There is a first time home buyer exclusion that would spare us from the 10% penalty of yanking the retirement funds, but I’d still be paying 30%+ in income tax that year. (I actually ran some #’s the last couple of yrs and decided it was best to have the wife stay at home and help full time with our start up. Her whole income was going towards paying our income tax for the year by working outside the home. She wasn’t to upset about the dilemma… Basically 30% isn’t anything new, but we could avoid it if we’re in a lower income tax bracket when we’re 60 and pull the 401k then.)
Return on Investments in the market may be bleak:
I feel the stock market is ready for a down turn. Along with high p/e ratio over all, I feel the market has another debt to pay. Boomers are soon to be retiring in a big wave 3-10 yrs out, and their going to be pulling their retirement funds to live on. This is going to be a huge tax on the market when you guys begin to collect on your earnings. I’m hard pressed to find a safe haven for my $. This pushes me to invest in a safe bet like paying off the mortgage and saving 5-7% in interest guaranteed. Essentially a 5-7% risk free return.
Loss of potential gain if the market changes:
If I have the $ wrapped up in the house, it would be very ill liquid if I the stock market took a big upswing. But, now that I wrote that, I realize I’m a 1st mortgage/Refi away from liquidity. Boy that sounds stupid. Take $ out of my home to play the market?
Emotional return:
Our first House warming party AND mortgage burning party on the same day. OOH the dream. I could consider doing something else with life at 33. No more employment with the main goal of maximizing income.
Employment free of worry with the possibility of a better quality of life:
I honestly feel I may be able to make more doing something else but I don’t want to risk my income to find out. I think I could do it in a field that I have a passion for. W/O a debt load I could have the luxury of a long leave of absence in the hopes of coming up with “something better.” It sound a bit “dreamy” but I think I could find a way to “work smarter not harder” if I had the time to play with a couple of ideas. If nothing stuck in a year I wouldn’t have to worry about a year of lost earnings.
Give me some other insights, or tell me to quit bragging and go away…
