Retirement or College Funds or Mortgage prepayment?

[TVRodriguez]

Thanks, razz!

[SteveinMN]

Nicely done, TV! It's hard to follow intentions with actions, but you have and you're enjoying the rewards of that. Good for you!

[iris lilies]

Great news op!

[catherine]

I am so totally jealous! I'd have done exactly the same thing. Congratulations!

[TVRodriguez]

Thanks, Steve, iris lillies, and catherine! I appreciate the good comments.

[TVRodriguez]

Well, I did end up sharing our mortgage paydown plan with one friend IRL, since she was telling me about how she had minimized all her expenses to be able to put as much into retirement as possible for the next five years. She started a new job about a year ago and it's paying her a very high salary, so she is trying to make the most of it by keeping her personal expenses down so she and her husband can retire in five years (she's 55). She knows that I'm more frugal than some of the other attorneys we know, and so I told her our plan is to pay off the mortgage. She was very excited for me, which is nice, as I was also excited for her in hearing her plan. It was encouraging to hear her comments.

And this week I put another $13,000 to the mortgage. It'll be down to $18,500 tomorrow when the payment hits!

[freshstart]

1) Keep the emergency fund topped off.
2) Maximize the available space in deferred compensation plans, Roths, HSAs, and pension accounts.
3) Mortgage prepayments.
4) 529 plans.

This is what I did. Every personal finance book I read, said fully fund retirement accounts before moving to #3 or 4. The theory being you can't borrow for retirement. So I couldn't reach the retirement max each year (close but no cigar) and thus did not save for #3 or 4.

Thank God I went this route. After 23 yrs of working full time as a nurse, in Sept, I became ill, so after many months out of work, I've had to apply for SSDI and long term disability. I never gave much thought that something could happen to me so did not do a lot of planning in this area. Sort of working out for me so far. I had paid very little into a voluntary short term disability policy that became available the year before I got sick, so that paid out. Voluntary Long term disability cost too much, but in hindsight, I should've sucked it up and done it. Now that I am disabled, I can touch retirement accts without fines. I've spoken to two financial planners who worked out how much I can take out each month without ever touching the principle. Hoping to never do this, the comfort that that money is there is immeasurable.

I felt guilty that I never got to filling 529s but if I had, what the heck would I have done? So I feel badly about this but it doesn't have to be a complete disaster. If the kids live with me, they should get a ton of financial aid and they have their dad to help.

So even though it is very tempting to spread your available money to fund #1-4, I am proof that you shouldn't move onto #3 and 4 until retirement is funded to the max allowable. My two cents