have no debt besides our mortgage. We pay the mortgage as a 15 year loan but it is financed as a 30 year loan. We contribute 15% each to our 401k's. We put away $300 a week to a online savings account for EF and Home Improvement/Repairs and vacations. We have a budget setup for all our weekly spending. I am wondering if we should stop putting away $300 to the online savings to pay more on the mortgage? All relevant information is below.

Our Combined Income - $74,500 basically 50/50
Online Savings - $16,366.37
My 401k - $114,280
Wife's 401k - $24,100

Mortgage - $113,931.45 16 months into mortgage. Currently pay $881.97 a month. $557.84 is what is actually due.

My Age - 34
Wife's Age - 29

Both our jobs are in retail and are pretty much secure. Mine I feel more than my wife's but hers has been secure.

I look forward to hearing everyone's thoughts on this. If I missed anything let me know.

[corn18]

So here is our situation. We currently have no debt besides our mortgage. We pay the mortgage as a 15 year loan but it is financed as a 30 year loan. We contribute 15% each to our 401k's. We put away $300 a week to a online savings account for EF and Home Improvement/Repairs and vacations. We have a budget setup for all our weekly spending. I am wondering if we should stop putting away $300 to the online savings to pay more on the mortgage? All relevant information is below.

Our Combined Income - $74,500 basically 50/50
Online Savings - $16,366.37
My 401k - $114,280
Wife's 401k - $24,100

Mortgage - $113,931.45 16 months into mortgage. Currently pay $881.97 a month. $557.84 is what is actually due.

My Age - 34
Wife's Age - 29

Both our jobs are in retail and are pretty much secure. Mine I feel more than my wife's but hers has been secure.

I look forward to hearing everyone's thoughts on this. If I missed anything let me know.

What's the interest rate? In a rising rate environment (like it appears we are in or approaching), a mortgage at a low interest rate is a good thing. I would stay the course and just pay the $881.97 / mo.

[autoxer]

If you are comfortable that your short term goals are covered, have you considered increasing your 401k contributions? Do they offer a ROTH 401k option?

What is the mortgage interest rate? Have you considered refinancing to a 15 year for a lower interest rate?

[disneysteve]

We put away $300 a week to a online savings account for EF and Home Improvement/Repairs and vacations.

Online Savings - $16,366.37

What are your monthly expenses?
What do you typically spend annually on vacations?
Other than routine stuff, are there any big ticket home items on the horizon?

[Jluke]

Your mortgage is 16 months old. I doubt you will get a lower rate if you refinance to a 15 or 20-year.

You ARE paying your mortgage off faster.

You say 15% for 401k. But you are allowed to contribute up to 18.5k. While I don’t expect either of you to max it I would think you could increase the 401k since you are saving $1200 per month.

I didn’t see your Roth listed. Hint hint


If you put enough in you may qualify for the savers credit (if that still exists with new tax program)

[skives]

What's the interest rate? In a rising rate environment (like it appears we are in or approaching), a mortgage at a low interest rate is a good thing. I would stay the course and just pay the $881.97 / mo.

Interest rate is 3.625%

[skives]

If you are comfortable that your short term goals are covered, have you considered increasing your 401k contributions? Do they offer a ROTH 401k option?

What is the mortgage interest rate? Have you considered refinancing to a 15 year for a lower interest rate?

I have considered raising our 401k contributions and both our companies I believe offer a Roth 401k.

My goal was to save $50,000 before starting to pay extra on the mortgage which would happen in my estimation at the end of 2020.

[skives]

What are your monthly expenses?
What do you typically spend annually on vacations?
Other than routine stuff, are there any big ticket home items on the horizon?

Monthly expenses are around $1,500 not including the mortgage.

Vacations usually are less than $1,000 a year. I try to find ways to get free hotels and we mostly do things that are free or close to free like in May we are going to Hocking Hills OH to hike the north country trail.

No big ticket items in the next year or two but my wife would like a new used car in 3-4 years which I figure could be paid off in a year or two.

[Thrif-t]

You have a good interest rate and your house will be paid off in 15 years and you'll still be relatively young, I'd keep plugging along, it will go fast, you'll see. We did the same thing, and our house was paid off when I was 49, just in time for kids to start college.

I'd keep beefing up savings, as well as start contributing to a Roth IRA.

One thing I like about contributing to a Roth IRA over a Roth 401k is there isn't a required minimum distribution in retirement with a Roth IRA, there is with a Roth 401k.

I max out the Roth IRA then if I have other money I put it in the Roth 401k. I also have money going in my regular 401k tax free too. I'm in the camp you should have a little of both. Not sure what's going to happen down the road. Part of me thinks if things get too bad things will change(taxes) with Roths.

[sblatner]

I'm kind of on the other side of thinking - I'd get that sucker paid off as fast as you can. :-)

There is nothing like the feeling of a paid off house where you only owe property taxes and insurance! We did that and then cash flowed college for our kids.

You are in great shape though so which ever way you go will be the correct way. It is up to you and how you feel about it!

[snafu]

Congratulations, you've both done a super job of managing your money. Take a bow!

I suggest doing a couple of on line questionnaires that identifies your RISK ratio using that to open a ROTH IRA as I see it earning far more than 3.65%. What did you and DW choose for allocation employers sponsored 401Ks? Anything added would need to mesh.

[Drake3287]

I agree, your already doing a great job with your finances, and better then most. For me at least, I'd sick with paying your loan based on 15 year's like your doing and continue to save away in both your 401's and savings accounts.

You'll be surprised at how fast your money will grow over the years. I followed the same path including the 15 year mortgage and it worked out perfectly. Getting that mortgage paid off down the line will give you almost an extra $1,000 every month.

[scfr]

My goal was to save $50,000 before starting to pay extra on the mortgage which would happen in my estimation at the end of 2020.

You seem to be very reasonable, focused, disciplined, and goal-motivated.
If the reason(s) you set the original goal of saving $50K before paying extra on the mortgage are still there, then I suggest you stay the course.

[msomnipotent]

Is this going to be your forever home? If it isn't, why bother paying it off? Save up for a large down payment on your next home and pay that one off sooner. Chances are excellent that mortgage rates will be significantly higher on your next house, so paying it off will benefit you more.

[Fishindude77]

I'm kind of on the other side of thinking - I'd get that sucker paid off as fast as you can. :-)

There is nothing like the feeling of a paid off house where you only owe property taxes and insurance! We did that and then cash flowed college for our kids.

You are in great shape though so which ever way you go will be the correct way. It is up to you and how you feel about it!

These are my thoughts as well.
There is a huge feeling of freedom when you become debt free.