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Help Me Plan for Retirement

May 30th, 2019 at 02:45 pm

Tomorrow, I will pay my second mortgage payment ever.

$351.98 – Principal
$100 – Extra towards principal
$995.81 – Interest!!!!!!!!
$393.02 – Escrow and PMI
$1840.81 TOTAL

I think it’s horrifying that the interest alone is more than (Principal + Extra to Principal + Escrow + PMI). Why are mortgages so EVIL?!!!???

Anyway, this makes me think even more of a plan that I have forming in my mind. I don’t know if it is smart or foolhardy. Here it is – please give me some advice.

I will be done with all my consumer debt by the end of this year as well as have $10K in EF. I don’t really have much of any other savings. My employer adds a meager amount to retirement savings, but that will cease when I quit my job early next year. While I worked the last 10-ish years to pay off about $60K in high interest consumer debt, I didn’t really save anything for retirement. So, now I have $40K in a retirement account with my employer, and will get a very small pension. Everything else towards retirement needs to be saved going forward.

I want to pay my mortgage off as soon as I can. It’s a 30 year mortgage at 4.5%. I want to pay it off in 10 years on the outside. Hopefully within 8-9 years if I can. If I quit my job, what this will mean is, after EF, sinking funds for major house repairs/entertainment/travel, purchasing my own health insurance, and if I pay $6k/year into an IRA, if I throw everything else at the mortgage, I can pay it down in 10 years or less unless something horrible happens.

Part of the reason I am planning to leave my job and go into SE full time is that I have a greater earning potential that way compared to doing the same thing in a salaried position. The downside of course is that I can’t predict what will happen – I might have serious health issues, have other things come up that will get in the way of making a good income. This feels like all the more reason to work as hard as I can to pay off the mortgage as fast as I can. If I can have the house paid off, then I plan to purchase a rental property for passive income. Work at the same rate as I am now, use rental income and part of my income to pay off the rental property in the next 10-ish years while saving for retirement simultaneously. Then go semi-retired around 58-60-ish. Even if I don’t buy a rental property, I am pretty frugal, and if I don’t have a house payment, then even if I were not able to work, then I could easily live off very little. If I purchase and pay off the rental property, then I can definitely semi-retire at 60 and would be able to fully retire at 65 with two paid off houses, and a rental income in addition to anything I have saved for retirement by then.

However, I also think it makes fiscal sense to save money for retirement and not throw all my money at the mortgage. I am so torn. What do you all suggest?