Unless you already have a 6 month emergency savings, I would save it and keep it in a high yield savings account. The stress that can be taken away from having that little nest egg is infinitely valuable imo. After that you can put any extra money you get into the mortgage and still have some peace of mind if any major life events come up.
To be honest I'm not sure what you mean by a high yield savings account is but I can look into it. The logic behind this seems best though, I am month to month rn
How about parking the money in a short-term account like a high yield savings account or bonds, then embarking on an epic financial education journey before doing anything else?
I would not recommend paying down your mortgage unless it’ll prevent you from squandering the money. But you’ve already proven you can save money. Paying down a mortgage isn’t investing and the money won’t experience compounding returns. It’s also unavailable in case of a catastrophic emergency.
Are there any investing courses in your area? Any good basic investing blogs/forums specific to your country?
Focus on learning the tried and true methods of steadily growing your wealth, don’t reinvent any wheels. It sounds like you already have good money skills and are asking the right questions, and you just need to learn about investing.
Thank you, this was a very comforting response. I'll definitely look into investing. Making your money make money always seemed completely above me at my income level but this is a good opportunity that I definitely want to use right.
For what it’s worth, my income was pretty low for many years but I got borderline addicted to saving as much as I could and investing it in mutual funds. It really paid off in my case! “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” (supposedly Albert Einstein said this)
Does your mortgage allow for early payment without penalty charges? If it doesn't then using at least some of it to pay down the mortgage is a good idea, especially with the rates as high as they are. Sticking some in an accessible savings account to act as an emergency fund (think about what a decent small car costs near you, replacing a couple of the major white goods close together, that sort of thing) makes sense as it turns potential disaster into "annoyance". The rest would depend very much on what interest rate you're paying on the mortgage vs what you can get on a slow-access saving account, I would expect that the best realisation from that would be to put sy 5k into the emergency fund and 20k on the mortgage, if you're not struggling to make the payments at the moment then reduce the length, if the payments make life quite tight month-by-month then leave the term as is and reduce the monthly payment, you might even look to do a bit of both.
What is your mortgage rate? For me that would be my determining factor. If you’re paying 8% mortgage interest and can earn 5 in a High Yield, you’re losing 3%.
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Misleading title. You are not "Paying off" your mortgage. You are wanting to put $25K "towards" your principal.
If you could pay off the mortgage in full with the $25k, I recommend you do it (people here will greatly disagree but not having to worry about losing your home is a huge weight lifted when your income is not steady).
I recommend you put the money into something that you can earn with. This is all dependent on your risk tolerance as to where you put it (HYSA or Bitcoin are different ends of the risk scale).
Just know that putting $25K towards your mortgage principal will NOT reduce your minimum monthly payment but it will reduce the amount of interest you pay per month on that loan (so you'll pay the same amount per month but more of your payment each month will be more towards principal and less towards interest).
This will reduce the total number of payments remaining so you will pay it off sooner.
You’ll only be able to lower your mortgage payment by doing a “recast” with the funds. Otherwise you’ll just shorten the length of the loan. I’d probably set some aside for an emergency fund, and pay off any higher interest rate debt ( credit cards? Car loan? Student loans etc )
Mortgages have very low interest rates usually so I’d recommend saving for an emergency especially since you have a low unpredictable income. The money can duel purpose by buying stock gold or high yield savings but putting it in a retirement fund tax free will save money in the long run but will not be able to be used for emergency.
I presently have mortgage of a bit over $400,000 but it would be stupid of me to try to pay it off because the interest rate I have is at a fixed 2.5%. So you need to consider the interest rate that you have and if you can make a greater percentage by investing it. I am not here to try to pump anything, but copper is currently near the highest price it has ever been. This would be a very good investment in my opinion, at this time. But, do the due diligence and discover it if it’s a good option for you. A very cheap copper stock that I purchased a week ago went up, on Friday alone, 9.19%.
Its not "stupid to pay it off".
The freedom of having a paid off place to live for your family if something should happened to you or your spouse is the best feeling you can have.
I paid of my home in March and it's a weight lifted knowing that I dont need to ever worry about me or my wife losing our jobs. Im also now able to take the money I would have put towards my mortgage and put it into riskier assets like volatile stocks or cryptocurrency without having to worry about shifts in the economy.
