Hello HeyltsRick. This is a good question. As I often comment, there can be a difference between the great technical answer and the answer that is correct for you and your wife. Some advisors say to keep that mortgage and tax deduction as long as possible. But even then, the value of the deduction diminishes as you get closer to the end of the mortgage. I love for clients to have a paid off mortgage in retirement. When retirees have no mortgage and up to 3 years of living expenses in cash, market fluctuations are much easier to ignore (and the reactive behavior that often gets investors in trouble). I is difficult in this forum to know enough of your circumstances to make a determination. I suggest that you are the perfect age to spend just a bit on planning. Have a fee only planner who works hourly run some projections with you re: this is what we have, this is what we are saving, and this is what we want in retirement. Are we going to make it OR do we have to make some changes. That kind of work could make the answer very obvious. The planner could use funding your annual expenses as one goal and then add the remaining mortgage payments as a separate goal. I am confident this kind of work at this stage in your life would be very beneficial (I was able to tell a couple just last week that they could achieve their goals without working as long as they planned). Sans that, it is just your gut call. And I like the paid off mortgage.
Sounds like a lucky couple, Bobbie! Thanks for the insight. Here's a final question for you from Jeff B.
Yes, that was a lucky and happy couple. But it was because of the hard work they did after our meeting two years ago, saving as much as they could since then.
I like that quote, David! Do you have time for one more question?
It is great GCDubya that you are trying to get a handle on these expenses now before they become a problem. The car loan and mortgage payments are straight monthly payments and don't need to be accelerated for now. Start with your highest credit card loan and pay as much extra as you can afford until it is paid off, then down the line to the other cards. Don't close them as doing so impacts your credit score. IT doesn't sound like you can free up money from your loans, in fact, I am recommending paying on a larger level. Other ways to free up money will have to come in reducing life expenses such as food, vacations, gifts, cable and other things like that.
Another question would be great!
A topic I'm sure many of our readers have questions about, David. Thanks!
David, here's one more question from Timster.
I am still free to take questions
Thanks Debbie, here's one last question for you from QuickDraw.
The full 6%, it is free money from your employer, take advantage of every penny. Of course, this is unless doing so would be a burden.
Jeff B, I always encourage clients to have money in several different buckets and this is a good example of one of the reasons why. If your income isn't too high, you might consider making contributions to a ROTH. You still can't take out the earnings before 59 1/2 but you could access the money you put in. Or simply open a taxable account and use it for investments that are tax favored....like investments that are likely to see a lot of returns from capital gains. With such an account you would have money to draw on before 59 1/2 for income OR for some good investment you might see. Do keep funding the 401K AT LEAST to the extent of the employer match. Good luck with the early retirement. You might check with a planner to see just what you would have to do to make that happen. Lot's of people retire early only to learn they need to go back to work a few years later.
A quick answer, Debbie :). In that case, here's one more question from Bill.
As always, I have enjoyed being with all of you today but the time has come that I must return to the tasks at hand. Thanks Kiplinger!!!!
As always, some sound advice Bobbie. Thanks!
Thanks for taking the time to join us today, Bobbie! Looking forward to the next chat.
Thanks, David. We'll let Debbie finish up her final question, and then we'll go ahead and wrap up today's chat.
Thanks, David. Happy you could be here!
Bill, for your first investment, I would use a mutual fund or an exchange traded fund. ishares is a large group of funds. It sounds as though you are young, so you can invest for the long term. We also recommend dollar cost averaging if using a mutual fund. That means buying a fund and then adding to it whenever you have extra money.
eTrade is fine as is Scottrade. Vanguard is a wonderful mutual fund company, but I think their minimum investment is $3000. If you use an eft, there is a commission each time you invest. Search for mutual funds where you can invest under $1000 to start. Make sure they are no load, the manager should be experienced and been with the fund for 10 years or so. Good luck
Fantastic. Thanks, Debbie! Very glad you were able to join us again today.
Thanks again to all of those who submitted questions last week and today, and thank you David, Debbie and Bobbie for all of your help. The next live chat with NAPFA will be held on Thursday, July 19 from 1pm to 3pm ET.
I enjoyed it so much and it is wonderful to see so many questions from young people concerned about their future
Absolutely, Debbie. Some smart savers out there!
Also, be sure to join us next Thursday, June 28 at 12:30 ET for a live chat with Kiplinger's Kim Lankford. She'll be taking questions about insurance, with an emphasis on long term care. We hope to see you then!