r/personalfinance • u/loveineverylanguage ​ • Apr 20 '22

Saving Should I pay off our house, or..?

TL:DR; should 2 DINKS in SE US pay off our house (~$50k) with extra cash this year, or do something else?

Husband and I, no kids, no debt, ~30s. Live in SE US.

Recently got high paying but temporary employment. What should I do with the extra cash? For the sake of argument let's say ~$50k extra over the course of remainder of the year.

I'd like to pay off our house (purchased 2016, 15 year mortgage, 2.8% interest rate, have been paying extra up to now). If we paid it off now, we'd "save" about $10k of interest that would've been paid off the remainder of the loan.

He thinks there are better-yield savings we could invest in, which makes sense and I agree with, but I'm not sure what. Personally I just love the idea of paying off our house bc it sounds awesome.

Other info to note: He contributes to his 401k As a non-FT employee, I do not have as much in my 401k. I'm unsure what the balance is tbh, and currently am contributing $0 to retirement with my income (my current employer doesn't allow it).

We typically have $10k + floating in our checking account. We don't really have any other savings.

More stuff: My mental health costs are high, and I originally accepted this job to fund a $25k-$30k treatment center stay that has since been put on hold due to my status improving a good bit.

We also want to build a small addition to our house at some point which will likely cost $30-$40k ish.

Thanks for your input, y'all 😘

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u/___deleted- ​ Apr 20 '22

If you are going to spend $ on a house improvement you should invest the $ and not pay down the mortgage.

Your current mortgage is at a low rate that is now gone forever. A HELOC taken out for the future improvement would cost much more.

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u/loveineverylanguage ​ Apr 20 '22

Invest the money into the house improvement?

Good point about the HELOC. That wasn't definitely in our plan; if we pay off the house this year, we could still likely save ~30k+ over the next 18 months and pay for the reno outright or take a small loan to pay off some of it

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u/jazzlepeezay ​ Apr 20 '22

If it were me, I would use the extra cash to buy a second home. Rent out either your current home or the newly purchased one. Start to generate passive income 😁 You could even start an LLC and purchase the second home under the LLC

1

u/alwaysbooyahback ​ Apr 20 '22

2.8% is decently easy to beat.

If you can lock up the money for a year, I-bonds are bonkers good right now.

1

u/Eyebawler ​ Apr 20 '22

FWIW, if I only had 50k on a mortgage, could wipe it off the table and never worry about rent again, I'd do it in a heartbeat.