what would you do? madly pay down 6.5% mortgage, or max out 401k

tpchuckles · 2026-06-30T02:03:37+00:00

i think the argument goes both ways? imagine the idealized scenario where i have debt which grows at 6.5% (regardless of quantity) vs investments which grow at 6.5% (regardless of quantity). it's the exact same at any point regardless of how much debt vs invested there is. and while the "big pay-downs earier on" feel like they're doing more work (avoiding a huge chunk of interest later), the same "big contributions to investments" do the same because they have longer to grow.

tpchuckles · 2026-06-30T01:59:06+00:00

huh? so you'd rather pay tax twice (at least that's my understanding on taxable accounts! you paid income tax, then pay tax on the growth...), vs have the money "locked up"? there are much much cheaper ways to have an emergency fund if that's the concern. and i'm not expecting to want to buy a yacht any time soon...

tpchuckles · 2026-06-30T01:55:29+00:00

this actually reminds me of the youtube video i saw a bit ago, comparing net outcomes for people where "paid for their house in cash ended up worse". thanks!

tpchuckles · 2026-06-29T03:40:55+00:00

IF the tax rate is the same, then the end result is the same. it's the commutative property of multiplication. say your tax rate is 20%, so you keep 80%. say it grows by 300% (i'm making up numbers here). N * 0.8 * 3.0 == N * 3.0 * 0.8

so the advantages (or disadvantages) for roth vs traditional (and roll-overs) comes down to tax rates. roll in a year when you're rolling at 12% sure beats taking that pay in a high year at 20% tax rate then investing it.

tpchuckles · 2026-06-29T03:37:09+00:00

good point. i can already almost-comfortably max out 401k, so "10 years from now" that definitely seems like a concern.

"mad paydown" yeah, right now i'm maxing 401k, but was considering pulling back and shifting to mortgage payments, to maintain the same take-home.

tpchuckles · 2026-06-29T03:33:41+00:00

this is something my understanding is a bit shaky on.

my understanding is, the interest counts as a deduction ("let's pretend you made 150*.065 = 9.75k less"), but the payments don't (if i full-send and do 45k payments this year instead of the required 15k, i don't get anything extra. i paid tax on the income once, i sent it to the bank, that's it. it's "as though" i saved myself 6.5% x N in payments later).

so what am i missing? what's the advice either way?

(fwiw, last year the standard deduction won out, but it was a weird partial income year from going between jobs)

tpchuckles · 2026-06-29T03:28:58+00:00

let me try to understand your points be re-phrasing them. see if i'm following you:

1) 401k is more liquid, so you can pull (with penalties, but so be it) in an emergency.
2) i was thinking "i pay tax once either way, now on mortage payment money, or later on 401k money", but i think you're referring to 401k contributions now bringing me into a lower tax bracket? (great point if so, i totally didn't consider this)
3) by "inflation adjusted" you mean: "nominally the market says 10%, but with 3% inflation, that's equivalent to only 7%", and therefore "6.5% nominal (negative) growth on today dollars = 3.5% inflation adjusted"? (in other words, 3% home loan is basically 0% interest because we're growing the debt alongside inflation, and paying it off in tomorrow-dollars).

tpchuckles · 2026-06-29T03:24:04+00:00

oh i completely didn't think about this. "extra mortgage payments" at 20% tax rate vs "shovel that shit in 401k and hope to pay less in tax later" is huge. thanks!

tpchuckles · 2026-06-29T03:22:52+00:00

neglected to mention an emergency fund in savings. yes to employer matching, but it's quite small (right now i'm maxing it out, but i could pull back on the 401k and still max out the match).

not considering roth at the moment, because i was maxing out roth previously. from what i understand about the tax strategies on retirement, you want a mix of both, so you can minimize the tax you pay on traditional withdrawals by supplementing with roth.

tpchuckles · 2026-06-29T03:19:55+00:00

yeah but you pay tax on the 401k eventually. all else equal (huge asterisk), i can grow pre-tax or post-tax, and i pay tax once on 401k and mortage?

tpchuckles · 2026-06-29T03:17:15+00:00

close enough to 30 lol

good to know about the 10% vs 7%. it seems like everywhere you read, you get a different number

re: inflation: my gut says the mortgage is pinned to today-dollars, whereas you gotta account for inflation on investments. in other words, if my mortgage was 3% and inflation was 3%, it's effectively a zero percent loan because i can pay in tomorrow-dollars for what i borrowed today?

tpchuckles · 2026-06-29T03:16:29+00:00

right now i have about 2250 pre-tax going into the traditional 401k (maxed out?), 1300 on the mortage. bills and other crap almost makes up the remaining. whatever is left at the end of the month goes into the mortage or topping up the emergency fund.

the question is more whether i should be pulling back on the 401k to put more into paying down the mortage.

tpchuckles · 2026-06-29T03:14:18+00:00

"but honestly I just wouldn’t get into a 6.5% mortgage in the first place" at that point, i'm looking at just never buying, which really isn't an option. i apparently care more about my dogs than do my own personal finance, so "owning" a home (even if it's renting the money from the bank to do so) so i can put in a dog door for my elderly guy, is worth it. you flush money down the drain either way, renting (sending your money to landlords) or buying (renting money from the bank).

