How aggressive should you be on your house?

How aggressive should you be on your house?

Dear Dave,

My wife and I have been living by the principles you teach, and, as of October of last year, have become debt-free except for our mortgage. Now, we’re trying to figure out how aggressive we should be about paying off the house.
Each month we pay a little extra on the mortgage, into investments and into home improvements. We both fully fund our 401(k) program at work and have Roth IRA accounts. I’d like to scale back my 401(k) to the amount at which my employer matched my investment and use the rest of the money to pay off the mortgage.
We are in our mid-40s and have no children. I’ve currently got about $50,000 saved up in my 401(k). We’ve also got about $15,000 in our other investments. I’m thinking about cashing in those investments and putting that on the house note as well. We only owe about $49,000 more on the house.

Mike in New Orleans, LA

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Dear Mike,

Congratulations! You’ve done a good job. Now, you’re at Baby Step 4 in our program, which is to put 15% of your income into your retirement investments. Anything extra you have above 15% retirement investing I recommend you put on the mortgage. You really need to keep that retirement planning going. Your mortgage balance is low. You should have enough extra income, now that you’re debt-free, to pay off this mortgage quickly without messing with your retirement funds. Then, in just 12-18 months, you’ll be in your mid-40s, no payments at all and still have your retirement money. That’s a great place to be! Of course, with no mortgage you can max out all your retirement options and retire really wealthy and change your family tree.

- Dave

Taking over ill father's estate

Dear Dave,

My father has just recently taken ill, and it doesn’t look like he’s going to be able to recover. He has a home that’s bought and paid for and needs some repairs. My sister and I are looking at the possibility of fixing his home up and living there and taking care of him, but we’re not sure yet whether he’ll recover or be able to come home. He doesn’t have a will, and is unable to execute one because he’s comatose. He doesn’t have life insurance either, and we had spoken with an attorney about guardianship, but that would be several thousand dollars. We’re also afraid that the state will be able to come in and take his home away from him.

Linda in Big Rapids, MI

Dear Linda,

You’re right, guardianship isn’t worth it. The house will go to his heirs. You’ll get the house anyway, even without a will, but it will be a lot more hassle. If he comes around and is cogent to make a decision that is a legally binding decision - he knows what he’s doing - in other words, then you get a will executed quick, girl. That will take better care of you as far as him being able to hand this house off to you.

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His heirs will have to pay his bills out of the assets of the estate. If he’s got $20,000 in medical bills, you guys will have to pay those bills in order to keep the house, otherwise the probate court will force you to sell the house in order to pay the estate’s bills. You need an estate attorney advising you.

- Dave