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Your idea of paying down the mortgage early is exactly what I did. Many banks have a mortgage amortization calculator. Play with it a little and see how much you'll save in interest over the years. The number is amazing. Not only that, but the money you free up for savings and investments after its paid off helps you accumulate very fast. Yes, you'll lose some tax savings but finally being free of debt is well worth it.
I agree with much of the advice given. Those who question your housing costs simply don't know about SoCal. When my mother died three years ago, we wound up selling her house for 400,000, and it was *nothing* special - and a very ordinary neighborhood. You'd have to move either way across the Sierra Nevada or to another state to cut that cost appreciably.
I'm wondering whether your wife might be open to visiting a professional independent financial planner. The first visit would be free. Long-range, you probably do want to build a stock portfolio. Having a pro go through the numbers could help prevent you from being the bad guy.
And yes, I think you're doing a good job on your own! But you and your wife need to get on the same page.
You really screwed yourself with that house. Good luck. You could cut nickels and dimes around the corner, and that would slowly help build up something, but that house payment and taxes is one big enchilada. Good luck.
Not really, he has a 15 year mortgage and boom! 15 years will pass in a blink of an eye and with a paid off house he's set for life. If you can pay off your house in 15 years and max out your 401Ks then just have fun spending the rest of the paycheck, no problem! but I advise both of you to attend Dave Ramsey's financial peace university class, will make an unbelievable difference in your lives. Your wife will be on the same page as you after you take that class. I sent my kids through it and it made all the difference in the world, they are not materialistic anymore.
Matt - I don't think most posters are processing how much maxing out both 401k's comes out to in savings, monthly and annually. You guys are doing great. Enjoy your life! That's why you worked so hard to get where you are, right?
One thing that a lot of experts would advise that would quickly solve your concern, is to fund your 401k to the company match, and then open up a Roth IRA. It would costs you more in up front tax dollars, but it is essentially also an emergency fund, as you can withdraw the contributions, penalty free.
My company has Roth 401K where we pay taxes up front. I maxed out at $17,500 and 60% of that goes to the Roth 401K portion. So theoretically I am contributing more than $17,500 because I already paid tax for a large portion of my account. My question is this Roth 401K similar to the Roth IRA you are talking about?
Quote:
Originally Posted by BostonAccountant
Matt - I don't think most posters are processing how much maxing out both 401k's comes out to in savings, monthly and annually. You guys are doing great. Enjoy your life! That's why you worked so hard to get where you are, right?
One thing that a lot of experts would advise that would quickly solve your concern, is to fund your 401k to the company match, and then open up a Roth IRA. It would costs you more in up front tax dollars, but it is essentially also an emergency fund, as you can withdraw the contributions, penalty free.
My company has Roth 401K where we pay taxes up front. I maxed out at $17,500 and 60% of that goes to the Roth 401K portion. So theoretically I am contributing more than $17,500 because I already paid tax for a large portion of my account. My question is this Roth 401K similar to the Roth IRA you are talking about?
If you are maxing out at $17,500 PLUS have a 15 year mortgage PLUS your wife has a federal goverment job, what in the world are you talking about not being able to build up a rainy day fund? You are effectively saving probably over $30,000 a year from direct savings and home equity and 15 years from now you have a paid off house worth at least $500,000 with a mid six-figure 401K which is the ultimate rainy day fund making you way ahead of just about every working person in the country. Go enjoy life with what's left over in your paycheck! Let her spend all her money the way she wants to, and as long as you pay cash and don't go into debt for the fun stuff, don't obsess over anything! You're basically on your way to the top 1% so don't be a miser who makes life miserable for your family as you pile up the dough! I think you're just bragging at this point.
Last edited by fumbling; 01-15-2014 at 10:14 PM..
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