So I still have $8,250 in debt and am thinking of paying it off in 10 months at $825 per month with no interest. We’re making around $4,000 a month after taxes, so it feels like a pretty big chunk of our income. After that, I want to start saving that much per month, but I’m unsure whether to put that towards a savings account for a down payment on a house or for retirement. I’m 50 years old and don’t have much saved yet for retirement, but I’m putting away 6% plus a matched 6% from my new employer. The problem is that housing is really expensive here, with median house prices over $900k. We currently pay very little in lot rent for a mobile home we own, but it feels small since we’ll be a family of four for quite some time. Should I forget saving for a house and just invest in retirement, or can I save in an account that’s available for either retirement or a home?
Is the $8,250 going to be interest-free indefinitely? If so, I would continue paying the minimum and put the rest of that $825 per month into your retirement account. You will earn more in interest that way. Retirement should be your #1 priority right now.
Yes, the minimum payment is $250 per month interest-free for almost another 3 years.
Mai said:
Yes, the minimum payment is $250 per month interest-free for almost another 3 years.
Then why the rush on paying it in just 10 months if you can pay it for 3 years without interest?
If you’ve got no real retirement savings at 50, that’s gotta come first. A house is nice, but not if it means you’re broke later. Since your housing is cheap, use that to your advantage and throw as much as you can into retirement. You can figure out buying a house down the road if it makes sense then.
@Dior
Thank you! We do feel a bit tight in our small trailer. But I see what you mean.
Maybe look into investment accounts that let you use the money for either a house or retirement so you keep your options open. Just don’t put yourself in a position where you’re stuck working forever.
It sounds like you have a solid plan. Balancing debt repayment with saving for retirement is key. Just remember to focus on your long-term goals.