I have a couple questions:
>What is your income? Out of this, while you're still paying a mortgage, how much have you been saving per month?
>On what were you basing your ER goal of $600k? The 4% rule floating around here assumes you have stock exposure
>Being conservative - a guaranteed 4.125% is found in paying off your house ASAP. It may help you from a foundation of zero debt anywhere to build from. It would let you do more dollar cost averaging in as you get comfortable with the market. It would save you probably $500/month on a 30 year mortgage to just put that behind you (I'd do that personally).
>Paying off the house gives you the benefit that you now need less of a stache built because it's one more expense you now DON'T have
>Is the goal to retire as soon as possible?
-My take home pay is $4k/month. I am saving 50% of my net pay. I'm basing my ER goal of $600k on my current annual cost of living @ $24k/year. I do understand that the 4% rule assumes you have stock exposure and other investments. I am also engaged and my partner works. With some spending restructuring, she could easily save an additional $2k/month.
-My goal is definitely to become financially independent asasp. I desire to remove myself from the rat race and stop working for someone else as a full time employee...but I would still work on passion projects and income generating hobbies.
-I have considered paying off the house totally - but was not sure that was the best decision given my options. Sure, it would eliminate a monthly expense and save me from paying a ton of interest but isn't that a bit like putting all my eggs in one basket? I am already paying it off much faster than if I were just making minimum payments.
Thanks for answering a few of those:
-You take home 4k/month - you save 2k/month (it sounds like after paying extra on the mortgage). I'm estimating the payment at $500/month Principal & Interest plus the $200/month you've been throwing extra at it. So if I'm hearing you right, if it were paid off your monthly expenses would now just be $1300?? ($4000 take home pay - $2000 savings now -$700 from mortgage being gone).
-Assuming that's right, your 4% stache (or 25x your annual expenses) is $1300 x 12 x 25 which = $390,000 stache at 4% withdrawal gets you the $1300/month. This is a drastic reduction in the size nest egg you need to grow.
-Do I think you can long term do better than your 4.125% mortgage rate in the market? Yes - but it's not risk free. You mentioned being new to getting into the stock market and having $150k. Get yourself a guaranteed 4.125% on your money by paying off the mortgage. You still have $45k - set aside maybe $8k in an emergency fund (6 months of expenses) and invest the rest ($37k).
-By my math - $37k initially invested in the market (all in the stock market, I think your need for bonds is less b/c you have such a firm foundation of no mortgage + a VERY high savings rate ($2700/mo off of $4000 = 67.5%). Assuming you earn 7%/yr on your investments you are about 7.5 years out from being Financially Independent.
This is how I would go at it - but I feel it's an especially good way to handle your situation given your experience with the stock market. By the way - if you hate having a paid off house a banker will always write you another mortgage.