vania-janet/multiturn-rag-retrieval-data huggingface dataset:
I'm not a 'rule of thumb' guy, but here, I'd suggest that if you can set aside 10% of your income each year for college, that would be great. That turns out to be $900/mo.  In 15 years, if you saw an 8% CAGR, you'd have $311K which happens to be in your range of expenses. And you'd still have time to go as the baby won't graduate for 22(?) years. (Yup, 10% is a good rule of thumb for your income and 3 kids) Now, on the other hand, I'd research what grants you'd be able to get if you came up short. If instead of saving a dime, you funded your own retirement and the spouse's IRA if she's not working, and time the mortgage to pay it off in 15 years from now, the lack of liquid funds actually runs in your favor. But, I'm not an expect on this, just second guessing my own fully funded college account for my daughter.
"I think your analysis is very clear, it's a sensible approach, and the numbers sound about right to me. A few other things you might want to think about: Tax In some jurisdictions you can deduct mortgage interest against your income tax. I see from your profile that you're in Texas, but I don't know the exact situation there and I think it's better to keep this answer general anyway. If that's the case for you, then you should re-run your numbers taking that into account. You may also be able to make your investments tax-advantaged, for example if you save them in a retirement account. You'll need to apply the appropriate limits for your specific situation and take an educated guess as to how that might change over the next 30 years. Liquidity The money you're not spending on your mortgage is money that's available to you for other spending or emergencies - i.e. even though your default assumption is to invest it and that's a sensible way to compare with the mortgage, you might still place some extra value on having more free access to it. Overpayments Would you have the option to pay extra on the mortgage? That's another way of ""investing"" your money that gets you a guaranteed return of the mortgage rate. You might want to consider if you'd want to send some of your excess money that way."
A payment of $224 at 7.2% interest will pay off a $33000 mortgage in 30 years. Unfortunately, I'm on cold medicine so guessing was the only way I got to the answer, but I guessed right on the first try :). However, if you like algebra: The following formula is used to   calculate the fixed monthly payment   (P) required to fully amortize a loan   of L dollars over a term of n months   at a monthly interest rate of c. [If   the quoted rate is 6%, for example, c   is .06/12 or .005]. P = L[c(1 + c)n]/[(1 + c)n - 1]
"None of what I say is advice directed to you. It is how I would continue to analyse the situation you have, were it mine. First off, I prefer to work in certainties more than possibilities. Saying that, paying down the mortgage makes sense as I can calculate the amount I will save. I also believe that rate rises are coming in the future, based on the talk from the BofE, so any money I pay off now means guaranteed less interest to pay in the future. Also, the lower my loan-to-value ratio, the better/lower interest rates I can receive in the mortgage market. If I do not want to work until retirement age, it'd be nice to have as few bills as possible in the decade or so prior to retirement age. I could then do early-retirement or part-time work in the run-up to retirement. I could use my savings to fund life until retirement pays out. I'd be aiming to put 15% of my gross income into ""future investing"" - using ISAs to build up a savings pot, taking advantage of retirement products. That way all the money is not tied to a normal retirement age before it can accessed. And it's not touchable by future greedy Government taxation... Any income leftover above the 15%, I'd be throwing at the mortgage - taking advantage of the 10% overpay window, remortgaging as LTV comes down. In theory, overpaid mortgage equity is money that could still be accessed (provided house prices don't decline and remortgaging is a possibility). So, in short, I'd follow a plan along these lines of logic. 1) Make sure I have 4-6 months of living expenses as a Rainy Day Fund. Insulate myself from fluctuations in my financial situation. 2) Put away 15% of annual gross income towards ""future saving"". ISAs first, pension second. 3) Overpay the mortgage and look to remortgage as LTV drops. When LTV nears 60%, look to lock in to a longer-term fix. eg.
