Pay the loan off?

I would pay off the mortgage providing you are disciplined enough to do the following. Save monthly the equivalent of the mortgage payment in addition to what you are also already saving towards your next child's college bills.

If you ended up just spending more on miscellaneous, which would be very easy to do with that much extra money every month, and then therefore having to borrow more for the college bills, I would stand pat.

 

You are going to find it hard to get a 6% return on your money over the next 6 years. You'll get maybe 3% on a 5 year CD. Given that, I'd pay the mortgage off and then use the extra money each month to rebuild the college fund. If you free up $600 a month from a mortgage payment you could set aside 28,000 over the next 4 years.

 

Ok, here you go :laugh:

 

Beware: I am no money man...


When does your next daughter start college? (do you have time to save up for the first year?)

Depending on when she is going to be starting school, I would take it in these steps:

Pay off your house

Save for your 3 month emergency fund

Start saving for the first year of college and continue to save as she goes to school or until you have enough for her education.

Then save more adding to your emergency fund making it a 6 month fund.


If she isn't starting school right away, the money you would save from your mortgage payment would be enough to save for her college and your fund.

That is depending on the amount of mortgage you have. Mine was $1400 per month so it would be easy to save for an emergency fund and then school at that rate.

Good luck and whatever you decide the right path is!

 

Also, remember that federal student loans are not dependent on the fluctuations in the market. If it is important to you to pay for your daughter's education, you can pay off the loans for her as you are able. Additionally, the interest on student loans will only accrue as they are disbursed (usually one semester at a time). If you qualify for subsidized loans, the interest will not accrue until she is out of school.

The savings from paying off your mortgage will provide instant ROI as well as a reduction in monthly expense.

I'd say go for it.

(BTW, I work in financial aid.)

 

>3. Paying my mortgage gives me a 6% break over the next 6 years.

Say again?

I am convinced that at least half the people who go to college never re-coop their lost time, lost wages, and school expenses. College has become rip-off.

 

It is difficult to find a job with any kind of upward mobility without a college education. Now, for English majors, you may be correct. :laugh:

 

Only because of the dumbing down of high school and grade inflation. A person needs 2 years of college to get a high school education. Not because the jobs are more complex. As the middle class shrinks and people with 4 year degrees flood the market, one will need 2 years of college to drive a garbage truck.

A person who finishes high school and gets into a union apprenticeship program (plumbing, electrician . . .) will get paid for learning and a fat job when he gets his license.