Posted on 01/10/2016 12:33:51 PM PST by al baby
I would pay down the mortgage as well.
Giving up $25K in cash to help payoff a mortgage MAY BE GOOD.
To gut and re-phrase the old real estate axiom “it depends, it depends, it depends.”
$25K can get you through some generally, un-anticipated tough spots like sudden job loss, health emergencies and civil strife.
Pay out the $25k, then lose your income stream tomorrow, you have fewer choices.
Pay out the $25K, uncovered health issues could wipe out any cushion.
If you lived in Ferguson, and paid out $25K towards your property, now your property is worth less, you lose.
If your rate is low and fixed, role with it. Wait until the $25K will actually PAY OFF the mortgage, then pull the trigger, MAYBE . . .
Make sure you have plenty of other CASH CUSHION, liquid assets, to meet significant un-covered emergencies.
Do some due-diligence about where you live. “I’ve lived here all my life” didn’t save folks in South Central, Watts, Newark, Detroit or other region under civil strife.
$25K gets you started on a bug-out plan.
Also, for those of like-mind, don’t forget about G-d’s grace. You have what you have from your hard work, AND with the grace and benevolence of our Lord & Saviour.
Holding on to $24K and throwing $1,000 to your favorite charitable organization may return un-told riches to you and your community.
Depending on your age....here are some thoughts:
Pay off your debts, starting with the smallest one and work up.
You need an emergency fund of at least four to six months of income.
You should have at least $1000 in small bills in your home.
Once you have all that, depending on your age you can “invest.” $25k is really not a ton of money these days.
Keep a small amount of it as an emergency fund.
Looks like a number of FReepers are Dave Ramsey listeners. :)
Normally, I am anti-debt, but it depends. If the mortgage is low interest fixed rate, keep it and do something else with the money. If it is variable rate, or the interest rate is above market, pay it down.
If you have a fixed rate mortgage and inflation comes, you are going to be paying that mortgage with cheaper dollars, while you invest your money in something that will hopefully keep up with inflation.
Now going to read the thread to see what others say.
These days, 2 months is inadequate for most folks. Six months is more practical. Another formula is one month for each $10k of annual income. Takes into account that it is easier to find low paying jobs than high paying jobs.
Let me sign you up as an Amway distributor. We’ll get rich!
Returns on investments are good
Debt service is bad.
rational decision:
will return on investment cover cost of debt service over the same time frame?
If your mortgage is above 4% APR you would be better off paying down the mortgage and eliminating the cost of debt service.
Buy a house with land. Not condos
I’d pay down the mortgage. There is no money in savings and I don’t trust the market right now.
At 50K, 10 years to go and 4.5 interest you will pay over 12K in interest. With 25K, you should be able to pay it off in 5 years with only 3K in interest and in 5 years have your payment as disposable/savable dollars every month.
We have a 2 year buffer without talking iras and such I love cash well you know it’s the only thing we got till the new world order credit rf tag in our behinds
“These days, 2 months is inadequate for most folks. Six months is more practical.”
You may be correct, it does depend. Two months is a good start for most who have no emergency fund but it does depend upon how reliable your income streams are. Those dependent upon commissioned based income probably need more of an emergency fund than a government worker. The big key is to focus on irreducible expenses. You don’t need an emergency fund for trips to the movie theater. You do need one for your mortgage or fuel to get to your work place.
Thanks
without digging its 6 percent
If you want to pay down your mortgage here is what I would do. If you can refinance for a lower interest rate do it and add the $25 thousand to the “down payment” so you can shorten the pay off time or reduce your monthly payments.
Getting rid of all debt forever is the best investment you can make.
A screen name i can trust thanks
...”Getting rid of all debt forever is the best investment you can make.”......
Thankfully I can attest to that as well....and enough cannot be said how it affects your very being you are debt free!...marked difference in how you view most everything.
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