"5-8 years is not quite long term.  Until the naughts (the 2001-10 decade), advisors were known to say that the S&P was always positive given a 10 year holding period. Now, we're saying 15 years is always positive looking back.  One can easily pull S&P return data which would let you run numbers showing the range of returns for the 5-8 yr period you have in mind. A bit of extra effort and you can include the dollar cost averaging factor.  This wouldn't produce a guarantee, but a statistical range of expected returns over your time horizon. Then a decision like ""with a 1/4 chance of losing 25% of my money, should I stay with this plan?"" This is just an example. The numbers for 1900-2014 look like this -  In any 5 year period, an average return of 69.2% (note 1.69 means a 69% gain). Of the 111 5 year periods, 14 were negative with the worst being a 46% loss. I maintain 5 years is not really long term, but the risk is relatively low of being in the red."
The title question suggests an answer - Balance.  There are countless stories of misers who saved their money but led miserable lives.  Keep in mind, you are looking at debt while still earning an income lower than you'll see after you get your PHD. Don't add more debt while working towards the PHD, but don't think that this is the time to aggressively pay it off, either.  I'd look at it this way - when you get a full time job, money itself will be cheaper, it will cost you fewer hours to earn the same number of Euros. When I was in college, the US minimum wage was just over $3/hr, but I had an engineering degree and back then, a starting salary of over $20/hr. While still in school, my time was precious, and the $10,000 I borrowed (for spending money) was 3300 hours that I didn't need to work, but it was paid back with just 500 work-hours.  Your question also goes to the future, a home purchase. There are 2 approaches. First pay off the student loan, then save for the down payment. For many anti-debt people, this is ideal. But, if your goal is to be in the house sooner, save now for the down payment and only pay the minimum on the loan. Once you are in the house, you can decide to pay the student loan faster, but 1.5%? I'd just pay the mortgage faster.  I don't know the cost of housing where you will choose to live, but in general, I'd suggest finding the house that you can afford on a 15 year mortgage, but take out a 30. This will give you flexibility in your budget. Life happens, and it's tough to plan for every possible outcome. I'd prefer to have room in the budget for the first years in the house, and for potential marriage and the kids that may follow. It's far easier to pay extra on loans than to get lower payments when you realize the budget is too tight.  Happy to update/edit to address any comments you may have.
How does paying off a mortgage early work? Example: I have a 30 year fixed rate mortgage of 3.5%, the amount borrowed is $300,000. I have just inherited $300,000. I am in the first year of the mortgage. Can I give the bank the $300,000 to clear the mortgage, or must I pay off the total interest that was agreed upon for the 30 year term? This depends on the country regulation and your agreement. Generally speaking the calculations are on daily reducing balance. so you just pay 300K I'm curious why the bank would let you do this, since they will lose out on a lot of profit
After 1 year, you have $1575 ($1000 principle, $500 match, 5% interest) - but you can't take it out. ROI = 57% - but you are stuck for a bit After 30 years, you have $6482.91, ROI of 548% - assuming away all risk. 2c. Finally, a full match After 1 year, you have $2100 ($1000 principle, $1000 match, 5% interest) - but you can't take it out. ROI = 110% - but again, you are stuck. After 30 years, you have $8643.89, ROI of 764% - assuming away all risk. Here's the summary - The interest rate is really all that matters. Paying off a credit card is a guaranteed investment. The only reason not to pay off a 20% credit card interest rate is if, after taxes, time, etc..., you could earn more than 20% somewhere else. Note that at 1 year, the matching funds of a 401k, in all cases where the match exceeded 20%, beat the credit card. If you could take that money before you could have paid off the credit card, it would have been a good deal. The problem with the 401k is that you can't realize that gain until you retire. Credit Card debt, on the other hand, keeps growing until you pay it off. As such, paying off your credit card debt - assuming its interest rate is greater than the stock market (which trust me, it almost always is) - is the better deal. Indeed, with the exception of tax advantaged mortgages, there is almost no debt that has an interest rate than is ""better"" than the market."
