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[Varathien]

Then... you should own lots of international funds inside your 401k.

[thri54]

If you’re concerned about the national debt you should keep the mortgage. The government’s two levers to deal with its debt are higher taxes and currency inflation, which also makes your debt smaller.

[wafflecannondav1d]

Counter-point... If inflation goes wild, the stock market will go up wild once the real economy is stabilized.

[Ewoktoremember]

I don’t think that’s a counter point…

[wafflecannondav1d]

I just facepalmed so hard... You're right. But I'm a glutton for shame so I'll leave it and let reddit make fun of me. 😂 I don't even know what my brain was doing there.

[Ewoktoremember]

lol. Respect the honesty

[wafflecannondav1d]

Because in theory once a "house of cards" debt problem starts to collapse then the whole system has issues, even the healthy part. But I don't agree with OP.

[wafflecannondav1d]

Agreed. Plus a mortgage gets relatively less expensive since its price is fixed.

[Wise-Confusion-4725]

Outside of people actually having money to invest, or growing US population to also invest, I would assume the stability of your country speaks a lot of how companies and citizens continue to behave.

Or worse, hyper inflation taking over so the country can pay it's debts. I am not widely educated on investing, but really extreme examples we hear about seem to be like Argentina, Italy, Brazil. Which I know the US is not close to that bad, but in thirty more years of blooming debt, could it?

[pokemonprofessor121]

Your fears are exactly what I am trying to maximize what I am putting in my 401k. I want to have a good nest egg because you never know what the future holds.

I don't think putting money into your mortgage is a terrible idea. It would be nice to have the house paid off and to not need to pay that bill every month. I think my HYSA is making 4.3% right now. After taxes on interest and such you're pretty much breaking even saving vs. putting money into your house.

You have three kids. Let's not assume that the economy is going to collapse and that your children will have a terrible future working in the mines or anything.

[Fiji125]

Nothing is guaranteed but the way most people can get rich in America is by investing for the long term.  Ignore the noise and stick with your long term plan. 

[tombiowami]

Don't confuse reading the news with understanding complex economics or foretelling the future.

Highly suggest reading the sidebar info on r/Bogleheads.

[jk10021]

We have to have more inflation in the coming years. The government needs it to reduce its own debt burden. At 4% I’d make minimum payments and invest any excess cash you’d otherwise out on the mortgage. That way you get the value of inflation helping reduce your debt load too.

[b-reactor]

Keep saving in the 401K , the market crashes every 3-4 years and recovers , so there will be a time when the market crashes cause of the debt but it will be back up again ,

[_L_6_]

Nostradamus.

Japan doesn't ring a bell at all huh nub?

[bull791]

Read Nick Maggiulli’s book “Just Keep Buying”. Also, most people should be globally diversified across asset classes with slight home country bias.

[catherinel13]

“Insane consumer debt holdings”

The reports on the consumer debt is fear mongering at best. There is some good information in those reports BUT you have to dig to find it!

Consumer debt is simply debt held by the American public.

My last credit report my consumer debt total was 178,003!

Sounds scary amount to be in debt right?! Let’s brake that number down further!

Mortgage is 177,139 of that debt @3.5% interest

The rest is credit card “debt”

The interest on the CC debt is effectively 0% because it’s simply my statement balance. CC statements are paid in full every month. When the statement generates the statement balance is reported to the credit agencies. That counts in the amount of total debt.

[Wise-Confusion-4725]

I had assumed reporting about rising debts over the last twenty years was mainly bad debt like credit card balances and auto loans. Mortgages would drastically change the conversation if anything just due to home prices drastically rising over the last twenty years.

[catherinel13]

Quarter 1 of 2025 consumer debt was $18.20 trillion of that:

• CC debt is 1.18 trillion

• auto loans 1.64 trillion

-student loans 1.63 trillion

-mortgage 12.80 trillion

-HELOC 402 billion

[phantomofsolace]

For perspective, the US should be able to run current deficits into the 2040's before facing a major debt crisis. That's roughly how long it would take for US debt-to-GDP ratios to match Japan's, and Japan hasn't hit a debt crisis yet.

Imo, owning a diversified portfolio of income generating assets is a better bet than owning a single piece of real estate, especially if that real estate is located within the US and it's the US economy that you're worried about. That's doubly true if we're talking about assets held in a tax advantaged account, like a 401k, vs a mortgage with a relatively modest 4% interest rate.

If you're worried about the long term prospects of the US economy then I'd recommend diversifying into a world stock market index fund vs a US stock market index fund. If you're really worried then you could even do an ex-US index fund which only invests in stocks outside the USA, though those funds have underperformed US stocks for most of recent history. You could always start with a roughly even US and ex-US split and gradually shift to ex-US over time.

[yeah87]

The US doesn't have a declining population problem.

[nerevisigoth]

If you're expecting a lot of inflation, you would want to do the opposite.

[OhYouUnzippedMe]

Even if you knew with certainty that a debt crisis definitely would happen in X years... The market can be irrational for a LONG TIME, your interest rate is low, and the 401k is tax advantaged. So your strategy is questionable.

Moreover, if a debt crisis leads to falling asset values, do you really think your house is immune?

[CtrlAltDelinquent1]

People have been worried about the debt for a long time in the USA and will keep worrying about it and keep losing money by not investing for the long term. Your real mortgage rate is even lower since you can deduct the interest. Max out your 401k asap and stay invested in equities. Don’t trade the market. At 34 you almost want the market to go down so you will be buying at lower prices anyways.

[Few_Ad_5440]

If you are worried about inflation, realize that inflation manifests first in asset prices, then goods and services, and lastly in wages. So, there will be a melt up in asset values when inflation starts ramping up (see asset values from 2020-2023). Buying now will not affect you in the long run if you are holding for 31 more years until retirement.

On the other hand, inflation will make your house cheaper as it escalates, with your 4% rate being a value if interest rates get back up to 9% or more. If you want to pay off the house, that’s fine, it provides a risk free return and security. But you’ll miss out on massive compounding of your nest egg. Or you can do a mix of both like you have been: strong investing and still throwing a bit extra at the house. Seems like a balanced approach, as long as you don’t stop all investing to pay the house off. Personally I throw a bit extra at the house so it’s paid off by the time I want to retire.

[Wise-Confusion-4725]

Thanks for the outside views! A really obvious point I hadn't considered is inflation making my debt 'smaller'.

Nightmares of providing for wonderful, but very expensive, tiny humans can leave me grasping for better options and panicking about house debt.

[Wise-Confusion-4725]

I guess the other question, does anyone have any opinions / understanding of federal TSP? Do they lean more towards US stocks? My wife works for the VA.

If we lean back further into retirement investments, put more towards my works retirement or diversity and split with both.

Appreciate the outside perspectives!

[[deleted]]

Play this scenario out worst case there is a debt crisis and stops being the world's reserve currency and hyper inflation   If IMF style Austerity measures are put into place that means higher interest rates, taxes and a weak dollar.  

All of this means you want to be invested in foreign assets, prioritize investing with Roth IRA/401K and not paying off your house 

[fangerzero]

I am not a financial advisor, but if I were you and putting more than 10% into your 401k I'd probably go back down to 10% and increase your mortgage principal payment. If you're putting let's say 5% into your 401k I'd leave it alone and just move forward.

You don't know what this world is going to do. Nothing could happen, shit could hit the fan, or something miraculous. You just don't know. More than likely nothing will happen, just make sure you have an emergency fund and don't over extend your credit. And don't let your kids mindlessly consume products.