Hi all --
Long time, first time, etc. Nice to meet you all. Spouse & I are just about bare-bones FI, though not RE; we're a bit older than most of you (50s and 60s). We're both still working, building the 'stache. No kids.
We're trying to figure out how home equity figures into our financial future. Our house is nearly paid off: After 20 years, there's $30k left on the mortgage, 5.5% interest rate, tried to refi again a few years ago but our mortgage broker said it wasn't worth it. It'll be paid off in 3.5 years. No other debt. We've been moderate Mustachians since before the term existed.
The thing is, about 37% of our entire net worth is in our home equity. After much reading here and elsewhere, I'm realizing that that money isn't working particularly hard for us. The rest of our net worth is en route to Vanguard index funds after spending a lackluster decade with a financial planner. (You live, you run performance analyses on your current assets in Excel, you learn.) We've stopped paying extra on our mortgage after realizing that although a 5.5% return isn't bad, we might do better putting those extra payments into stock & bond index funds instead of accelerating its path into yet more home equity.
My quandary is trying to figure out our best strategy for our assets. Put everything that's not tied up in home equity into stocks? Do a stocks/bonds split, even though 37% is already tied up in a relatively stable if underperforming place? Take out a HELOC (just learned about that) to get some liquidity out of our stagnant home equity and invest the $$? Buy a new house and get the biggest mortgage we can while rates are still low? That last option is unappealing because of the massive amount of work involved in moving 20 years worth of stuff into a new home while we're both working full-time, and because of the irrational appeal of owning our own home free and clear. We're more interested in optimizing happiness than in optimizing every possible penny.
We're comfortable with relatively high financial risk; neither of us blinked when we lost 30% of our net worth in 2008. We just let it ride and recover. Ideally, we'd like a 75/25 stocks/bonds split, but we're not sure how home equity figures into that.
So -- any thoughts?
Thanks.