Best advice to Invest or Pay Off Mortgage Early
Hey, Guys, It's me Onesiphoro In this blog I will give you the best advice on how to invest or pay off the mortgage without further ado let's get right into it. you how can I help so a little bit of a unique situation my wife and I am on the second home that we purchased from her parents and her dad so graciously allowed us to purchase it from him and he is our bank and it is a 0% interest a land contract that he is actually covering the taxes on so we're in a great situation but my question for you today as we are looking at really starting to invest I'm trying to weigh what would be a better return on our money whether that would be to simply pay off our is your percentage interest mortgage as fast as we can or to do a little bit of both investing and while paying off our mortgage we suggest when you're debt-free everything but the mortgage that your next step is to have an emergency fund of three to six months of expenses, we call that baby step 3 do you have an emergency fund we do but I know that it's not as much as we should have okay the first thing before we talk about in this other stuff is it should be three to six months of household expenses in liquid cash that you don't touch for any reason this is not a Hana saving up for Christmas or vacation or a house or anything else this is an emergency fund the government then once you've done that then we do baby steps four five and six at the same time but in that order of priority four is 15% of your household income going into retirement and that would be matching 401 k's Roth IRAs you know traditional whatever along those lines and you're filling up stuff in good mutual funds there and what's your household income is about seventy-five thousand dollars combined a year okay all right and so you know we're talking about 9k Dollar a year roughly is your is fifteen percent of your income everything above that then leaves us for bay step five which kids college you have any kids that you need to say for college we have one so far we're in the first year of building our families oh yes okay.
I would start something it doesn't have to be dramatic but I would start something towards the kid's college hundred dollars a month or something in a good mutual fund and that's going to be you know that's gonna be a blast and get that rolling and then everything else I'm gonna throw towards the mortgage until it's paid off I do want to get this mortgage paid off as fast as possible regardless of the zero percent interest rate and here's the reason it's your largest payment and as a matter of fact, it's your only payment and all the data tells us from the ten thousand millionaires that we surveyed that one of the keys to becoming a millionaire is getting your home paid off and keeping it paid off okay and because it frees up cash now you are in more of a danger zone then you feel like you're in with this land contract land contracts are very dangerous here's why anything that happens to your father-in-law or a mother-in-law who's named this property is in and they get sued for that could be a lien placed on the property that you feel like you own that you do not own if they are driving down the road and hit a patch of ice and they were driving reasonably and someone gets killed in the car wreck and Sue's them for 500 million dollars and wins that a lien is gonna be placed on the property that you thought you owned because it's not in your name okay screw off if they screw off and go run up a big IRS debt and there's an IRS lien placed on them it's going to be on that property that they own that you have a contract to buy the contract for deed is a dangerous ownership methodology point being you could pay a hundred thousand dollars down on this principle and 20 minutes before you pay it off a lien gets slapped on there and you don't end up with the property that you.
Just paid off even if he wanted to I mean it could be something that's out of his control I'm not suggesting I was a crook the worst-case scenario is he's a crook but I'm not suggesting that but I mean life happens here and you can really get in a mess so I strongly suggest that you guys get that property put into your name and you convert this from a land contract toa mortgage on a mortgage or a deed of trust depending on how your state functions with a lien on a piece of property that you own so the deed transfers to you and you still owe him under the exact same terms the mortgages and if it costs a little bit of paperwork money to get the lawyer to do you pay the bill and get it to put into your name before you start reducing this principle and it has nothing to do with questioning Papa's integrity life happens and it could be out of Papa's control and then you'd have a really bad situation and believe me in 13 years I've seen it a bunch and doing financial counseling that's why I'm so strong on it I have a land contract. That's it Hoping it helps you guys see you on my next blog.
