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 Post subject: Opinions on what to do?
PostPosted: Mon Nov 12, 2012 6:35 am 

Joined: Mon Nov 12, 2012 6:20 am
Posts: 1

Wife and I combined income is $82,500 annually. We are 43 and 39 respectively. No kids.

Total Debt - $32,500

Debt - $32,500 owed on mortgage
Home purchased in 2004 for $177,000.
We have been after this mortgage for years and with our current plan are exactly 24 payments from paying it off. Obviously with the housing crash our home value hasn't gone up but we are in a stable area and the value has held and comparable sales in our neighborhood, when things do sell, is roughly $180,000.

Two cars - 2003 Toyota Corolla / 2002 Saturn Vue both paid for.

Cash - $30,000 in 1.25% credit union savings for now.

Other Cash - $3,000 in checking for emergencies. This is in addition to our regular monthly deposits and we don't touch this $3,000. It's there for emergencies. Say if our air conditioning goes out, or our car has a maintenance issue.

Retirement - $100,000 combined in various 401k plans, IRA's, etc.

Frugality is our mantra. We live below our means and direct all additional into paying off our mortgage. We don't plan to move, hopefully ever as we are in our dream home. Two questions.

1. We can pay our house off in 1 year instead of 2, if we take $10,000 from the $30,000 cash above and combine it with our payoff plan and add just a bit extra each month, which we can do. Should we do this or stay on our 2 year plan and keep the 10k on hand.

2. Retirement. Our balance seems a little low. Still trying to figure out how much we'll need at age 60 to 62. Obviously we plan to ramp up the dollars into the retirement account as soon as the house pays off. Suggestions as to what to do with the retirement account and a good way to figure how much we'll need exactly?

Thanks for your thoughts.

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 Post subject: Re: Opinions on what to do?
PostPosted: Mon Nov 12, 2012 7:40 am 

Joined: Mon Nov 01, 2010 5:15 pm
Posts: 1354
Sounds like you guys are on top of things financially. What is the interest rate on the mortgage? If I were you & the rate was really low, I'd focus more on retirement & savings than getting rid of a low rate mortgage in one year rather than two.

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 Post subject: Re: Opinions on what to do?
PostPosted: Mon Nov 12, 2012 8:35 am 

Joined: Fri May 04, 2007 8:14 pm
Posts: 2121
I agree with Tightwad with regard to the mortgage. If the interest rate is low, it's cheap money and you can allocate the money you'd use to pre-pay your mortgage to beef up your retirement fund instead.

I also agree that you guys are pretty well situated. I think you'll probably need to do a bit of tweaking (most of us do), but won't need to do anything in the way of wholesale changes to what you've been doing for years.

As for retirement itself, check out http://transparentinvesting.com/. It has links (mostly to Vanguard) that will help you determine how much you need for retirement and what also help you determine your risk tolerance. It will also help you determine the appropriate asset allocation for your goals and how to allocate them between taxable and tax-deferred accounts. Have a look and do read the Full Story pdf file; it's more comprehensive than the 10 steps outlined on the site.

Welcome to the forums. Feel free to come back and ask questions.

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