If you can make enough ROI from the capital you retain by not paying off your mortgage, then why not? I do, I could pay off a significant chunk of mortgage if I wanted but whilst interest rates are low there's little incentive. As for another crash... Well, there's no reason to expect a crash would result in high interest rates, more the opposite, but you should consider what you would or could do if interest rates did jump to 15% for whatever reason. As long as your investments aren't too risky or difficult to liquidate, etc, you could always consider paying off a big chunk then, when it makes sense.
How old are you? With $15k, I assume late twenties.  Do you still use your credit cards? or is this just past accumulated debt? (paying them off will do you no good if you just run them back up again.)  Does your employer match you contributions? How much? Are you fully vested in their contributions?    In general, it is not a good idea, but under the right circumstances it isn't a bad idea.
"The reason is that although the American economy is functioning normally, mortgage rates are stupid-low, and are below a prudent expectation of long-term (30 year) rates of return in the market.   I manage endowments, so I say ""prudent"" in the context of endowment investment, which is the picture of caution and subject to UPMIFA law (the P being prudent).    What's more, there are tax benefits.  Yes, you pay 15% long-term capital gains tax on investment income.  But your mortgage interest is tax deductible at your ""tax bracket"" rate of 25, 28 or 33% - this being the tax you would pay on your next dollar of earned income.  And in the early years of a mortgage, mortgage payments are nearly 100% interest.  So even if it's a wash: you gain $10k in the market but pay $10k in mortgage interest -- you pay $1500 tax on the gains, but the interest deduction redudes tax by $2800. So you are still $1300 ahead.   TLDR: the government pays us to do this."
Actually if you look at a loan for $115,000 over 30 years at current interest rates you would have a payment of about $500 a month. I would argue your $500 monthly payments are building equity the same way a loan repayment schedule would. Is your agreement in writing? If it is, there's nothing you can do unless they agree. If it's not then write up a contract for a $115k loan that you will pay back over 30 years at $500 a month with the amortization table. That will show how much equity you're building over time. (It's not much the first 10 years!) Note that some states require real estate contract to be in writing or else they are voidable by either party. Whatever you do, get something in writing or you'll probably either end up in court or feeling bitter for the next few decades.
You want /r/personalfinance  As long as you can afford to pay down the debt and interest over a period, 5-10 years or less, it seems reasonable enough.  Interest is high compared to a mortgage but it is tax deductible (last I knew).
You can't max out your retirement savings. There are vehicles that aren't tax-advantaged that you can fund after you've exhausted the tax-advantaged ones.  Consider how much you want to put into these vehicles.  There are disadvantages as well as advantages.  The rules on these can change at any time and can make it harder for you to get your money out. How's your liquid (cash) emergency fund?  It sounds like you're in a position to amass a good one.  Don't miss this opportunity. Save like crazy while you can.  Kids make this harder. Paying down your mortgage will save you interest, of course, but make sure you're not cash-poor as a result.  If something happens to your income(s), the bank will still foreclose on you even if you only owe $15,000.  A cash cushion buys you time.
I think the first step is to be thankful that your relationship with this person has not degenerated into lawsuits and bickering.  That would greatly affect your cash flow and valuations!  It also seems that this person is open to a variety of solutions.  This truly is a gift. I see two options without taking a mortgage or fronting cash: The key here is if the 65% property already has a mortgage.  Does it have enough equity to provide 15% cash out, and cover the existing mortgage?  What is the interest rate?  Can you get a lower rate that will reduce the impact of a higher mortgage payment will have on your income?  Can you have your partner finance the 15%?   In the end there really isn't a way to divest this company without impacting your income.
