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Current Mortgage is 4.375% 30 Years No PMI. Currently, we are paying extra 1000$ plus bi weekly so the mortgage calculator said we will be paid by more more less 13 years. We don't have credit card debt but is now confused whether we should tackle mortgage or increase emergency liquid funds. We have 6 months worth of emergency excluding roth ira. Appreciate your point of view in this matter. Thank you!
@Anonymous wrote:Current Mortgage is 4.375% 30 Years No PMI. Currently, we are paying extra 1000$ plus bi weekly so the mortgage calculator said we will be paid by more more less 13 years. We don't have credit card debt but is now confused whether we should tackle mortgage or increase emergency liquid funds. We have 6 months worth of emergency excluding roth ira. Appreciate your point of view in this matter. Thank you!
Cash is king. Your rate is not bad on the mortgage. I'd increase emergency fund if I were in your shoes as you are already paying extra for your mortgage.
I would save at least a few more months worth of monthly expenses just incase. Most of the time when people are out of work it's for medical related emergencies and then your entire savings would be wiped out. Can you save for a few more months then just make the extra payments on the mortgage once you've reached a more comfortable place?
"Prepare for the worse, hope for the best."
Emergency funds. No doubt.
@Anonymous wrote:Current Mortgage is 4.375% 30 Years No PMI. Currently, we are paying extra 1000$ plus bi weekly so the mortgage calculator said we will be paid by more more less 13 years. We don't have credit card debt but is now confused whether we should tackle mortgage or increase emergency liquid funds. We have 6 months worth of emergency excluding roth ira. Appreciate your point of view in this matter. Thank you!
...imnsho six months PLUS the IRA is more than enough to cover most conceivable emergencies if you have good insurance ...nor would I be paying down a mortgage at 4.375/no pmi ...that's a very good long term investment if real estate is flat or rising over the next decade as it should be, especially considering taxes ...I'd look at putting that $2k xtra every month to work elsewhere ...obviously I'm in the minority here
Depends on your personal situation. Is your job safe? If so you are probably ok on the emergency fund side. Can you make more than 4.375% on investments? If so the better option would be to invest that money, and just keep paying down the mortgage as you have been.
I have to agree with beefing up your emergency savings in my personal experience. I had more than a year's worth of emergency savings and blew through that with a medical emergency that came completely out of the blue (don't they all)? I won't go into details but I had over a year saved and thought that was enough. It wasn't. You can't have too much cash saved IMO.
I like that you are paying down your mortgage, but maybe you want to slow down the rate of paydown and put it away. If that rainy day doesn't come, then you can take a lump sum and pay down the balance when you are beyond comfortable (if there is such a thing).
Sounds like you both have your priorities straight though and are doing very well. Congratulations on all of your successes!
Thank you for all your response. Should I say, just pay extra 500 instead of current 1000 then keep the 500 as more savings for emergency instead? I had been going crazy looking up if it is actually beneficial to pay off the house early.
http://finance.yahoo.com/news/why-pay-extra-toward-mortgage-100000732.html
there were several comments in this link that said If I pay it early I give up the tax breaks???
@Anonymous wrote:Thank you for all your response. Should I say, just pay extra 500 instead of current 1000 then keep the 500 as more savings for emergency instead? I had been going crazy looking up if it is actually beneficial to pay off the house early.
http://finance.yahoo.com/news/why-pay-extra-toward-mortgage-100000732.html
there were several comments in this link that said If I pay it early I give up the tax breaks???
Thats correct on the tax break. As how much you should pay extra, it will depend on how much you want in your emergency fund. The thought of being mortgage debt free is nice but the liquid funds availability trumps it.