Hello Mustashians,
I'm 28 and my wife is 25, we live in Florida and we're in need of a little financial direction. After reading several blog posts and combing through the forums I'm a little confused on whether I should be paying my mortgage down or investing.
We currently owe $85,591.21 on our house we bought for $108,468.00 on 01/2009 with 6% interest. Our monthly payments are $842 with taxes and insurance included ($650.33 without). I have a Roth IRA with $20,920.94 invested with Stocks 71.30% Bonds 28.70% at Vanguard and my wife has a 401k through her work with about $3,000ish saved up.
Right now we're able to save around $1,500 monthly, and we're hoping to grow our mustaches and save more but how should we best utilize these funds?
At the beginning of the year tried to put all of our extra savings towards the mortgage in a mad dash to pay it off. Our rational is that we'd be saving/earning 6% when doing this. We recently came to a conclusion that we might be able to do better by investing these funds and making our money work for us by gaining compounding interest.
After reading MMM it seems that we can put our savings towards the Roth IRA that I already have, and start one in my wife's name as well so we can put in up to 10,000 annually (5,000 in each respective account), then invest those funds with indexes and bonds gaining 7% or higher, compounded. I'm not sure how we would invest the remaining 8,000+ though. The thought too is that with a Roth IRA if we save up enough we would be able to retire early by withdrawing from our previous contributions without paying any tax penalties by leaving the earnings intact.
Am I learning this correctly or should go back to our plan of paying off our mortgage first then think about investing?
If investing inside the Roth IRA is indeed a good plan, what should we do with our remaining 8,000+ that we wouldn't be able to put towards it?
Thanks in advance for any financial compasses to give us direction.