Just paid off our house! (1 Viewer)

[Steve Tasker]

There is a chance we may never leave but the thought of a change in scenery up north to Westchester or even Vermont or out west to Wyoming or Idaho is really tempting.

Retiring and getting a place in small-town New England is pretty much my dream.

 

[jamny]

Retiring and getting a place in small-town New England is pretty much my dream.

Our real dream is Italy but I seriously doubt that will happen. But a little property with maybe goats and ducks, with a couple of dogs and cats, would be great.

 

[Random]

We plan to stay in our current house and travel a lot.  Why buy a house in Italy/Hawaii/New England/Ireland?  We just plan to rent for a few months at a time.

 

[jamny]

We plan to stay in our current house and travel a lot.  Why buy a house in Italy/Hawaii/New England/Ireland?  We just plan to rent for a few months at a time.

I like that plan!

 

[Steve Tasker]

We plan to stay in our current house and travel a lot.  Why buy a house in Italy/Hawaii/New England/Ireland?  We just plan to rent for a few months at a time.

I'm 29....I haven't really planned out my real retirement goals yet....

 

[jamny]

We plan to stay in our current house and travel a lot.  Why buy a house in Italy/Hawaii/New England/Ireland?  We just plan to rent for a few months at a time.

In reality though, we've travelled so much over the years, 3 or 4 trips a year, that it's almost hard to find places we want to see now. That's why a place in Wyoming or Idaho would be great to just take road trips from home. Such a beautiful part of the country.

 

[Tiger Fan]

Question for those with the house paid off.  Where did "pay extra on the house" fall in the saving/investing pecking order?  (401K, college savings, HSA, IRA, Payoff House)

Short answer is it depends b/c everyone's goals, priorities, pension availability, family situation, etc is different.

Here's what boggleheads wiki says

1. Contribute to the work-based plan (401(k), 403b,) enough to get the full employer match (the match is like free money, your best possible investment),
   
2. Pay off high interest debt (a guaranteed high return, the next best thing to free money),
   
3. Contribute to a Health Savings Account (HSA) if available (unlike many other tax deductions, there are no income restrictions to contribute to an HSA),[1][note 1]
4. Contribute the maximum to an IRA, traditional or Roth, depending on eligibility and personal circumstances,
   
5. Contribute the remainder of the maximum employee contribution to the work-based plan,
   
6. Contribute to a taxable investing account or use the backdoor Roth technique,[note 2]
7. Non-deductible IRAs or annuities.
   

College is only for after you're damn sure that you have your retirement in order

If you're serious about paying it off, I think you start thinking about it after #2...but with 3-7 in mind.  For me, I had a balance, but was heavier towards paying off the mortgage.

A couple other threads that address this (and paying off mtg in general).

https://forums.footballguys.com/forum/topic/458665-thinking-of-paying-off-mortage-instead-of-investing-in-mkt/#comment-10014065

https://forums.footballguys.com/forum/topic/723933-pay-off-home-vs-invest-math-vs-psychology/?page=1

 

[rascal]

So, I put 9% towards 401(k) with employer adding 5% (currently doing Roth 401(K)).  Then have house (170K), car (9K), student loans (20K) all at 3.5% or less, then have health savings account maxed ($2600/year).

Should I put in less towards retirement and more towards paying off the debt?

 

[Judge Smails]

We plan to stay in our current house and travel a lot.  Why buy a house in Italy/Hawaii/New England/Ireland?  We just plan to rent for a few months at a time.

I'm leaning this way as well.  My friends have bought vacation homes in the mountains and they never go.  I was thinking it would be great getting a house or condo in Palm Springs (I live in Thousand Oaks CA, so not like I need to flee winters) or a place in Cabo, but I don't want to be locked into having to go there.  The idea of going somewhere for a month or two without being tied down is appealing.  I want to see different places.  Not veg in the same spot.

 

[Sand]

Congrats! Man that takes a lot of pressure off of life.  Meeting with new financial planner next month, and making decisions on mortgage will be a big decision.  I don't want that over my head in retirement.  Have a relatively low amount by FBG standards, only 11 years left on a 2.75% note, but a payment is a payment.  I could sell the thing and not worry about it, but a mortgage burning party would be a great aspiration, deduction or no deduction.

