I am selling a small stake of a company I own part of. I will continue working there in management, but as an employee. We will continue to operate independently.
The sales proceeds will be enough to pay off my house, car, and have maybe $10k left over.
Alternatively, I could beef up my emergency fund big time, invest $50k into a taxable account, beef up 529s, and do a bunch of other small things to improve my financial comfort.
I'm leaning towards paying off the house. Why? The purchase agreement includes numerous standard reps & warranties (basically promises the sellers make like the financials are honest, there are no pending lawsuits, etc.) which give the purchaser 12-24 months to go after the sellers in the event of a breach. We are not hiding anything and have been 110% honest from Day 1, but you just never know. Our state doesn't allow home equity in a primary residence to be seized. The other argument is that it's a guaranteed 3.25% return and with stocks at all time highs and bond yields trash, a 3.25% return doesn't seem so bad.
I figure I can use the future cash flow to invest in a taxable account, continue funding 529s, while the buyer's protection period runs out... Right now I pay $1500 but only $1000 goes towards principal. If I pay off the mortgage, I can put $1500 into a taxable account and all $1500 will be used to buy shares.
Am I crazy in looking at things this way? Am I being overly paranoid?
The sales proceeds will be enough to pay off my house, car, and have maybe $10k left over.
Alternatively, I could beef up my emergency fund big time, invest $50k into a taxable account, beef up 529s, and do a bunch of other small things to improve my financial comfort.
I'm leaning towards paying off the house. Why? The purchase agreement includes numerous standard reps & warranties (basically promises the sellers make like the financials are honest, there are no pending lawsuits, etc.) which give the purchaser 12-24 months to go after the sellers in the event of a breach. We are not hiding anything and have been 110% honest from Day 1, but you just never know. Our state doesn't allow home equity in a primary residence to be seized. The other argument is that it's a guaranteed 3.25% return and with stocks at all time highs and bond yields trash, a 3.25% return doesn't seem so bad.
I figure I can use the future cash flow to invest in a taxable account, continue funding 529s, while the buyer's protection period runs out... Right now I pay $1500 but only $1000 goes towards principal. If I pay off the mortgage, I can put $1500 into a taxable account and all $1500 will be used to buy shares.
Am I crazy in looking at things this way? Am I being overly paranoid?