As others have shown, if you assume that you can get 6% and you invest 15% of a reasonable US salary then you can hit 1 million by the time you retire. If you invest in property in a market like the UK (where I come from...) then insane house price inflation will do it for you as well. In 1968 my parents bought a house for £8000. They had a mortgage on it for about 75% of the value. They don't live there but that house is now valued at about £750,000. Okay, that's close to 60 years, but with a 55 year working life that's not so unreasonable. If you assume the property market (or the shares market) can go on rising forever... then invest in as much property as you can with your 15% as mortgage payments... and watch the million roll in. Of course, you've also got rent on your property portfolio as well in the intervening years. However, take the long view. Inflation will hit what a million is worth. In 1968, a million was a ridiculously huge amount of money. Now it's 'Pah, so what, real rich people have billions'. You'll get your million and it will not be enough to retire comfortably on! In 1968 my parents salaries as skilled people were about £2000 a year... equivalent jobs now pay closer to £50,000... 25x salary inflation in the time. Do that again, skilled professional salary in 60 years of £125000 a year... so your million is actually 4 years salary.  Not being relentlessly negative... just suggesting that a financial target like 'own a million (dollars)' isn't a good strategy. 'Own something that yields a decent amount of money' is a better one.
"Let me run some simplistic numbers, ignoring inflation. You have the opportunity to borrow up to 51K. What matters (and varies) is your postgraduation salary. Case 1 - you make 22K after graduation. You pay back 90 a year for 30 years, paying off at most 2700 of the loan. In this case, whether you borrow 2,800 or 28,000 makes no difference to the paying-off. You would do best to borrow as much as you possibly can, treating it as a grant. Case 2 - you make 100K after graduation. You pay back over 7K a year. If you borrowed the full 51, after 7 or 8 years it would be paid off (yeah, yeah, inflation, interest, but maybe that might make it 9 years.) In this case, the more you borrow the more you have to pay back, but you can easily pay it back, so you don't care. Invest your sponsorships and savings into something long term since you know you won't be needing to draw on them. Case 3 - you make 30K after graduation. Here, the payments you have to make actually impact how much disposable income you have. You pay back 810 a year, and over 30 years that's about 25K of principal. It will be less if you account for some (even most) of the payment going to interest, not principal. Anything you borrow above 25K (or the lower, more accurate amount) is ""free"". If you borrow substantially less than that (by using your sponsorship, savings, and summer job) you may be able to stop paying sooner than 30 years. But even if you borrow only 12K (or half the more accurate number), it will still be 15 years of payments. Running slightly more realistic versions of these calculations where your salary goes up, and you take interest into account, I think you will discover, for each possible salary path, a number that represents how much of your loan is really loan: everything above that is actually a grant you do not pay back. The less you are likely to make, the more of it is really grant.
It depends on your bank and your mortgage contract details if they are willing to handle it that way, but you are correct in your assumption that you should be able to save the interest for the twenty days, which accumulates to significant savings. A rough estimate for the overall saving is 20 years x 3% x 20/30 of the days = (one time) 40% of your monthly payment.
Considering that it's common for the monthly mortgage payment to be 25% of one's income, it's an obvious advantage for that monthly burden to be eliminated.  The issue, as I see it, is that this is the last thing one should do in the list of priorities: The idea of 'no mortgage' is great. But. You might pay early and have just a few years of payments left on the mortgage and if you are unemployed, those payments are still due. It's why I'd suggest loading up retirement accounts and other savings before paying the mortgage sooner. Your point, that rates are low, and your expected return is higher, is well presented. I feel no compulsion to prepay my 3.5% mortgage.  As the OP is in Canada, land of no mortgage interest deduction, I ignore that, till now. The deduction simply reduces the effective rate, based on the country tax code permitting it. It's not the 'reason' to have a loan. But it's ignorant to ignore the math.
If it's either/or, I'd pay down the mortgage, no question. I know I'm in the minority, but I'm not a fan of tax-advantaged retirement accounts.  There are too many things that can change between now and the next 30 years (the time frame that you'll be able to withdraw from your IRA account without penalty).  The rules governing these accounts can change at any time, and I don't think they'll be changes for the better. Putting the money toward your mortgage will relieve you of that monthly payment faster.  The benefits of IRAs come retirement age are too uncertain for my taste.
