Hello!
I just recently found this blog and I'm sure like many of you, I wish I would have found it years earlier. For the past week I've been having a Mr. Money Mustache Read-A-Thon with my wife, competing to read all the articles the quickest.
Before MMM, I've lived the first 7 years of my 20's in a pretty un-mustachian way. However, no more! My wife and I are rethinking the way we live and spend to get on track to financial independence.
However, my main question today is not about me. It's about my parents who have no idea of the Mustachian ways. As of December of last year my father retired. Recently they've made some moves which put them back into debt. They just built their dream retirement home (took on a $100k mortgage to get it) near a nice body of water, bought a brand new car ($20k car loan), and are spending quite a bit to decorate and furnish their new home.
My dad has the very unusual benefit of having a pension plan (which is a rarity nowadays) so they have a steady stream of income as long as he's alive. They also have a a decent 401k of around $500k. My question is, with a 401k and a steady income from pension plan, should they use the 401k to pay off their car and home debt? Or just use the steady income to attack the debts?
I'll list out in a tabular approach....
Income: $4k/month
Assets: $500k in 401k
Debts: $100k mortgage
$20k car loan
I'm not sure of their monthly expenses, but I would imagine them being rather high due to the non-mustachian nature. I would appreciate any advice you may offer. If you need more information/financials, I can get that information.. What's the best course of action for them to get out of debt??
Thanks Mustachians!