Deciding to pay off house with retirement savings...

[huntnful]

I really do appreciate everyone’s insight on this!! I seriously take every view into consideration!

I think my best route is the 2.5% refi. That’ll get that big interest payment off my back (which bugs the hell out of me) basically cutting it in half. More money will go towards my principle and I’ll “save” $300 a month. If the refi costs $4k it’ll take less than a year to re-coop (because of the higher principle payment in addition to the savings) and if I’m still not satisfied with how I’m feeling about it I’ll pay the house off later on down the road. For now I’ll wait for a good 10% dip in the market, like it did earlier this month, and get back to business with saving and inventing again!!

 

[TxxAgg]

Nails on a chalkboard, for the love of all that is holy! Do the math of your rate of return vs. interest. You would almost certainly be pissing money down the drain, and a shit ton of it. For what? To have the good feelz about no debt?

I agree with this. And nobody has mentioned the taxes you're going to owe.

 

[huntnful]

Is anyone else wondering how in the fu$# a 30 year old has saved 500k for retirement? lol

Good on you man, I thought I was doing good having 1x my salary before 30 married with 2 kids and a house.

Man I honestly just hit the jackpot at a young age. I started pipe welding at 19 and been making 6 figures ever since. Not married and no kids. I should honestly be retired right now, but I was dumb as hell with money when I was younger, but who isn’t? Haha

I actually did recently start dating an awesome chick with 2 daughters though. I KNOW this will hinder my whole life retirement/saving plan of course. But it can’t be all about me forever, and they deserve a great life as well. We’ll see how it goes!!

 

[huntnful]

I agree with this. And nobody has mentioned the taxes you're going to owe.

Oh I’m well aware of any taxes. I do my own every year and pay over $50k to the damn government already. I would pay about $15-20k on that $50k. I would have to work 0 overtime and I could bring that money in just under the 24% bracket. Plus state taxes. I didn’t like the thought of it. Trust me haha.

My goal is to retire on $50k a year to keep taxes on my withdrawals at a minimum. Also works for cash under the table. Everyone needs something welded haha

 

[wind gypsy]

I actually did recently start dating an awesome chick with 2 daughters though. I KNOW this will hinder my whole life retirement/saving plan of course. But it can’t be all about me forever, and they deserve a great life as well. We’ll see how it goes!!

Sounds scary.

 

[Kimber7man]

Man I honestly just hit the jackpot at a young age. I started pipe welding at 19 and been making 6 figures ever since. Not married and no kids. I should honestly be retired right now, but I was dumb as hell with money when I was younger, but who isn’t? Haha

I actually did recently start dating an awesome chick with 2 daughters though. I KNOW this will hinder my whole life retirement/saving plan of course. But it can’t be all about me forever, and they deserve a great life as well. We’ll see how it goes!!

Your house won’t be nearly nice enough, better save some cash to fix it up...

Or better yet, pay the house off and be cash broke. Then you can say “honey we don’t have the cash, we need to wait”!

 

[huntnful]

Sounds scary.

Hell yeah it’s scary. But what change isn’t ya know? It’d be just as scary as me starting a brand new family at 35 or even 40 and raising kids into my 60’s haha. But she’s got her own income and is super independent as well. I never saw myself doing it either, but I’m only lucky I don’t have several psycho baby mommas trying to ruin my life by now. Why not find one that’s mentally stable and already a good mom

 

[Kilboars]

Good for you.

Re-fi then put the $300 your saving to pay down the principal and knock 10yrs off your mortgage.

I great to have goals though


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[huntnful]

Your house won’t be nearly nice enough, better save some cash to fix it up...

Or better yet, pay the house off and be cash broke. Then you can say “honey we don’t have the cash, we need to wait”!

Hahahaha our finances will never be merged. I could never do that at this point in my life. Just need a genuine partner that doesn’t care how much I hunt. Don’t we all though hahaha.

 

[Throwin Darts]

Man this thread has my head hurting. You sold all of your taxable account, triggering capital gains taxes, to pay off a house that you’re now going to refi. Now you want to time the market to go back in at a new basis on your taxable fund. You aren’t saving money, you’re costing yourself money. You are going to end up right where you could have anyway except you are cutting a check to Uncle Sam.

You sound risk adverse by going down this road to begin with. I’d view a lot of money invested in a taxable account as much more risk adverse than having a paid off house with your money tied up in an illiquid investment (house). If you can’t keep your finger off the sell button then you probably shouldn’t be invested in the market. Pay off the house.

 

[AZ8]

Don’t forget about compounding interest. I wouldn’t cash out your $210K. Even at your young age, you’ll never be able to catch up or recoup the potential growth attributed on that 210K. It’ll be gone forever.

210K compounding for the next 30 years vs starting over compounding for the next 30 years.

Let the mortgage company pay for your house. Get a 15 year mortgage and make extra payments. Let that 210K grow.

 

[NDGuy]

Man I honestly just hit the jackpot at a young age. I started pipe welding at 19 and been making 6 figures ever since. Not married and no kids. I should honestly be retired right now, but I was dumb as hell with money when I was younger, but who isn’t? Haha

I actually did recently start dating an awesome chick with 2 daughters though. I KNOW this will hinder my whole life retirement/saving plan of course. But it can’t be all about me forever, and they deserve a great life as well. We’ll see how it goes!!

You did it right with your situation sir. While people were in college you were working away and putting it all away. You set yourself up well for the future and are doing better than probably 99% of people our age. And from your posts sounds like all by yourself. It's good you are thinking of a family if that's what you want. They are worth it, don't need to save every penny to be successful.

Hell of an accomplishment at 30. If you make a billion someday, just remember us plebs on Rokslide....

