Quote:
Originally posted by digme
awsome thread. so far very informative.
heres my question.
I have a second mortgage (at 8%)
I have some money saved (could pay off the debt)
Is it better to get rid of the debt, or invest the money? Should I be investing in a 403b instead?
I'll probably be in this house less than 5 years, if that counts for anything.
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The only benefit to the mortgage is the tax advantage. Since you can deduct it, call your mortgage 6%. Can you beat 6%? You probably can, at least over time.
Unless you're a teacher or a priest (which you might be), I don't think you can do 403b. But 401k-- the private sector equivalent-- has some tremendous advantages over traditional accounts. Namely:
1) Tax deferred;
2) Possible matching.
I'd say, generally speaking, up your payments on the mortgage a bit, that way you'll clear a bit more when you sell. Start putting some money in your tax-deferred account, and if you can, make some back payments into it.
The one thing that confuses me a little bit is that you say this is a "second mortgage." What's the term on the first one, and at what rate? You may want to look at refinancing and consolidating, you should be able to get your rate down.
Bob