Stop Retirement, Pay House?
Kaylie and her husband wonder if they should stop saving for retirement in order to pay off their house sooner.
QUESTION: Kaylie and her husband are both 25, and they’re on Baby Step 6. They bought their first house earlier this year. On their current budget making $115,000 a year, they’ll be able to pay off the house in about three years. Kaylie’s wondering if they should stop saving for retirement in order to pay off the house even sooner.
ANSWER: I wouldn’t call your idea crazy or stupid, but I wouldn’t do it. You’re looking at three years to pay off your house, and you’re both in your twenties. You guys are doing good work!
Let’s go ahead and continue saving for retirement, because the dollars that you’re putting in at such a young age are going to become millions. I don’t want you to miss out on the growth of that money for the house. I do advise putting a temporary stop to retirement savings when it comes to paying off other types of debt, but you guys are well past that point.