Investing 102

[Bucketlist2012]

Originally Posted by SLO_Z28

Youd be surprised how cheap you can live if motivated, all my bills combined are $1300/mo. Even my dad lives quite well off $1000/mo social security income.

Anyways on to some planning, I can retire at 59 with 90% of my pension for the rest of my life(government pension, costs 10% of my salary), should I buy a house now and amortize the hell out of the loan by paying double the payment on a 15 year loan then put the entirety of my house payment into a 457(b), or just make regular payments on the house and pay the excess into my 457 thus reducing my tax burden. Basically im asking is it better to pay down a debt at 3% and gain equity and defer investing for 7 years(how long it should take to pay off a house), or invest for the entirety of those 15 years at the 457 maximum? If I invest the full amount into the 457 I can lower my federal tax rate to 15% (I have a 48,000 salary that when reduced to 43,000 by the 457 contributions drops me to a 15% tax bracket from the 25% im at now), so I would guess that the tax deferral would be worth it?

Personally at 3%, I would not double down on the loan payment, and I would Invest that money.

That is without the tax reduction. With the tax reduction , I would for sure keep the loan and Invest the rest. That is an additional 10% for you in tax savings, and you should be able to get more than 3% on your Investments. IMHO.

Now we need our resident Math experts to chime in and share their thoughts..