I’ve got mortgage fever-close to paying it off…
I wondered: what if I stopped contributing to my 401k for just a year, could I pay it off?
My heart, being akin to Liesl in The Sound of Music, was certain:
The Sound of Music. 20th Century Fox
Then the math nerd stepped in and said “eine minuten, bitte”…
For the ease of math, let’s assume I contribute the max the govt allows:
and that my company matches 6% of that…
Total to put into the market:$18,500
Estimated average return-12%
17500*1.06=$18,550 to start
12% return each year…
Year 3: $65, 317
Year 4: $91, 705
you see how this is growing…
after this 4 years. let’s say it grows for 10 years without me putting in any more $…
Future buying power $217,223
( inflation eats away at it, sadly)
Not skipping year 1: $$217,223
If I had skipped just year 1:
Future buying power: $155,308
I’m pretty sure an extra $100,000 would come in handy in the future…
Let’s say I owe $50,000 on the mortgage…
If I took out the $17,500 I would be taxed.
Let’s assume 35% tax because eminent socialism…
That leaves me with $11,375.
Doesn’t exactly “move the needle” ( as Dave Ramsey would say) on the $50,000 mortgage.
So, Liesl, my dear,
“waiiit a yerear or two…”