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Dear The Purse,
About 15 years ago, before I had kids and a house—meaning I had very cheap rent and not many expenses—I put a ton of money into my employer’s 457(b) plan. Since then, the account has grown a lot.
We also have two rental houses, one with $200,000 remaining on the mortgage at 3.5% interest, and another with $100,000 remaining at 2.5% interest. On my primary home, I still owe $300,000, but that’s at 1.85%.
I’ve run all the numbers in a spreadsheet showing how much money I will have if I keep the money in the 457(b) account, assuming the market grows, compared to pulling the money out now and investing the rental income. Clearly I should not pay off the loan, because the 457(b) account will (allegedly) grow more than my interest rates.
However, emotionally, I am terrified of what’s going to happen to the economy, the country, and my job. Right now, I’m making $200,000, and my spouse isn’t working. If we pay off one or both rental mortgages, we would have some additional income coming in if anything happened. Both rentals are in really great rental communities. However, we’d be paying so many taxes.
So what’s your advice? I realize I am in a very privileged position. I got lucky with the stock market, but also my spouse and I, all of our lives, have saved and saved and saved.
Best,
Investments Say I’m Rich But I Don’t Feel It
Dear Investments Say I’m Rich But I Don’t Feel It,
You’re far from the only person who is feeling uncertain in today’s economy. Ever-changing trade deals, a new war, and whatever is going on with AI—it’s putting us all on edge, wondering how we can get ahead of any potential downturn.
But when emotions come into play, that is usually the worst time to make a big financial decision, says Baylee Bryant, certified financial planner (CFP) at Merit Financial Advisors. There’s no doubt this is a stressful economic time full of uncertainty, but that makes it even more prudent to take a step back from any life-changing financial moves.