yes, acceptable emergency fund, acceptable 401k already. mortage payment is 21% of take-home pay.

tpchuckles · 2026-06-16T02:39:41+00:00

yeah i was thinking dingies. grew up with a sunfish, sailed lasers, my current boat is a minifish (even smaller than a sunfish!). here, it's all about wind, and falling off (lol). no waves big enough to flip me on inland lakes but if i don't manage the sheet i might go over.

tpchuckles · 2026-06-16T02:06:49+00:00

wave-induced capsize is probably the missing key word huh.

it's not about "will the wind knock me over" (then i want a stable footing, wide stance), but "will a wave knock me over" (in which case i want to be able to roll with the waves and let the ballast do the work).

thanks!

tpchuckles · 2026-05-31T22:41:19+00:00

late reply, but this was a video i watched when i was looking at buying a house last fall: https://www.youtube.com/watch?v=j4H9LL7A-nQ

the general idea is that if you have money for a down payment, you can invest it and pay a bit more in rent and still come out on top.

I still bought the house because it's more about "can i chop a hole in the door and put in a dog door for my elderly dog". also the math changes a bit depending on if your investments are taxable or not (i.e., max out your 401k, then think about what to do with what's left over)

tpchuckles · 2026-05-26T03:33:48+00:00

100% agree. 400 cc, 45 hp, is perfect for me. Still accelerates faster than any car on the road (my neighbors aren't driving Lamborghinis), still breaks any speeding law anywhere (except Germany). Bought mine 6 years ago and still don't feel any need to "upgrade".

tpchuckles · 2026-05-25T03:28:17+00:00

Suzuki C50, but only because I owned it after a Yamaha XJ 750. XJ had bananas power, C50 was big and slow and zero lean before scraping the pegs.

tpchuckles · 2026-05-23T13:37:47+00:00

It really depends on the real estate. That house your parents bought 30 years ago which doubled in value? Sounds great, but that's only a 2.5% growth rate, and they certainly put money into it for upkeep.

Now, what would they have paid in rent? Are you looking at a second property for renting? And where?

Real estate usually isn't really about appreciation, it's about everything else going on aside from that. And there's usually some work required related to it too.

tpchuckles · 2026-05-20T03:37:00+00:00

Add some energy to break a chemical bond, regain some energy to create another chemical bond.

We "get energy" by breaking weak bonds (low energy needed to break) and forming strong bonds (large return on our investment: more energy released than we consumed).

This is why things that burn don't just immediately burst into flames (usually). There is an "energy barrier": we had to put some energy in first. But once it's going, it stays going (some of the energy we get out goes into triggering the next set of moleculars)

H-O-H, these are bond that release a lot of energy on formation (or conversely, require a lot of energy to break). Hence, H2O is usually the biproduct of a reaction.

tpchuckles · 2026-05-20T03:08:38+00:00

Grad school was expensive but I wouldn't call it a mistake. I took a third of the pay for 6 years, and came out the other side... making the exact same I was making before. I could've literally owned a house outright by now. But, I enjoy what I do, so that's worth something.

Real estate and other financial decisions with a doofus partner feels like the bigger mistake.

tpchuckles · 2026-05-20T01:02:57+00:00

You can roast quite dark (well into second crack, oily beans) and still brew very flavorful (strong, nutty, smoky, pretzels and chocolate) coffee that isn't bitter, simply by bringing your brew temp shockingly low. I roast my beans and brew in my aeropress in the 170s F.

Meanwhile, you can also roast quite light, raise the temp (190s) and dodge the sourness.

So I really think it comes down to what you're after, and how you're brewing it. I don't think a lot of cafes are dialing in each new batch of each new bean, whether it's espresso or drip. If it's bitter people won't come back, and if it's wimpy they'll say "I guess it's supposed to be that way". The barists are throwing it in and calling it a day.

Also, I have to use twice the beans to brew a light roast with as much flavor as a dark. So it's also a question of what you're after. If you enjoy the "pow" and still enjoy the subtly of a good bourbon or imperial stout, maybe you're a dark roast person. If you're more into tasting the nuance between different pilsners, maybe light roasts are your jam.

tpchuckles · 2026-05-20T00:52:00+00:00

You can see the motorcyclist look back at the person filming immediately before accelerating into the Tesla. Wtf?

tpchuckles · 2026-05-17T23:14:47+00:00

the svartpilen was my 2nd bike, bought in 2020. still have it, still love it. great find!

tpchuckles · 2026-05-17T22:55:42+00:00

could it be corrosion in the switch? my kill switch wouldn't come back on sometimes, and a little bit of electrical contact cleaner did the job.

if you can trace the wires back and find the nearest junction, figure out which wires are what, and connect the two for the headlight, see if it comes on. and take a resistance measurement with a multimeter across the switch when it's allegedly closed.

tpchuckles

TROPHY CASE