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Ask Dave

Pay Off The House?

Patrick should pay off his car today with the money he has in a mutual fund, pay off the house in a few months, and invest in good growth stock mutual funds.

QUESTION: Patrick just refinanced to a 15-year fixed mortgage.  He has about $70,000 in a mutual fund and has a $6,000 car payment and a $70,000 mortgage.  Should he use his mutual fund to pay off these two debts, even if he doesn’t think he’s going to be in this house much longer?

ANSWER: Pay off the car today.  Then pay off the house in about three months.  Finally, take the amount you were putting toward car payments and house payments and have that automatically drafted into good growth stock mutual funds.