[USER]

We have received a 400k inheritance and are debating what to do with it.

We have a 550k mortgage with a 5.5 interest rate. A paid off rental that brings in around 28k net a year.

About 100k in a 401k. We have a car lease payment of 500 a month and no other debt.

Should we use the money towards the mortgage? Buy another rental? Invest it?

Thank you!

[Zachery]

Personal preference honestly… for me I’m only 30 years old and just got a new house.

I would put $300k on the house so it’s nearly paid off and use the 100k to max out my 401k and stash in savings.

Gives a good piece of mind. Your 100k in the 401k could be rather low depending on your current age.

[Bethany]

Only if it gives you inner peace to know that your mortgage is paid off. Or if you are retiring soon and want to reduce debt.

Stocks are on sale now so it is a great time to buy.

Even an SP 500 Index fund averages a 10.7 percent return typically which is about double your interest rate.

A good middle ground would be to split it up and pay down some of the mortgage and invest the rest!

[Allen]

I would deploy that money in an investment that will appreciate.

If you don’t have a plan for the extra money you gain by paying off your mortgage, there is a risk you may squander it slowly

[Robert]

First off, I’m sorry for the loss that you and your spouse must’ve occasioned in order to receive that inheritance.

Yes, it can give you a very calm feeling to have paid off the majority of your mortgage, if you put the entire 400 K into your mortgage.

But if it were me, I would look around for a piece of residential real estate – either one or two duplexes or triplexes; or a four Plex five Plex or possibly a six Plex; and make a substantial down payment.

Find a “B” property in a “B” neighborhood; get yourself a killer, property manager; and you are on your way.

Weil there is certainly no “one-size-fits-all” to FIRE, residential rental real estate has been an indispensable part of my own journey towards FIRE.

[Aubrae]

Pay off car, max out 401k and IRA for the year, have a 6-12 month emergency fund in HYSA and put the rest toward mortgage.

[Hillary]

Unless you’re in your twenties or really low cost of living, it seems like you need to catch up a lot on your 401k balance.

Agree with what others said—if you free up money by paying down mortgage, what will you then do with that money?

Make a plan either way and remember to pay yourself first (invest in your future)

[Way]

I’d be paying down that mortgage for sure. We sold our starter home and bought our current house all cash and I cannot even begin to explain to you the peace being 100% out of debt has brought us.

It’s incredible. That then frees up your income to invest or enjoy.

[Jill]

Buy some VTSAX while the market is down, put some on your house. Do you have emergency savings? If not, some in a HYSA.

I’d also rethink leasing a vehicle going forward.

[Author]

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