Once you have successfully started saving 15% for retirement and have begun saving for your kid’s college education, you are in the home stretch of completing the baby steps. Baby Step 6 is paying off your home early. The benefits of having a home paid off in pre and post retirement are amazing! You’ll no longer be dealing with payments, which frees up cashflow to enjoy other things in life. During this time, you can tangibly start to feel the freedom of being totally debt free!
This step can commonly be misclassified into Baby Step 2, so make sure to follow Dave’s advice and wait to complete this process as step 6. If you do this during Baby Step 2, you can miss out on the time value of money for your retirement and end up falling behind.
Once you have determined how much money is going towards your investments and kids’ education, continue to budget every dollar of your income. Any additional funds you have can be put towards the mortgage. This will save you immense amounts of interest in the long term and allow you to pay your home off early.
Do you have a specific goal in mind to have your house paid off? Are you stuck in a mortgage with a high interest rate? Do you want to take Dave’s advice and switch to a 15-year mortgage? We invite you to talk with one of our advisors to create a plan to hit your goals quickly, allowing you to build wealth and give.
Jeremy Sharp is the Director of Financial Planning at Stewardship Financial. Jeremy loves helping people figure out ways to organize their financial life and make better decisions with their money. Jeremy and his wife have two boys and is an avid fan of New England sports.