FIL passed away - Financial advice?

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Tide27

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My wife's father passed away very unexpected recently.

The short version is that he left behind about a $600k pension and a house that's in fairly bad shape, but a cash offer has been made in the $280k range. The money / house will be split between my wife and her brother.

Apparently the pension was set up so that it did not need to go through probate, so my wife now has access to about $300k.

We ended up purchasing a house a few years ago for around $320k, at a 6% interest rate. After all is said and done, we pay around $2500 a month for our mortgage. By doing some napkins math, by the time we pay the house off at that rate, we will spend about $900k for a $300k house.

Our dilemma ( my ) is this...

Wife doesn't want to pay off the house, and instead wants to invest it. I'm of the idea that if we just pay off the house, we save around $600k interest alone, and then can take whatever money we save by not having a mortgage payment, and invest that if that's what she wants to do.

For perspective, we both have decent jobs, but due to interest / inflation / timing of the market when we purchased....we still basically live paycheck to paycheck after all of our financial obligations are met.

With the uncertainty of the job market, I'm terrified that one day either one of our jobs could be lost, and there is zero way we could support our obligations on a single income....so having the house paid off would be a huge burden lifted in my opinion.

At the end of the day, I know some of you are much more informed financial gurus and would like to get your opinions / pros and cons of

A) Paying off the house or
B) Taking the $300k+ and investing

Greatly appreciate any advice or experience yall may have.
 
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Furry

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The smart play is B. Why is your woman for B and you aren't? Are you a tard or something.
 
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Araysar

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Tide27 said:
My wife's father passed away very unexpected recently.

The short version is that he left behind about a $600k pension and a house that's in fairly bad shape, but a cash offer has been made in the $280k range. The money / house will be split between my wife and her brother.

Apparently the pension was set up so that it did not need to go through probate, so my wife now has access to about $300k.

We ended up purchasing a house a few years ago for around $320k, at a 6% interest rate. After all is said and done, we pay around $2500 a month for our mortgage. By doing some napkins math, by the time we pay the house off at that rate, we will spend about $900k for a $300k house.

Our dilemma ( my ) is this...

Wife doesn't want to pay off the house, and instead wants to invest it. I'm of the idea that if we just pay off the house, we save around $600k interest alone, and then can take whatever money we save by not having a mortgage payment, and invest that if that's what she wants to do.

For perspective, we both have decent jobs, but due to interest / inflation / timing of the market when we purchased....we still basically live paycheck to paycheck after all of our financial obligations are met.

With the uncertainty of the job market, I'm terrified that one day either one of our jobs could be lost, and there is zero way we could support our obligations on a single income....so having the house paid off would be a huge burden lifted in my opinion.

At the end of the day, I know some of you are much more informed financial gurus and would like to get your opinions / pros and cons of

A) Paying off the house or
B) Taking the $300k+ and investing

Greatly appreciate any advice or experience yall may have.
Click to expand...

Im in favor of investing for 3 reasons.

1. The average annual market return even if you just put it into an index fund like SPY is 13%, handily beating 6% interest you pay on the mortgage
2. Holding long-term lower interest loans like mortgage isnt all that bad due to inflation making the latter half of the loan a more advantageous proposition to you.
3. You live paycheck to paycheck so you need liquidity in case things go bad. If you sink money into paying off the house you *could* extract it back via HELOC if things go bad, but then youre paying HELOC fees and costs. It would be just cheaper and easier to sell off your index fund positions (assuming youre net profitable) as needed to maintain income until you get back on your feet
 
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Foler

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Pay off the house. Debt is slavery. Free yourself of your shackles. There’s an emotional investment of debt that you’re obviously seeing judging by this post. Why go through your life worrying about your financial obligation on your house especially given that your married?

I’ll argue against Araysar on the liquidity. You pay that off and you free up more monthly income. Take that new money and start building an emergency fund. Once you have bare minimum a 3 month (ideally 6 month) EF, then start investing. An index fund position being liquid is true but what if the market is in a downturn? Unironically a downturn could coincide with job loss. Do you want to take that hit?

Go read/listen to Dave Ramsey
 
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Furry

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Foler said:
Pay off the house. Debt is slavery. Free yourself of your shackles. There’s an emotional investment of debt that you’re obviously seeing judging by this post. Why go through your life worrying about your financial obligation on your house especially given that your married?

I’ll argue against Araysar on the liquidity. You pay that off and you free up more monthly income. Take that new money and start building an emergency fund. Once you have bare minimum a 3 month (ideally 6 month) EF, then start investing. An index fund position being liquid is true but what if the market is in a downturn? Unironically a downturn could coincide with job loss. Do you want to take that hit?

