Author Topic: Mortgage or IRA?  (Read 1265 times)

Nuns

  • 5 O'Clock Shadow
  • *
  • Posts: 1
Mortgage or IRA?
« on: October 27, 2014, 04:14:15 PM »
I have $10K sitting in my saving/rainy day account and I feel like I could be using that money more effectively. I am thinking of spending $5K towards either my Mortgage or towards my IRA.

I currently max my 401k contribution but haven't made an IRA contribution this year or last year. (My IRA balance is at about $26K).
I am paying 4.75% (it is considered an investment property) on my mortgage which stands at ~$220K (30 year, $1420 per month). If I paid the principal down by $5K I'd pay it off 18 months early.

Should I put my money in my IRA which I have neglected the past few years or would my money be better spent towards the principal of my mortgage? 


solon

  • Handlebar Stache
  • *****
  • Posts: 1664
  • Age: 1819
  • Location: CO
Re: Mortgage or IRA?
« Reply #1 on: October 27, 2014, 04:20:09 PM »
By paying down your mortgage you'd make 4.75%. How much would you make in your IRA?

sol

  • Walrus Stache
  • *******
  • Posts: 8493
  • Age: 42
  • Location: Pacific Northwest
Re: Mortgage or IRA?
« Reply #2 on: October 27, 2014, 04:24:59 PM »
And would the IRA be a Roth or a deductible IRA?  If you qualify for a deductible IRA and are in any tax bracket above zero, I'd probably take the deduction rather than the 4.75% on your mortgage.