Typically, when one hears the words “the American dream,” one of the images it conjures is of owning a home, maybe with a white picket fence on a tree-lined street. Conversely, the idea of renting a home may not fit in with that dream, especially if you’re used to owning in the past. But sometimes it makes sense to rent, depending on your circumstances.
Let’s say you’re 50 years-old and you have an extra $900 a month to work with. Should you use that money to pay down your mortgage or contribute it to your 401(k)? Assume you just refinanced your mortgage for $450,000 over 15 years at 3.5 percent interest— so you’re paying $3,217 a month. Also, assume you have $500,000 in your 401(k) account and you’re putting away $10,000 annually, which is growing at 7 percent.
A client recently asked if we could do a post about a financial challenge they were having, thinking it might be helpful for others who read this blog.
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