Go read/listen to Dave Ramsey
Click to expand...
Why don't you have your own opinion instead of listening to this so called dave ramsey guy? Anyways, the main reason I bring up you being a retard is because paying off the house is the right call if you are a retard. It's much smarter than losing all your investment money in AMC, gamestop and penny stocks.
 
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Foler

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Furry said:
Why don't you have your own opinion instead of listening to this so called dave ramsey guy? Anyways, the main reason I bring up you being a retard is because paying off the house is the right call if you are a retard. It's much smarter than losing all your investment money in AMC, gamestop and penny stocks.
Click to expand...
It is my own opinion. Why do you have no opinion other than saying “X is rEtArdED EHe!”

T Tide27 are you going to take advice from a guy who participates in the furry lifestyle? Does that seem like someone who would have sound judgement on anything in life at all?
 
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Hatorade

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No idea what you should do, but what we do is try and have zero debt then max out our IRAs etc. every year. We paid off the house in ten years and cars in one or two years when we have to buy them. No debt means all the money we make is ours(minus taxes of course) so we do what we want when we want. Fuck debt.
 
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Araysar

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Foler said:
Pay off the house. Debt is slavery. Free yourself of your shackles. There’s an emotional investment of debt that you’re obviously seeing judging by this post. Why go through your life worrying about your financial obligation on your house especially given that your married?

I’ll argue against Araysar on the liquidity. You pay that off and you free up more monthly income. Take that new money and start building an emergency fund. Once you have bare minimum a 3 month (ideally 6 month) EF, then start investing. An index fund position being liquid is true but what if the market is in a downturn? Unironically a downturn could coincide with job loss. Do you want to take that hit?

Go read/listen to Dave Ramsey
Click to expand...

Unmanageable debt is indeed slavery because you are not in control.

Manageable debt with a low interest, or debt that isnt burdensome is perfectly fine.

The wealthy make their living from debt, borrowing against their assets all the time.
 
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Araysar

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By the way what does your wife want to invest in? Maybe her investment plan is retarded and then yeah you're better off paying off the house.
 
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fred sanford

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Invest it. I had the same scenario with my dad 7 years ago. Yes, the house is a debt but it’s a debt with an asset tied to it. As long as you aren’t under water on that debt, leave it alone. If you’re under water then pay it down enough to not be. The thing to remember with investing/growth is that the more you have to invest the faster it grows. If you pay off the house and start investing a little bit at a time, your growth will be slow and would take quite a while to build up to having 300k again. However, you can just start with 300k now and have bigger gains straight out of the gate. Just don’t invest it yourself unless one of you does it for a living. Get a financial advisor and let them invest for you.
 
sleevedraw

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6% interest to me is an edge case, and I wouldn't criticize you for doing either. If the mortgage rate was ticking at 4% or less, then yes, I would definitely use the rate as leverage and just invest.

I do think that over the very long term, investing is still probably the better call at 6%, but I am more bearish about the S&P than I used to be, and I don't know if SPY increasing at 13% is going to be the pattern going forward.

And with finance, some things can't be boiled down to just numbers on a screen. Some people can sleep easier at night knowing that there is no debt around their necks. If the emotional boost of not being in debt is worth a lower rate of return to you, then it's still money well spent.
 
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Kithani

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Everyone always says they will pay off the mortgage and then invest the extra cashflow but very few people ever actually do that they often end up with lifestyle creep.

Throw it all into VTI tomorrow or DCA it in over the next year if you really want to and leave the remainder in VMFXX while you do.

If your household income is near 300-600k+ then feel free to take more risks I guess
 
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Seananigans

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Put 100% of it into bitcoin, serious answer. Can bookmark this post and come back in 3-5 years to see Bitcoin increased by more than 20% annual easily.
 
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Araysar

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sleevedraw said:
6% interest to me is an edge case, and I wouldn't criticize you for doing either. If the mortgage rate was ticking at 4% or less, then yes, I would definitely use the rate as leverage and just invest.

I do think that over the very long term, investing is still probably the better call at 6%, but I am more bearish about the S&P than I used to be, and I don't know if SPY increasing at 13% is going to be the pattern going forward.
Click to expand...

Yeah, 6% is right around the boundary for me for low interest to medium interest debt. Much easier call at 4% like you said.

Also agree with what fred sanford fred sanford said. If you dont have experience doing it, talk to a lot of people that do to get a clearer picture and invest with a very long term horizon in mind (10+ years).

