Home Forums Hunting & Shooting Hunter's Campfire Need financial advise

The question is should I use 403b money to pay off a couple of mortgages. I'm 63 and still working. We owe money on our home and vacation home. The total might be 200k. Probably seven years left on each 15yr loan. I don't need the 403b money for income when I retire and paying off the mortgages would free up about $2500/month. So if I withdrew say 50k now and another 50k after the first. I think you get the idea. Is this a bad idea? I do realize that the withdrawals would be taxed. Thanks, Ken

for me a large part of the equation would be dependent upon whether they are fixed mortgages or ARMS.


if fixed and at a decent rate I'd be inclined to hold them


if Arms, I'd pay those suckas off so fast it would make the bank tellers skirt blow up.

They are fixed at 5.25 ish

On the long term you need to figure out if the taxes paid on the 403b would be more or less than the total interest paid if you just finished the loans out on schedule. If you'll break even or come out ahead, I would say do it.

I'd pay them off. Just hate debt looming over me and I erradicate it asap.

Also need to figure how much return + growth you would be foregoing by cashing out on you 403. Is it more than the intrest you pay? If so that is a losing proposition.

PM VAnimrod and draw his attention here. I'm sure he'll be able to lay out your best options.

it is never a bad idea to pay off your home.

you may have other better financial options, but paying off a home can never be a bad thing.

I'd sooner let the bank have it back.

Here's one slightly different option or train of thought. Pay off just one motgage to reduce the interest you're paying per month. It doesn't have to be an all or nothing deal on both houses. Also, reduce the tax implications by taking out funds over more than just two years.

It should be a decision based on the math vs paying off debt just to feel good about it.

i am in somewhat of a similar situation in that i owe some money to a bank, which is a large monthly payment, but the rate is only 2.28%. I have the money to cover the obligation, but don't like the tax consequences of taking it out.
I don't like paying that bill.
I would look at it several ways.
Doesn't the interest deduction benefit you at all on your tax return?
Is id difficult for you to make the payments?
Is it a valid point that if you have the money in the plans to offset the obligation that in a sense you can get rid of the debt anytime you want, so in essence it isn't a debt in some sense of the word anymore.
Have you thought about additional principal payments to the normal payments to reduce the time allocation?
How much are you making on the plans, at least as much as the interest on the loan?
If you truely did want to pay it off, what would the tax cost be if spread over MORE than this month, and the rest next month, say you did it over a couple of years or more?
I don't like debt either, but i consider a debt that i have fully reserved for different than if i don't have the money to close it out at will.
But i also don't like giving sammie anymore than i have to.

Ken,

Do you have a definite retirement date set? That would weigh heavily on my decision. If your gonna work a few more years, you have time to all but pay them off without having to take the tax hit.
I can see paying off your primary residence for peace of mind. I however would rather have a nest egg than a paid off vacation home.
I would be on the horn with my tax guy and financial planner before doing anything drastic.

Erich

Kend...many,many varaiables to consider. It's probably worth 500 of your stash to go speak with a expert so you can be meticulous with your specific dynamic,rather than with the generalities well intended folks here are utilizing to offer you some advice.

I can think of at least 10 rapid fire questions I'd need you to answer before I felt comfortable even considering offering advice. And, I'm not even close to being a expert.

Best of luck to you in this undertaking. I have no doubt you'll do what's best for you and your family.

Isaac, I think I'll take your advise. I'm inclined to want to be debt free but I don't want to waste money getting there. Ken

Best of luck. If your meeting takes place, come back and teach me!

Same here.

Kend, half way thru a 15 year note and you're paying off principal more than interest. You can get a current amortization schedule from your bank or a multitude of online services via Google. Take a look and see what it's costing you interest wise as of today. It probably isn't much. Fishead's comment in the last sentence sounds prudent to me.

Choose wiesely with who you consult with. If it's anyone that sells load type mutual funds or profits in anyway from the sale of stocks and bonds - pass. Best bet is to pay an hourly rate to someone who doesn't even offer investments. CPA, CFP - etc.

If paying them both off now increases your current quality of life due to having the extra expendable income, do it. Even if it costs a little more in the long run. None of us have a guarantee on how long we're going to be kicking around. Enjoy every day to the fullest you can.
My homes are paid for, I pay cash for my vehicles,boats, etc. I collect a little interest here and there but I don't pay any. It gives me peace of mind that would be hard to hang a price tag on.

I'm in a very similar position with about 7 years left on a 15 at 4.75%. I'm letting mine ride (mortgage) but paying extra principle when able. The tax benefit of the deduction vs the tax penalty of the 403b withdrawals just don't make it worthwhile for "ME".
As others have suggested, your specifics may be different.