The path to FI is often a twisty path through the woods. Before I met my wife, she attended Dave Ramsey’s Financial Peace University and decided to refinance her house at 4.25% for 15 years in 2011.
She knew the higher payment would really pinch her budget, but having a paid-off house was worth it. Upon getting married and working the finances, I put an extra $200-$300 on top of this.
Then as a part of COVID-19 relief, they allowed people to take withdraws from IRAs without penalty and to pay the taxes owed for it over three years. We withdrew $51,000 to pay off the house. At the time I was laid off, so not paying all the taxes due at one time worked out well.
Before this, we had already paid off higher interest-rate debt such as credit cards and auto loans. With the house paid off, we focused on investments, mainly in the S&P 500 (401k) and VTI (total market index).
We didn’t pay off my student loans because of the politics involved with loan forgiveness. Although I believe you should fulfill the commitments you make (student loans being one of them), we found it rather stupid to pay off loans that a political party is promising to pay off.
