A bit of background before I get to my actual question. First, married with 2 and soon to be 3 kids. We have been living in our house for nearly 7 years and been paying extra the entire time. Due to a recent windfall in the form of a sandbox vacation + double dipping, our financial situation has taken bounds forward. Due to the previous mentioned windfall still helping (i.e huge incoming tax refund) and now even more COVID money just hitting the bank, this is starting to drive a question to the forefront of my mind. Here is the breakdown of where we are at financially:
- We have decently funded 529s for 2 kids + GI Bill.
- Our $155K initial mortgage (3.375%) now sits at $64K (payment + extra = $1286/mo).
- We have $86K in a taxable account, with $48K in two bond funds (VBTLX, VWITX).
- We should be getting a $9100 (Fed + State) refund in a matter of weeks.
- $5600 COVID check just hit the bank.
We are trying to save up for a large land purchase ($200k-$350k). Unfortunately, it would be challenging to cash flow two mortgages, hence why we started a taxable account. Also, land prices have unreasonably (unreasonable because there is a lot of open farm land around here) skyrocketed around where we are looking, so it may be another year or two before we find what we want to buy. Our bond funds are not really making much and are actually turning slightly negative. Even the 5yr & 10yr returns sit at around 3.5%. Does it make sense to cash out those bond funds and use the extra windfall cash (refund + COVID payment) to pay off the mortgage this year? Are there other opinions or better ideas?
- We have decently funded 529s for 2 kids + GI Bill.
- Our $155K initial mortgage (3.375%) now sits at $64K (payment + extra = $1286/mo).
- We have $86K in a taxable account, with $48K in two bond funds (VBTLX, VWITX).
- We should be getting a $9100 (Fed + State) refund in a matter of weeks.
- $5600 COVID check just hit the bank.
We are trying to save up for a large land purchase ($200k-$350k). Unfortunately, it would be challenging to cash flow two mortgages, hence why we started a taxable account. Also, land prices have unreasonably (unreasonable because there is a lot of open farm land around here) skyrocketed around where we are looking, so it may be another year or two before we find what we want to buy. Our bond funds are not really making much and are actually turning slightly negative. Even the 5yr & 10yr returns sit at around 3.5%. Does it make sense to cash out those bond funds and use the extra windfall cash (refund + COVID payment) to pay off the mortgage this year? Are there other opinions or better ideas?