Do I Pay Off the House or Invest More?

Walt asks if you should pay extra on a mortgage that will be paid off in the next couple of years or invest that money over and above Dave's recommended 15% for retirement once you are on Baby Step 6.

QUESTION: Walt asks if you should pay extra on a mortgage that will be paid off in the next couple of years or invest that money over and above Dave’s recommended 15% for retirement once you are on Baby Step 6. Dave talks about how the house is the better option.

ANSWER: I would pay extra on the house. A magical thing happens when you sell the house: They give you the money. If you pay the house down and sell it, the money comes back out. You didn’t lose it.

You don’t lose it if you put it into retirement either, but we don’t know what’s going to happen over the next five years of your life. We think we know. You definitely have a plan and stuff, but I would pay down the house because your plan might not work out exactly the way you want and it sure would be neat to have that house paid for at some point if things don’t go well for you.

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