I am curious if anyone has any advice. We have a 30 year fixed @ 4.25% that we refinanced last year so our payoff date is 2040. I am 33 and my wife is 32. Our #1 financial goal is to have this paid off in 20 years (this is our ONLY form of debt). We also have every other Friday payments set up, which will shave off a few years right there, but I want to pay it off by 2030 at the latest.
Anyway, right now we're in a good spot financially - to the point where we have a full year of savings, max out IRAs and 401Ks, so all of our excess money on top of this I have earmarked for a Vanguard Target Retirement Fund for 2030, which we have designated this as our mortgage payoff fund. Every little bit extra we get we put into this fund so we can pay off the mortgage early. Our goal is to put at least $3,500/year into this fund, which by my calculations at 8% return will put us at the point in 2030 that we can pay off the remaining mortgage if we so choose from this account.
So, my questions are:
Anyway, right now we're in a good spot financially - to the point where we have a full year of savings, max out IRAs and 401Ks, so all of our excess money on top of this I have earmarked for a Vanguard Target Retirement Fund for 2030, which we have designated this as our mortgage payoff fund. Every little bit extra we get we put into this fund so we can pay off the mortgage early. Our goal is to put at least $3,500/year into this fund, which by my calculations at 8% return will put us at the point in 2030 that we can pay off the remaining mortgage if we so choose from this account.
So, my questions are:
- Should we continue putting money into this Vanguard Target Date 2030, or should we put it directly into our mortgage principal and get the guaranteed 4.25% return? With a 20 year horizon, I feel confident that we'll get better than a 4.25% return, so that is why we started the 2030 account.
- Is there a different strategy people would recommend for this money and any other ideas to get the mortgage paid off earlier?
- Due to some fortunate bonuses for each of us and the fact we have no other debts, we've been able to put just a bit over $15K in a bucket for this mortgage payoff fund that I have sitting in ING for eventual placement into the Vanguard fund (I haven't put it in yet because I have anticipated the market to pull back a bit, which I know is a stupid reason to have this in ING, especially with a 20 year horizon). Should we be thinking of doing anything different with this $15K and $3,500 annual than putting both into the Vanguard 2030 earmarked entirely for mortgage payoff?