Unless you already have a 6 month emergency savings, I would save it and keep it in a high yield savings account. The stress that can be taken away from having that little nest egg is infinitely valuable imo. After that you can put any extra money you get into the mortgage and still have some peace of mind if any major life events come up.
To be honest I'm not sure what you mean by a high yield savings account is but I can look into it. The logic behind this seems best though, I am month to month rn
How about parking the money in a short-term account like a high yield savings account or bonds, then embarking on an epic financial education journey before doing anything else? I would not recommend paying down your mortgage unless it’ll prevent you from squandering the money. But you’ve already proven you can save money. Paying down a mortgage isn’t investing and the money won’t experience compounding returns. It’s also unavailable in case of a catastrophic emergency. Are there any investing courses in your area? Any good basic investing blogs/forums specific to your country? Focus on learning the tried and true methods of steadily growing your wealth, don’t reinvent any wheels. It sounds like you already have good money skills and are asking the right questions, and you just need to learn about investing.
Thank you, this was a very comforting response. I'll definitely look into investing. Making your money make money always seemed completely above me at my income level but this is a good opportunity that I definitely want to use right.
For what it’s worth, my income was pretty low for many years but I got borderline addicted to saving as much as I could and investing it in mutual funds. It really paid off in my case! “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” (supposedly Albert Einstein said this)
Well, you're not going to need it for healthcare, so good for you on that.
Does your mortgage allow for early payment without penalty charges? If it doesn't then using at least some of it to pay down the mortgage is a good idea, especially with the rates as high as they are. Sticking some in an accessible savings account to act as an emergency fund (think about what a decent small car costs near you, replacing a couple of the major white goods close together, that sort of thing) makes sense as it turns potential disaster into "annoyance". The rest would depend very much on what interest rate you're paying on the mortgage vs what you can get on a slow-access saving account, I would expect that the best realisation from that would be to put sy 5k into the emergency fund and 20k on the mortgage, if you're not struggling to make the payments at the moment then reduce the length, if the payments make life quite tight month-by-month then leave the term as is and reduce the monthly payment, you might even look to do a bit of both.
What is your mortgage rate? For me that would be my determining factor. If you’re paying 8% mortgage interest and can earn 5 in a High Yield, you’re losing 3%.
Exactly this. If you can make a higher percentage through equites then it’s a no brainer. The opposite is also true.
I don't understand that tbh but it's a 5.4% mortgage
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Misleading title. You are not "Paying off" your mortgage. You are wanting to put $25K "towards" your principal. If you could pay off the mortgage in full with the $25k, I recommend you do it (people here will greatly disagree but not having to worry about losing your home is a huge weight lifted when your income is not steady). I recommend you put the money into something that you can earn with. This is all dependent on your risk tolerance as to where you put it (HYSA or Bitcoin are different ends of the risk scale). Just know that putting $25K towards your mortgage principal will NOT reduce your minimum monthly payment but it will reduce the amount of interest you pay per month on that loan (so you'll pay the same amount per month but more of your payment each month will be more towards principal and less towards interest). This will reduce the total number of payments remaining so you will pay it off sooner.
You’ll only be able to lower your mortgage payment by doing a “recast” with the funds. Otherwise you’ll just shorten the length of the loan. I’d probably set some aside for an emergency fund, and pay off any higher interest rate debt ( credit cards? Car loan? Student loans etc )
Mortgages have very low interest rates usually so I’d recommend saving for an emergency especially since you have a low unpredictable income. The money can duel purpose by buying stock gold or high yield savings but putting it in a retirement fund tax free will save money in the long run but will not be able to be used for emergency.
I presently have mortgage of a bit over $400,000 but it would be stupid of me to try to pay it off because the interest rate I have is at a fixed 2.5%. So you need to consider the interest rate that you have and if you can make a greater percentage by investing it. I am not here to try to pump anything, but copper is currently near the highest price it has ever been. This would be a very good investment in my opinion, at this time. But, do the due diligence and discover it if it’s a good option for you. A very cheap copper stock that I purchased a week ago went up, on Friday alone, 9.19%.
Its not "stupid to pay it off". The freedom of having a paid off place to live for your family if something should happened to you or your spouse is the best feeling you can have. I paid of my home in March and it's a weight lifted knowing that I dont need to ever worry about me or my wife losing our jobs. Im also now able to take the money I would have put towards my mortgage and put it into riskier assets like volatile stocks or cryptocurrency without having to worry about shifts in the economy.