I see a lot of answers calculcating with incomes that are much higher than yours, here is something for your situation: If you would keep your current income for the rest of your life, here is approximately how things would turn out after 40 years: All interest is calculated relative to the amount in your portfolio. Therefore, lets start with 1 dollar for 40 years: With your current income, 15% would be 82.5 dollar. At 12% this would over 40 years get you almost 1 million dollar. I would call a required return of more than 12% not 'likely'. The good news, is that your income will likely increase, and especially if this happens fast things will start to look up.  The bad news is, that your current salary is quite low. So, it basically means that you need to make some big jumps in the next few years in order to make this scenario likely. If you can quickly move your salary towards ranges that are more common in the US, then 15% of your income can build up to a million before you retire. However, if you just follow gradual growth, you would need to get quite lucky to reach a million.  Note that even if reaching a million appears unlikely, it is probably still a good idea to save!
You mention only two debts, mortgage and student loan, but you mention $19K in savings, which suggests that you are a saver, and likely do not have other debts. You did not mention your (net) income and expenses (income statement), but since you have substantial savings, you likely live within your means (income > expenses). Since you mention $38K in retirement, we might conclude you are regularly saving for retirement (are you saving 10% toward retirement)? You did not mention any medical condition or other debts, that might require a large savings, so I would suggest having 6 months savings ($2.5K x 6 = $15K) but should your net expenses be less, you might reduce this ($2K x 6 = $12K). You do not mention any investment you might want to make, but since you did not mention any candidate investments, we can assume you have no (specific) investments you find particularly attractive. You did not mention anything you were saving to purchase that you might want to purchase. You have combined $19K + $50K = $69K savings, and $15K would be a comfortable emergency savings, leaving $54K you could use to reduce mortgage or student loan debt. The mortgage debt interest @4.5%, is higher, so paying that debt off would be like earning 4.5% guaranteed return on your money, tax-free. At your income, your marginal tax rate is low enough that the mortgage interest deduction (if you do itemize) would not reduce this return much (15% if you itemize). The student loan debt interest @2.8%, would be like earning 2.8% guaranteed return on your money, tax-free. Clearly the higher return on your 'investment' in paying off debt would be reducing your mortgage balance (over 50% higher return on investment, compared to the student loan debt). You did not mention any circumstance that might cause the student loan rate to increase, the mortgage rate to increase, nor did you mention any difficulty making both the mortgage and student loan payments, the amounts of either payment, nor the number of years remaining to pay on either. Should you need (or desire) to reduce your payments, you could choose to payoff the student loan to eliminate one payment, and thus decrease your expenses.
if the rate of interest on both loans is 6.5%, it does not make any difference against which loan you offset. if you offset it with 50K loan, you will close it sooner [I am assuming your 50K loan is of shorter tenure compared to the 300K without considering offset]. The overall interest outgo looks larger if you close the shorter loan vs closing the larger loan, however the net effect is the same if you start putting out the balance $400 to the 300K loan after you have closed it out.
Term life insurance for a healthy 30 year old is a heck of a lot cheaper than for a 40 year old who's starting to break down (and who needs the coverage since he's got a spouse and kids). So, get a long term policy now while it's cheap.
"I'd suggest you avoid the Roth for now and use pretax accounts to get the greatest return. I'd deposit to the 401(k), enough to get as much match as permitted, then use a traditional IRA. You should understand how tax brackets work, and aim to use pre-tax to the extent it helps you avoid the 25% rate. If any incremental deposit would be 15% money, use Roth for that. Most discussions of the pre-tax / post tax decision talk about 2 rates. That at the time of deposit and time of withdrawal. There are decades in between that shouldn't be ignored. If you have any life change, a marriage, child, home purchase, etc, there's a chance your marginal bracket drops back down to 15%. That's the time to convert to Roth, just enough to ""top off"" the 15% bracket.  Last, I wouldn't count on that pension, there's too much time until you retire to count on that income. Few people stay at one job long enough to collect on the promise of a pension that takes 30+ years to earn, and even if you did, there's the real chance the company cancels the plan long before you retire."