 

[wind gypsy]

Hell yeah it’s scary. But what change isn’t ya know? It’d be just as scary as me starting a brand new family at 35 or even 40 and raising kids into my 60’s haha. But she’s got her own income and is super independent as well. I never saw myself doing it either, but I’m only lucky I don’t have several psycho baby mommas trying to ruin my life by now. Why not find one that’s mentally stable and already a good mom

I wont argue that. I'm 35, no kids. Got married 2 days ago. Touche sir!

 

[Blaw]

I haven't read every comment on here yet. But throwing this out there if it hasn't already been said.

I am a big finance nerd. I invest heavily and have a few rentals.

My input.
You don't have to pay off completely or invest in the market completely

You figure out what you would make making in a min wage paying job. then pay off enough of your mortgage and re amortize so that if something where to happen. A minimum wage paying job can cover all your expenses and allow you to still live life......this is also beneficial because you can change careers/start your own business if wanting too.

then invest the rest....i like dividends

BECAUSE! then those dividends get added to your low paying job....so you would even have to work less if things where upside down.



This is what I currently do
buy rentals/ dividend paying stocks
I also invest in crowdfunding for small businesses, reason being they pay you back principle +interest every month.....so i figured with unemployment insurance what I would be short on cash wise every month. invested enough so that my principle and interest combined returns would cover the rest of my expenses. Hopefully that made sense.


...mean while the rest of my investments are chugging along

I am in Canada btw so slightly different.


Good luck! I am in the trades as well. It can be a grind but it can also provide a lot of opportunity!

 

[Throwin Darts]

Guys it’s principal, not principle.

 

[netman]

I’m 56 and been retired for three years. My current home loan interest rate is 3.75 and I’m about to sign my refi papers at 2.25%
I have the cash on hand to pay my home off. My financial advisor advised me to do the refi and keep my cash and my investments invested as I’m making a higher return.
It’s nice to know that no matter what happens in either the stock market or housing market I’ll be okay.
Remember your only as good as your health as a younger man. Think about what could happen if your health was taken from you. Are you prepared for that?

 

[huntnful]

Man this thread has my head hurting. You sold all of your taxable account, triggering capital gains taxes, to pay off a house that you’re now going to refi. Now you want to time the market to go back in at a new basis on your taxable fund. You aren’t saving money, you’re costing yourself money. You are going to end up right where you could have anyway except you are cutting a check to Uncle Sam.

You sound risk adverse by going down this road to begin with. I’d view a lot of money invested in a taxable account as much more risk adverse than having a paid off house with your money tied up in an illiquid investment (house). If you can’t keep your finger off the sell button then you probably shouldn’t be invested in the market. Pay off the house.

I didn't actually withdraw it. I just transferred it (which does mean I sold it) into a non growth account (their version of a savings account) once I had enough to pay off my house. I don't believe I get taxed on it unless i've fully withdrawn it? I could definitely be mistaken. I hadn't looked into the refi at all up until this point, because I frankly wasn't interested in restarting my loan, or switching to a 15 year. But maintaining my same loan at a cheaper monthly, less interest and more going toward principle makes good sense. I've been consistently investing for 4 years, no matter what the market has done and no finger on the sell button lol. I would just prefer not to buy back in at the absolute peak, knowing it was down 15% just last month.

 

[Vids]

I didn't actually withdraw it. I just put it into a non growth account (their version of a savings account) once I had enough to pay off my house. I haven't had to pay any taxes because I haven't withdrawn it. I could put it right back into the market at the same amount tomorrow. I hadn't looked into the refi at all up until this point, because I frankly wasn't interested in restarting my loan, or switching to a 15 year. But maintaining my same loan at a cheaper monthly, less interest and more going toward principle makes good sense. I've been consistently investing for 4 years, no matter what the market has done and no finger on the sell button lol. I would just prefer not to buy back in at the absolute peak, knowing it was down 15% just last month.

It all comes down to simple math. Low interest rate debts + High interest rate investments = Coming out better in the long run. I'll take a 2.5% mortgage and 7-10% investment return all day long. Refinance and invest the money, just make sure you have enough in the coffers to sustain you for 6-12 months.

Kudos to huntnful for being much more sharp financially than I was at 30 years old. You're on the right track, you'll be just fine.

 

[Bubblehide]

Yes, pay the home off, and if you have anyone you truly care about, put the home into a living trust with that person(s) as the trust beneficiary so it won't get sucked up in taxes. The latter may be something for the future though.

 

[Marble]

Well, I called my loan company. My credit score would put me at 2.5% APR. That's unreal.

Here's the numbers.

Current Loan.
4.5% APR
23 years 6 months remaining
$261K Loan amount
$990 interest $590 Principle currently on payment. $1580 total.

Refi.
2.5% APR
23 years 6 months on new loan
$270K Loan amount. (3% worst case refi fees. Told them I will not refi at 3% and to give me the best rate possible for my area. Period.)
$540 interest $740 Principle starting on the first payment. $1280 Total.




This is honestly just too blatant of a great scenario to ignore. I come $0 out of pocket and immediately lower my payment and start crushing more money towards my principle and FAR less towards interest. I told them to proceed as long as they can get the refi down near 2% or lower. I'm a little upset about my decision to pull from the stock market, as I'd have mad another $30k just this month... but you live and learn. No point in dwelling on it!

You are $0 out of pocket, but the cost is rolled into the loan.

Think about it. You will be paying that for the life of your loan.

Building/creating wealth is not an income problem. It's decision based. Your ability to make decisions to build wealth increase with no debt. The math as far as comparing how much one route costs versus the other makes completes sense mathematically. But your ability to invest will be severely hampered.

People who become wealthy (millionaires) rarely receive money in inheritance, they pay off their homes as soon as they can, live debt free and invest for decades.

If I had the money to pay off my house, I would do it today.

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