You're the only person I've seen who has a note lower than mine (2.875% here).  Mathematically you're way better off keeping the note.  I have 14 years left on mine and my equity in the house is increasing at a 20% CAGR.  That will slow down, but it will be a long time (maybe never) before expected market returns even sniff that.  

Smart, IMO, to go with the 15 year, though.  Nice peace of mind knowing the note doesn't extend until you're 75 (at least for me).

Well played.  I'm 40, owe over 1.5M on my mortgage, my wife doesn't work, and we have 3 kids, possibly more on the way.  

####.  I should move to Columbus and buy this whole #######ed farm for myself. 

This stuff always kills me.  Here you could have a 17-20,000 sq.ft. house.  I paid $85/sq.ft. here in a great school district.

 

[Zigg]

Our house is a small 2BR (2000 sq. ft.) and we probably could have stayed here with one kid if we had children. It's really perfect for the 2 of us though, the neighborhood is great, almost everything we need is within walking distance, plenty of restaurants. Our yard is very small, think Rodney Dangerfield's yard in Easy Money, but we enjoy hanging out there in the summer on weekends. But more property would be nice. My in-laws live about a 10 minute walk from us and we'll stay here until they're gone and then really start thinking about making a move. Hipsters are starting to push in from Brooklyn and driving up housing prices so it will be hard to pass up selling if we can get like $850k for it. There is a chance we may never leave but the thought of a change in scenery up north to Westchester or even Vermont or out west to Wyoming or Idaho is really tempting.

<_<   I hate you a little.  Vancouver resident with a 950sf condo, so I guess I hate the rest of you with reasonably priced houses as well.

 

[jamny]

<_<   I hate you a little.  Vancouver resident with a 950sf condo, so I guess I hate the rest of you with reasonably priced houses as well.

We were looking at apartments in Manhattan last year, just something small to avoid travelling home when working very late or just to give us a place to hang out on the weekends. $350k would get us, at best, 400sq ft. And nothing even close to modern or renovated.

 

[Tiger Fan]

So, I put 9% towards 401(k) with employer adding 5% (currently doing Roth 401(K)).  Then have house (170K), car (9K), student loans (20K) all at 3.5% or less, then have health savings account maxed ($2600/year).

Should I put in less towards retirement and more towards paying off the debt?

It depends.  Do you think you're going to stay in this house forever?  If not, how much longer do you think you'll be there?  Age?  Steady job?  Any pension for you or spouse?  any windfall (ex. inheritance from parents) expected?

 

[Dentist]

Question for those with the house paid off.  Where did "pay extra on the house" fall in the saving/investing pecking order?  (401K, college savings, HSA, IRA, Payoff House)

401k was maxed,  HSA maxed, IRA maxed,  college savings (not maxed, but contributed to),  18 month emergency fund in tact...   just extra money laying around... could've invested in cash management account.. and I have one of those as well, but I was getting mediocre returns there

 

[Zegras11]

We were looking at apartments in Manhattan last year, just something small to avoid travelling home when working very late or just to give us a place to hang out on the weekends. $350k would get us, at best, 400sq ft. And nothing even close to modern or renovated.

LOL.....   $350k will get you 4bd, 3ba, 2800 sq ft, brand new with nice updates, on 3/8 acre here in Boise.  Maybe be able to toss in a pool also,

 

[5Rings]

Congrats ZM! 

Personally, I'm not so sure paying off properties with a big lump sum payment is a good move.  I've been thinking of this quite a bit.  Have over 1M outstanding at 3.75%.  Decided not to pay it off, as my cash is earning 3% + the big tax credit from interest.  Gives me a bit of flexibility too, but I don't have any peace of mind from having buildings paid off.  3 kids, 43yo.

Now, if the tax system is changed and we lose the interest tax credit...different game.

 

[Dentist]

LOL.....   $350k will get you 4bd, 3ba, 2800 sq ft, brand new with nice updates, on 3/8 acre here in Boise.  Maybe be able to toss in a pool also,

here in Kansas city, I can get into that for about 450-500,  basically exactly what we're looking for.

So my worst case scenario i THINK is:   500k,  put down 20% or 100k,   get 15 year note for 400k,   sell home (should clear about 200k from that)   put that on home loan, recharacterize and have a 200k 15 year note.

Best case about 400k and I'll be fist pumping as I should just have a 100k note for 15 years, which would not be a very high payment

 

[gianmarco]

Congrats ZM! 

