Savings - screened porch v college?
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Anonymous
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Monthly mortgage is $3000, but we have been paying $4600 since 2017 to pay off the 30 year mortgage in 15 years. (3.6% interest) - should be paid off in 4 years. My husband wants to do this and whether or not it makes the best financial sense - I am telling myself it’s not hookers & blow and I’m going to throw him a bone and let him do this for his mental health / security. House currently worth $900K with $150K left on mortgage.
My car loan - 2.5 years left on it, 2.6% interest rate - $383 monthly payment - have a HYS at 4.3% now, just not going to pay that off early. My student loans - $28K left - at 6% and I have a plan to pay off in 4 years also. (For whatever reason I’ve decide that the interest rate is the price I’m willing to pay to have 4 more years to pay this off.) 3 kids - ages 14, 11, and 8 - oldest is in 9th grade and the mortgage and student loans are timed to both be paid off at the time oldest starts college. This all remains to be seen as we get closer but I would like to pay room / board / tuition for my kids to go to college at a state school (or that amount put towards private school). They will be in charge of their own spending money in college and for all of grad school. I would also like to pay cash for a screened in porch in the next 3-5 years. DH and I are 41/48, almost 42/49. $1.2m saved for retirement. As of right now, I have the only grandkids on my side and my parents have said they will give some money for college but idk how much. Can you just try to talk to me on the college savings and the screened in porch and how I’m directing any extra money in the next few years? Recall that I’m freeing up a bunch of cash in the next 4 years from these loan payments. Our college savings are on the lower end of what I see on dcum - we put in $100/mo./per kid with the idea to fund college by also having extra cash flow from these loans being paid off and to take out student loans for them. Screened in porch is something I've wanted for at least the last 5 years or more - not on a whim. |
Anonymous
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Am I missing something or did you not tell us how much you have in 529s or other college savings? Also what is your HHI?
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Anonymous
This plus I am confused. Why do you say you want to pay for all on college....but you also plan to take out student loans? Why would you pay down a mortgage at 3.6, whose interest is tax deductible, to take out student loans when interest rates for loans are currently at 8 percent? |
Anonymous
This combination of facts makes no sense. You're doing too much mental accounting--these things are not in separate frames from one another, they are all in one frame in which you have one debt it makes financial sense to keep and one debt it does not, relative to the interest being paid on the basket of money you owe. How much is in the HYS? |
Anonymous
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Your DH is playing too loosely with $1600/mo.
You could have had your student loans paid off. You could have saved more for college. I would have a very serious talk with him. |
Anonymous
| No way. You have a car loan and student loans. |
Anonymous
And $1200/year for each kid towards college savings isn’t much. |
Anonymous
I suspect he'd rather pay off a marital asset rather than her pre-marital student loans. Paying off the 3.6 percent mortgage whose interest is deductible doesn't make sense when they don't have more saved for college and they have all this other debt. |
Anonymous
| You need to stop paying off that extra 1600 a month on the mortgage and start funneling it towards 529s and the other debt. |
Anonymous
+1 Plus, giving up the tax savings from watching the 529s grow over the years tax free. That extra $$$ towards the mortgage would be better going into 529s. Also don't get why you'd pay down the mortgage at a low interest rate when you STILL have your own student loans at 6%. Just doesn't make sense |
Anonymous
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OK I take the point that you are all aligned on college over porch. So I will take that into extreme consideration going forward.
On the mortgage vs. student loan thing - I think my DH and DCUM are going to have to agree to disagree. I get what you are saying about 6% being higher than 3.6%. But his feeling on the loans is the total amount of interest paid on $150K at 3.6% is more actual money than what you pay on $28K at 6% and then he also feels secure in where we have to live. Without being able to do the actual math on the interest myself - I think it's a close enough call to be a wash. HHI is $300K. I don't know the actual amounts currently in the 529s - I will find that out ASAP. |
Anonymous
OP here. My parents paid for me to go to college but some of it was loans that they took out in my name (that have since been paid off). DH put himself through college and grad school - and we were married when I went to grad school - he paid for most of it, except I still have some small loans to finish. |
Anonymous
OK but the reason I have a car loan is because I am making more money in the HYS than paying it off. |
Anonymous
m That is super recent |
Anonymous
| The amounts you are paying for the mortgage and mortgage, student loan, and car loan that you are hoping to payoff and the be able to cash flow part of college won't go very far with 3 kids. Even if you pay off all the debt, you'll still pay proparty taxes and home insurance. You need to take a hard look at college savings and see how you can increase that while paying down your higher interest debt. I would stop paying extra on your mortgage and try to spend less generally. |