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[quote=Anonymous]My primary residence is a house I bought for $500k and is now worth $400k (mortgage is $350k).
My investment property was bought for $500k and is now worth about $450 (mortgage is $250k).

I've been a prolific saver based on a temporary higher income (contract will end soon) and have saved up about $350k.

My income will decrease to a point where I will not be able to save money like I have in the past but it will still be enough to get by (a comfortable pay check to pay check scenario).  With my income decreasing in the foreseeable future, I wanted to see what you would do.  Would you pay off the investment property to generate an income of about $2k/month or would you pay off your mortgage which would reduce your expenses by $2500/month?

If I pay down my investment property to generate income, I will be making a profit on it every year (right now, I make a paper loss with the depreciation) and will have to pay taxes on it.  But if I pay down my mortgage, I will be reducing my expenses by about $2500 every month which will not incur any additional taxes.  In the mortgage scenario, I would not have any savings/cash cushion left which would leave me exposed if something bad were to happen (car accident, medical emergency, etc).

What would you do?
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