This has likely been asked and answered before, but I’ll ask anyway.
Mortgage is large - $560k, Bay Area, CA. Lowish rate-3.625%. First (and probably only) child is coming in the next couple weeks.
Both parents working. Income is $140-160k (I’m self employed and it fluctuates). Daycare will be like 1500-2k per month, which is a new expense for us. Mortgage is $2600. We already contribute to retirement.
I can see both scenarios making sense.
Start the 529 quickly and strongly, be consistent, and let compound interest do it’s work. Pay the mortgage as usual and make extra payments if available. However, I also suspect college and schooling as we know it today will be different in 20 years. Don’t know how but suspect it.
I can also see paying the mortgage off 10-15 years early and saving ~$200k in interest, which would go a long ways towards schooling, and allow us to better cash flow college when it comes. I’ll also add that I like the idea of no debt. Mortgage is the only debt.
Conversely, that $2600 per month mortgage payment will feel like $1000 per month in 10-15 years and will feel like a bargain compared to today, assuming our wages increase with inflation.
Although I don’t like his politics I appreciate the advice of Dave Ramsey. He would say college first and house after, and his logic does make sense to me. I understand some will say the low interest rate and interest deduction makes sense to keep the mortgage, but the idea of not owing anyone anything is appealing to me.
What do you all think?
Submitted May 13, 2018 at 10:32PM by Easy_lucky_free_111 https://ift.tt/2IguR6p
