Currently putting 15% in 401k, company matches 3%, so a total of 18%. Currently paying extra on principle on house and have 31 payments left at current rate. I can drop my 401k down to 3% to get the company match and knock the house term down to 23 months. Normally I wouldn’t think of this but I’m watching my 401k go down and now am contemplating it. Thoughts from the brain trust? Rate on mortgage is 3.125 if that helps.

I just started contemplating doing this very same thing.

You know the saying, "buy low, sell high". That's what I'd do if I were you. I would be continue to buy low, unless you think the market is going to go down forever. If you think that, then invest in bullets, medical supplies, and long shelf life food instead.

I'd pay off the house. In 24 months, you can go to the max in your 401k and still have disposable income.

You never know but paying down a mortgage at 3 percent wouldn’t be my highest priority. If you want to limit your exposure to the market and bring your 401k contribution down I would say putting that extra cash in straight cash is smarter than paying off a low interest note.

Just keep dollar cost averaging into your 401K. Your mortgage rate is low. I bonds are paying 9.2 percent as a comparison.

I'd stay your current course. Even in a down market, stock historically return higher than the 3 percent of your mortgage.

I'm curious- The 401K money is tax free. You'd pay taxes on the mortgage money. Is it worth paying that difference to pay off the mortgage?

Nobody but you & a financial advisor can really answer with numbers, but I'll say this - Don't react from emotion. ever. Do the math or do nothing.
Both 401k & mortgage are tax incentivized, so the math is pretty complicated and then there's the uncertainty. You'll probably end up with no difference, at best.
January 2009, a friend (late 20s) pulled most of his 401k & paid off his house. I put some cash in a few stocks. Guess who came out better? He's still trying to dick around with the IRS over the penalties, assuming it will go away. You're not proposing anything near as drastic as he did, but the rationalization is the same.
My opinion/actions - clench butthole & ride it out. Not checking my 401k, trying to reduce spending & increase cash. Even with inflation, cash is king - dumb people don't understand inflation. If worse comes to worst, having cash on-hand can help keep me & mine going for a while and maybe get a leg up on others. Unless the banks croak cause my cash ain't under my mattress.

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Originally posted by braillediver:
I'm curious- The 401K money is tax free. You'd pay taxes on the mortgage money. Is it worth paying that difference to pay off the mortgage?

Another consideration for sure is having to pay the tax man for that extra 15% in income. This would be at your highest rate and more than like you'd hit the next bracket and have to pay on an even higher rate. Leave all other financials out of it, I rather keep my money than give it to the government.

I absolutely would not suggest what you’re contemplating. Keep contributing to your 401k as you have been- when the market is down you’re getting more shares for the same money. And with inflation more than double your interest rate, why would you want to pay off the mortgage early? There is an overwhelming likelihood that money you put in the market today will yield significantly more than the rate you’re paying on your mortgage.

If you are able to be debt free with no intention of future loans, and can’t do better than 3% return on any investments, then pay off your mortgage. As long as inflation is high I’m excited about owing money at 3%. 10 years from now your current mortgage payment might be the cost of a hamburger.

Big question not answered yet...How old are you?

For me this is a decision on what makes you feel better vs some expert crunching the numbers.

On the surface I want to say keep doing what you are doing.

But some factors to consider are.

Current interest rate on mortgage
How is your 401k invested (risk)
How long till retirement

I am guessing your mortgage payment is mostly principal at this point.

Again, feels like you should continue as is. Imho.

And I am a big "no or low debt" guy.

To me the only upside to pay mortgage a bit early is 7 months of interest at 3ish percent. That is super easy to calculate.

I would leave maximum 401k investment. This is helping in buy low sell high stategy everyone should use. Yes there is risk. If you want to reduce risk, reduce 401k and put maximum into Ibonds ($10,000/year). That is very low risk with over 9% interest earnings.

I am maximizing my 401k and putting $10k into Ibods. I have about 10 years left on my low interest mortgage and plan on retiring in 2 or 3 years. I have no problem retiring before my mortgage is paid as long as my saving has money to make the payments

Continue investing in your 401K. It's the smart thing to do.

Keep doing what you are doing, but throw any and all extra money at the house payment. You may have to write “toward principle” on the check so they don’t just pay off the next payment-thus them still getting you interest payments.

Current age is 54. I enjoy my job and as long as my mental faculties are good I can work till 70 if I want.

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Originally posted by mholmes:
Current age is 54. I enjoy my job and as long as my mental faculties are good I can work till 70 if I want.

Are you taking advantage of the over 50 catch-up program? Also can do similarly w Roth.

My 2 cents is that you're years away from retirement, and the market is already down, though could go down further. I would suggest continuing contributing the maximum to your 401k. The smartest financial guys I know, and I've been in the business for decades, can't time the market. You could always change your 401k investment allocation, but at this point small cap, though crushed, will do fine over the next couple of decades (as well as mid and large caps). Bonds, right now, are going to lose value due to interest rates continuing to rise. Your 3.125% mortgage is a great rate, though you are close to paid off. I see no value in paying off your mortgage a few months earlier. Stay the course, imo. Don't look at your portfolio. value daily or even weekly. Quarterly, at your age, is fine. Don't stress...

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over 50 catch-up program

Please explain