Husband 28M and I 27F, make ~175k/year and recently paid off all our debt except the mortgage.
We save plenty (about 28%) for retirement.
We clear about 3-4k/month extra, on top of all expenses, retirement savings, and giving ourself plenty of fun money etc. This was previously going to pay off debt but now I’m not sure what would be optimal to throw it at.
Our mortgage is 200k at 5.5% on a 300k house.
Other than our 15k emergency fund we don’t really have any other liquid assets – it’s all tied up in retirement accounts or the house.
I’m wondering what split you guys would recommend for saving in a brokerage vs paying down the house, vs other accounts (rotating CDs?).
We don’t plan on any major purchases soon… I may need a new car in 2-3 years. And maybe we will want to upgrade our house eventually ✨if✨ we end up having kids in ~5+ years. But not really sure.
What do you think?
Save extra in brokerage or pay off house?
byu/RitaRomano inpersonalfinance
Posted by RitaRomano
2 Comments
5.5% is right on the cusp to recommend paying off. Guaranteed return plus emotional dividend of being debt free.
If you don’t want it all tied up in the house you could always prioritize the mortgage and out say $1k or so into a brokerage or separate savings depending on time horizon.
Congrats on killing the debt first of all.
5.5% is actually a solid guaranteed return. like yeah the market historically does better, but that’s not every year and paying down the mortgage is risk free. there’s something to be said for that.
i’d probably lean heavier on the mortgage than most people suggest here. maybe 50/50 half to extra mortgage payments, half to brokerage. you’re building equity fast and your interest burden drops every month you overpay. (Living rent and mortgage free is the dream 😃)
only thing i’d do first is beef up that emergency fund a bit. $15k is thin when you own a house. get it to like $20-25k then split the rest.
on the CDs, i get the appeal but the juice isn’t worth the squeeze. you’re looking at maybe 4.5-5% right now, which barely beats your mortgage rate and you’re locking up cash with expiry dates to manage. just not worth the hassle.
and honestly the brokerage piece is still worth doing, the market has had a crazy run the last couple years and historically, S&P is up something like 50%+ since 2022 lows. nobody knows if that continues but being completely out of the market outside retirement accounts is leaving a lot on the table long term.
so: top up the emergency fund, then 50/50 mortgage and brokerage are my thoughts