We recently were lucky enough to receive a decent-sized block of cash (~$750k). My wife and I have always worked to be very conservative with our money, and I know we are very fortunate where we are right now. Hoping to hear any ideas from the smart folks out here on a couple of ideas I have for this block of cash. Very high level of our situation:
Married, two kids (9 & 6). Living situation: appx 540k mortgage (no PMI), 4.60% interest rate. Monthly payment: ~$3700/month. Kids’ college funds are well-established (over 100k each). We max out our 401k contributions each year, and save about 12% extra for additional retirement savings. No credit card debt. Our cars will be paid off/purchased in 2-6 months.
I have always wanted to own rental properties that I can use for passive income and investment. With the $750k block of cash, I can purchase 2 (maybe 3) smaller rental properties. I believe the economy will be taking a downturn this year, and my thoughts are that I would wait until real estate prices fall in that environment, and buy on a dip in the real estate market (rather than now, which is somewhat overheated in our market).
Alternatively, I was thinking that I might pay off our mortgage entirely (it is always shocking when you look at the total amount you pay on a 30 year mortgage), and eliminate the cost of our mortgage, and begin saving the $2800/month we pay towards our mortgage. (About $900/month would still have to be paid/saved towards insurance & taxes.) This would save us over $460,000 over the life of our loan. Another idea I had was to partially pay down the mortgage principal to the point in the amortization schedule where most of my payments would be going towards principal, rather than interest (I don’t know if this is even something I can do), and then use the remainder of the money for an investment property.
Any thoughts?
Submitted March 24, 2019 at 09:31AM by AGoatandTwoPesos https://ift.tt/2HRTOIa
