Hi Everyone,My wife and I recently purchased a summer home and took out a mortgage to finance it. We have no other debt (primary residence is paid for).I currently have "529 Plans" set up for my three children. I'm from Wisconsin and contribute to the state's 529 Plan (the contributions are a deduction from taxable income on the state's tax return).Does anyone see a benefit of stopping the 529 contributions and applying these monies to the mortgage payment?Thanks for your time.Sparkman
Does anyone see a benefit of stopping the 529 contributions and applying these monies to the mortgage payment?Not really. The more savings that you and your kids have, the less need-based aid will be awarded -- then again, you'll have LESS NEED. It can be nice to tell your kids that, with both you and them (when they are old enough to get summer jobs and possibly part-time school year jobs) saving, they will be able to go to any college to which they gain acceptance -- whether that's State U or Exclusive College.About the only thing that I would put in front of college savings is saving for retirement (contribute the max to the 401k or IRA for you and your wife), contributing to an emergency fund til you feel comfortable with it, buying term life insurance if not provided through employment (think of it as an extension of the emergency fund for your family). If you've done all that, and you're building the college funds, and you still have wads of money left, well, you can send it to me. No, not really -- then you might investigate investing in a taxable stock index fund. That'd maximize your funds available in the future, for college or whatever.
I think there is always an argument for paying down a loan. The amount of interest savings is like a guaranteed return.OTOH have you or your other half decided who will explain to your children in 15 years (or whenever) that you had considered putting money away for their education but decided to put the money into the second home instead?On balance, I think I would go for the 529 contributions.Bob
Thanks RiverCityFool and CABob for your comments.
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