38 yo married with 3 kids (7,5, and zero)
Income = 250-275k
Annual retirement contributions (401(k), Roth, HSA,) = 50k
Annual 529 contributions = 16.5k
Emergency fund = 30k (4-5 months)
Retirement assets = 567k
529 funds = 67k
Mortgage debt = 152k fixed 3.125% ($750/month payment)
I plan on working at least until mid 50s and then hopefully will have the option to sell off my small business for 500-600k if it all works out.
I receive some of my income at the end of the year so I could lump sum 8-10k on the mortgage at that time. Then I was thinking I could add another 1k every month to the mortgage payment. If I loosely follow this path, I could have my mortgage paid off in 5ish years. I know it's a low interest rate and I might be able to get better returns via compound interest long term in a taxable account. I have a small taxable account with Vanguard. I could also do a mix 50/50 pay off mortgage payment and add to taxable. I am maxing out all tax deferred investment options available to me at this time so any additional funds would go into the taxable account (VTSAX). My concern building up a sizable taxable account is that it's fungible. Maybe I'd get the inclination to buy a new car with cash, maybe a home improvement, maybe a fancy trip. I know I should be able to control myself better than that but there is some satisfaction to paying down the mortgage and watching it slowly shrink (and thinking of the 3.125% I'm saving on every thousand bucks at a time). This is how I motivated/visualized my student loan payoff a few years ago. The difference with that was that I halted all investments to knock it out fast. I don't plan on taking that approach with the mortgage debt. I'll pay it off as extra funds allow within the constraint that I max all tax deferred investing options. I try to have a Vulcan approach to investing but I must admit I am a little bit more like Spock (emotional component to paying off debt). Thanks!
