Author Topic: In Need of Financial Advice  (Read 1322 times)

jambi46n2

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In Need of Financial Advice
« on: August 09, 2016, 10:09:54 AM »
Hello,

This is my first post here. I've been lurking over some threads and felt this is a good place to come for advice.

I'm 34 years old, I have a 14 year mortgage at 3% the balance is 140,000.
The appraised value is now at 250,000. If I keep paying the minimum I will have the house paid off when I'm 48 years old.
I make 40,000 a year, and I don't have much credit card debt, just 5k will be paid off in a year with 0 interest.

Is it a good idea to pull equity on my home to invest? If so, what investments would you recommend?
I've heard some say rental property, others say index/mutual funds.

I'm thinking more and more about retirement and just want to know what's the best way to plan for a financially sound debt free future? Ideally I would like to have a nice chunk of money in the bank when my house is paid off.

Thank you!

TheAnonOne

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Re: In Need of Financial Advice
« Reply #1 on: August 09, 2016, 10:28:22 AM »
Hello,

This is my first post here. I've been lurking over some threads and felt this is a good place to come for advice.

I'm 34 years old, I have a 14 year mortgage at 3% the balance is 140,000.
The appraised value is now at 250,000. If I keep paying the minimum I will have the house paid off when I'm 48 years old.
I make 40,000 a year, and I don't have much credit card debt, just 5k will be paid off in a year with 0 interest.

Is it a good idea to pull equity on my home to invest? If so, what investments would you recommend?
I've heard some say rental property, others say index/mutual funds.

I'm thinking more and more about retirement and just want to know what's the best way to plan for a financially sound debt free future? Ideally I would like to have a nice chunk of money in the bank when my house is paid off.

Thank you!

TECHNICALLY, most will say that the market will outperform our low interest rate environment.

However, most will ALSO say that borrowing to invest is not a great idea.

I wouldn't pull equity for the market myself. I think the net benefit is small enough that it wouldn't be worth it. Not only that, but the costs associated with REFIing your house to get the money out would wash away even more of the gains.


Why do you want to do this vs. just investing monthly? I think you have A LOT to look at before you start looking at what you are proposing.

A. 40k a year is pretty(very) low, work on increasing this....
B. You have credit card debt, why? Get rid of this....

That being said, I wouldn't pay EXTRA on your mortgage to pay it off. Get an emergency fund, get debt free, invest monthly, work on your income, and THEN I would maybe start looking at other options like your proposing.

jambi46n2

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Re: In Need of Financial Advice
« Reply #2 on: August 09, 2016, 10:40:01 AM »
Hello,

This is my first post here. I've been lurking over some threads and felt this is a good place to come for advice.

I'm 34 years old, I have a 14 year mortgage at 3% the balance is 140,000.
The appraised value is now at 250,000. If I keep paying the minimum I will have the house paid off when I'm 48 years old.
I make 40,000 a year, and I don't have much credit card debt, just 5k will be paid off in a year with 0 interest.

Is it a good idea to pull equity on my home to invest? If so, what investments would you recommend?
I've heard some say rental property, others say index/mutual funds.

I'm thinking more and more about retirement and just want to know what's the best way to plan for a financially sound debt free future? Ideally I would like to have a nice chunk of money in the bank when my house is paid off.

Thank you!

TECHNICALLY, most will say that the market will outperform our low interest rate environment.

However, most will ALSO say that borrowing to invest is not a great idea.

I wouldn't pull equity for the market myself. I think the net benefit is small enough that it wouldn't be worth it. Not only that, but the costs associated with REFIing your house to get the money out would wash away even more of the gains.


Why do you want to do this vs. just investing monthly? I think you have A LOT to look at before you start looking at what you are proposing.

A. 40k a year is pretty(very) low, work on increasing this....
B. You have credit card debt, why? Get rid of this....

That being said, I wouldn't pay EXTRA on your mortgage to pay it off. Get an emergency fund, get debt free, invest monthly, work on your income, and THEN I would maybe start looking at other options like your proposing.

Thanks for the reply.
My credit card debt was a result of being laid off from my last job and unemployed for 6 months.
I am renting a spare bedroom to help pay it off quickly in the meantime.
My income could be better, I agree. I had to find something during my time of unemployment.
The primary benefit from my work is a 5 minute commute. My current employer will bump my pay to $50k by the end of the year. After that there's no promise of increased income. The job market is tough where I live. Many people are moving here fresh out of school and will work for less because they desperately need a job.

Additionally I wasn't considering a refi. I just did a few years ago. Initially my mortgage was a 30 year loan, and I was paying mortgage insurance. So by refi-ing to a 15 year, I eliminated my mortgage insurance and my house payment only went up 200 a month. I was thinking along the lines of a HELOC, but wasn't sure. I just want to live comfortably when my home is paid off.

jambi46n2

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Re: In Need of Financial Advice
« Reply #3 on: August 09, 2016, 10:53:38 AM »
Another thought I considered is if I were to sell my home within the next few years I could easily walk away with $100,000 in my pocket. I could use a portion for a down payment on a new home and have extra money for investing as well. I've never invested before so I am on the fence with taking those kinds of risks.

tonysemail

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Re: In Need of Financial Advice
« Reply #4 on: August 09, 2016, 11:01:27 AM »
hey, welcome to the forums!

there are dozens of threads about paying off mortgage vs investing.
http://forum.mrmoneymustache.com/ask-a-mustachian/let's-settle-this-with-a-vote-invest-or-payoff-debts/
http://forum.mrmoneymustache.com/investor-alley/paying-off-mortgage-early-how-bad-is-it-for-your-fi-date/

search feature is broken, but you can use google to find the previous threads.
http://forum.mrmoneymustache.com/forum-information-faqs/the-forum-'search'-feature/

if you're new to investing, you should start at the shallow end.
jlcollins stock series is very accessible and the easiest read to start learning about stock investing.
jlcollinsnh.com/stock-series/