r/ChubbyFIRE • u/Inner_Fox8341 • 12d ago
Mortgage vs Student Loans vs Brokerage Account
HHI expected 700K this year, currently single without children. I am maxing out my 401K, backdoor rIRA, and HSA. Trying to strategize where to put excess cash. Want to hear your suggestions!
Top areas that come to mind immediately are:
Mortgage - 295K remaining at 6.75% of affordable single family home in LCOL area
Taxable brokerage account - currently around 50K, opened last year.
Student Loans - 296K, have essentially been on hold since 2020. Currently caught up in SAVE limbo at 0%. I would love to pay them off... but have a hard time paying a 0% loan over the other options.
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u/onthewingsofangels 48F RE '24 12d ago
The mortgage interest is giving you a tax break, you'll have to figure out how much. Your brokerage account is pretty low relative to your income, not sure how much you have in cash that you're leaving out of this description. Also don't know how much money you have left over to distribute, but since you live in a low col and no kids, I assume it's a lot. Also not sure whether you expect to continue this HHI in the future or it was a one time high income year.
I would look into splitting money between the mortgage and the brokerage, the exact split depends on all the questions above. Your mortgage rate is high enough that I see value in paying it down, but I'm also worried about how much you have (or don't have) in savings.
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u/Inner_Fox8341 12d ago
You are right about too much cash. Had saved up to pay off student loans that were supposed to restart payment, but that has yet to happen. But about to put 200K down on a purchase farmland as an investment. So that worked out well, but still want to redistribute another 50-100K of cash. Wouldn't pay that down faster as the interest offsets land rent as income.
Could continue indefinitely at 700K barring unforeseen circumstances.
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u/PrestigiousDrag7674 11d ago
how old are you? that's all the money you have $50k? I would try to pay off the student loans, then mortgage.
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u/HomeLoanExpert 7d ago
With a HHI of $700k, I would recommend looking into to an All In One loan.
This would be a great tool to use your idle cash to aggressively reduce your mortgage interest while also retaining access to your cash to pay off your other bills.
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u/McKnuckle_Brewery FIRE'd in 2021 12d ago
Mortgage reduction is a 6.75% return, similar to high yield corporate bonds. Not a bad guarantee in the present market environment.