I Changed My Mind

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Some of you may remember that I declared and committed to a goal to invest $500 a month into an S&P index fund, or a total of $6000, this year.  6 months in and I’m actually about a month AHEAD, woo hoo!

You may also know that I’ve been furiously reading finance books trying to find the secret to retiring in my 30s….without drastically changing my current lifestyle (which I already think is pretty modest).  While I don’t think it’s going to happen in the next few years, I know that in addition to having a stash of investments to live off of, I need to pay off my mortgage.  I could do one, and then the other, or I work toward both at the same time.

While this debate is going on in my head, I’m also researching other financial advice blogs.  I read a recent post about a pending recession in the near future.  It reminded me that I predicted a market correction months before the election last fall and it never happened.  I liquidated some of my investments to get ready to buy stocks on sale and the market has just stayed high, which is why I felt good about my monthly contributions to the index fund.  I was dollar cost averaging and it didn’t matter whether the market was high or low.  But this article reminded me that we’re still OVERDUE for a correction and recession!  In the case of a bull market, it may make more sense to put extra cash towards reducing debt versus investing in stocks.

Soooo….I changed my mind!  I really want to start putting my extra cash each month toward paying down my mortgage principal versus investing (outside of retirement).  Am I being flighty or fickle?  Am I a bad example?  These thoughts certainly crossed my mind, but here’s what I decided, and the message I want to send to you:  it’s OK!  If I take a step back and look at the big picture, the important thing is that I’m living below my means and have extra money in my budget every month.  I have two goals that have to be completed at the same time for me to retire, so if I put more money toward the mortgage one month and more toward investments another, I can indulge my temporary whims and still be working toward my long-term goals.  If the market does significantly decrease, I will probably start funneling a lot of that extra cash back into that index fund to take advantage of the SALE prices!  (And then, friends, we should have some great blog posts for beginner investors!  Bear markets are such a great learning opportunity!)

I hope you are living below your means so you can achieve all your financial goals, too!

Disclaimers:

  • You may not want to switch around if you’re dealing with multiple types of debt to repay.  Stick with the Debt Snowball method, go by loan balance or interest rate and attack one debt at a time so you can see drastic results of each loan being paid off one by one!
  • You may not want to aggressively pay off your mortgage if you don’t plan on living in your house forever.  I know I’m not going anywhere so this is a good method for me.  (You know you’ve gotten in a finance mindset when instead of coveting McMansions, the thought of buying a bigger more expensive house just makes you sick because you know it will push out your retirement date HA!)

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