Personally, I'm not so sure paying off properties with a big lump sum payment is a good move.  I've been thinking of this quite a bit.  Have over 1M outstanding at 3.75%.  Decided not to pay it off, as my cash is earning 3% + the big tax credit from interest.  Gives me a bit of flexibility too, but I don't have any peace of mind from having buildings paid off.  3 kids, 43yo.

Now, if the tax system is changed and we lose the interest tax credit...different game.

This is me almost exactly except I'm at 3.5% which makes it even nicer (3.75 initially and refinanced 6 months later).  3 kids, 41 yo, and similarly wouldn't have much peace of mind just because it's paid off.  I have more peace of mind knowing I'm locked into a great rate and let the bank pay for my house while my money makes more elsewhere (for now).

 

[kutta]

I'm leaning this way as well.  My friends have bought vacation homes in the mountains and they never go.  I was thinking it would be great getting a house or condo in Palm Springs (I live in Thousand Oaks CA, so not like I need to flee winters) or a place in Cabo, but I don't want to be locked into having to go there.  The idea of going somewhere for a month or two without being tied down is appealing.  I want to see different places.  Not veg in the same spot.

I live in Phoenix and the wife and I bought a little vacation house in Prescott which is about 1.5 hours from Phoenix. It's a beautiful mountain town, one of my favorite places in the world. That's all we are buying though. It's great to get up there on the weekends (I'm here now  ), but we don't want to buy something that we have to travel far to. We will just go to those spots and rent for a month or two or three to keep our options open.

But, we sure did love Sydney...

 

[rascal]

It depends.  Do you think you're going to stay in this house forever?  If not, how much longer do you think you'll be there?  Age?  Steady job?  Any pension for you or spouse?  any windfall (ex. inheritance from parents) expected?

We have no plans to move until our youngest are out...16 more years.  I'm 36 with a steady job.  Wife has no pension.  I'll have a pension (top 3 salary X 1.1% X years employed).  Make 105K.  Might expect 150K for inheritance but plan on that going to fund kids school.

Also been suggested I get a home equity loan as we bought our house as a short sell (230K) with market conditions making our house value closer to 280K.

 

[Binky The Doormat]

Zen - congrats!  Great job of saving and making conservative financial decisions.  

Keep saving and planning.  You are on your way.

 

[Righetti]

So when you upgrade to some 500k house with what, maybe 3500 square feet and several extra BRs and bathrooms, what to do you with all that when the kids are out of the house?  Play tag with your wife?  Indoor corn hole?

More taxes, more upkeep, and way more space than you would ever possibly need for just the two of you.  Probably need a maid service once a week which adds another year or two before retirement.  Probably a bigger yard and more landscaping costs to keep up with the joneses, adds another 2-3 years before retirement.  Higher utility costs to heat/cool that space, add another year.

Damn dentist, you aint gonna retire till 70, especially because once this house is paid off your wife will want another upgrade

Not sure if that is money well spent, yes it will increase her confidence, she'll look a lot better in a dress and (for a few weeks) you get a lot more of the sex

But just realize that as soon as she does, start hiding money   Soon you'll be back to paying a mortgage on a crappy two bedroom on the edge of town above the laundromat 

 

[Tiger Fan]

We have no plans to move until our youngest are out...16 more years.  I'm 36 with a steady job.  Wife has no pension.  I'll have a pension (top 3 salary X 1.1% X years employed).  Make 105K.  Might expect 150K for inheritance but plan on that going to fund kids school.

Also been suggested I get a home equity loan as we bought our house as a short sell (230K) with market conditions making our house value closer to 280K.

It's a personal decision really on how you want it to weigh into your overall financial strategy.  It's more documented in the thread I started, but I view it as another insurance; especially b/c I work for a global company and don't want to leave the city I live in.  I face a realty (albeit small) that I could cap out at some point and might have to leave a very good job...so paying off my house early was one way of mitigating it.  Also, the fact that my wife at one point wanted to stay at home when we had kids was factored in as well.

That pension you have is pretty sweet, and that combined with what you're currently doing leads me to believe that you'd be in a good position to at least seriously think about it (obviously without knowing anything else about your situation).  

 

[jamny]

I'd love to never move again, but if I had to move somewhere Boise sounds pretty great. 

We're heading there next 4th of July to scope it out.