Also, I wouldnt pay a financial advisor to do it for you. Every time I talk to someone who said "my financial advisor told me to do X" its usually terrible advice,. For example, I was just talking to a guy last week whose advisor has him heavily invested into a US 10+ year treasury bond ETF with a crazy expense fee. Not just bonds, but a bond ETF. If he was old, I'd call it elder abuse.

Cant really go wrong with an index fund that tracks the whole market like SPY. Beats every calamity pretty reliably whether its dot com bubble, Great Recession or COVID

1750940247157.png
 
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fred sanford

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Araysar said:
Also, I wouldnt pay a financial advisor to do it for you. Every time I talk to someone who said "my financial advisor told me to do X" its usually terrible advice,. For example, I was just talking to a guy last week whose advisor has him heavily invested into a US 10+ year treasury bond ETF with a crazy expense fee. Not just bonds, but a bond ETF. If he was old, I'd call it elder abuse.
Click to expand...
There’s nothing wrong with using an advisor to invest for you but you have to pick the right one. You can’t just go pick one randomly. You basically have to interview them. After all they’re your employees that you pay. When I went through this I sat down with several different advisors around town and had them show me reports of their past performance and then give me a basic strategy of what they think I should do with the money. I don’t regret my decision at all. In the last 7 years through investments and deposits we’ve turned 500k inherited into 800k.
 
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Araysar

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fred sanford said:
There’s nothing wrong with using an advisor to invest for you but you have to pick the right one. You can’t just go pick one randomly. You basically have to interview them. After all they’re your employees that you pay. When I went through this I sat down with several different advisors around town and had them show me reports of their past performance and then give me a basic strategy of what they think I should do with the money. I don’t regret my decision at all. In the last 7 years through investments and deposits we’ve turned 500k inherited into 800k.
Click to expand...

Do they have you diversified into bonds?
 
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moonarchia

moonarchia

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Tide27 said:
My wife's father passed away very unexpected recently.

The short version is that he left behind about a $600k pension and a house that's in fairly bad shape, but a cash offer has been made in the $280k range. The money / house will be split between my wife and her brother.

Apparently the pension was set up so that it did not need to go through probate, so my wife now has access to about $300k.

We ended up purchasing a house a few years ago for around $320k, at a 6% interest rate. After all is said and done, we pay around $2500 a month for our mortgage. By doing some napkins math, by the time we pay the house off at that rate, we will spend about $900k for a $300k house.

Our dilemma ( my ) is this...

Wife doesn't want to pay off the house, and instead wants to invest it. I'm of the idea that if we just pay off the house, we save around $600k interest alone, and then can take whatever money we save by not having a mortgage payment, and invest that if that's what she wants to do.

For perspective, we both have decent jobs, but due to interest / inflation / timing of the market when we purchased....we still basically live paycheck to paycheck after all of our financial obligations are met.

With the uncertainty of the job market, I'm terrified that one day either one of our jobs could be lost, and there is zero way we could support our obligations on a single income....so having the house paid off would be a huge burden lifted in my opinion.

At the end of the day, I know some of you are much more informed financial gurus and would like to get your opinions / pros and cons of

A) Paying off the house or
B) Taking the $300k+ and investing

Greatly appreciate any advice or experience yall may have.
Click to expand...
Can you get 6% or more annually on investing? If yes, do that. Use the dividends to pay your mortgage. Or put the dividends into a high yield savings account, and when that gets to the payoff point for your mortgage pull the trigger then.
 
OU Ariakas

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I have a different question than anyone else to pose and that is: What will make your life better now AND in the long run? It sounds like the burden of living bi-weekly is hard on you; is it as hard on your wife as well?

Posed a different way: if you could guarantee that the 300k invested would be better than paying off the house BUT you were guaranteed to live paycheck to paycheck until retirement, would the stress of that be offset by the knowledge that you had a nice nest egg there for retirement?

If you are more worried about living paycheck to paycheck but you cannot convince your wife to pay off the house you can make a budget, set aside 6 months as an emergency fund in a savings account with no cards/checks for easy access, and then invest the rest.
 
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OU Ariakas

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I want to stop and make sure that the two of you remind yourselves that this is a life blessing from her father and a gift that is not wasted no matter which way the two of you choose. Do not take this thing that he worked his whole life to enrich his children past when he would see the results into a point of contention between you. Ultimately, it was her father so she (as a woman) is going to feel like her decision should carry more weight, right or wrong. If you pay off the house and that is less stress monthly or you invest it and that is less stress thinking about retirement; either way it is a gift that 90%+ of people will never receive.

Great men plant trees whose shade they know they shall never sit in.
 
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