Step 4: Retirement investing comes before paying off house because delaying such investing (maybe for years) will come back to haunt many people. You DO want a paid for house when you retire, but you don’t want to sacrifice retirement income in order to make that happen. Remember: with long term investments such as retirement, time is money, so getting started early is critical.

Step 5: Much of the same logic when planning for your children’s college, but I could understand paying off one’s house and using those former payments to cash flow your children’s college…IF you can get it paid off before they start college.

Step 6: You may have enough new cash flow after creating your emergency fund (Step 3) to do Steps 4 and 5 and 6 all at the same time. This is what I meant when I said they may flow together.

In summary, you may want to do step 6 ahead of step 5, but I would really think twice about delaying your retirement investing while accelerating your house payments.

By the way, you guys are doing GREAT! Congratulations!
I hope this helps.

Johannah B’s post regarding the peace of mind he felt/feels even today. His financial decisions from years past continue to pay huge dividends and that’s a big encouragement.

We owe about 180k on the house with no other debt at all. My wife and I are blessed to have decent jobs, keep a relatively tight budget, and stay strict to a healthy monthly savings plan.

My question is about steps 4-6, because 1-3 are taken care of.

It seems like paying off the house #6 would open up a ton of money to complete steps #4 and #5.

What do you think?

4. Invest 15% for retirement.
5. Save for childrens’ education.
6. Pay off house.

I recommend reading and understanding how and why these Baby Steps work so you can better understand the answer to your question.

Following these Baby Steps, you would take these actions in the order listed:
1. Make sure you have $1000 set aside for emergencies.
2. Pay off all debt except the house (your car).
3. Build that emergency fund to six months of expenses.
4. Invest 15% for retirement.
5. Save for childrens’ education.
6. Pay off house.
7. Build wealth and be very generous.

Because you have a large inheritance, I recommend working with a tax consultant, an investment consultant and an estate planner. They would be able to guide you through the best and most efficient ways to handle this inheritance. For example, investing 15% for retirement is a great thing to do for ongoing cash flow, but not necessarily from an inheritance. Don’t hire anyone, though, without checking references and doing interviews. You want only people you can trust.

I wish you well as you use this inheritance in a way that will serve your family well for the long term and honor the one who left you the money.

@mona,
You ask way more than I can answer, or even what this post intends. However, I can assure you that God will not get mad at you if you provide services to the church in lieu of money…and if the pastor gets mad about such an arrangement, it is time to find another church.

I think you need to make sure you have a working budget in place, place giving at the top of your expenses and live on what is left after you give. If it isn’t 10% right now, don’t beat yourself up. However, have a plan to incrementally give more as you are able…maybe bump it up a percentage or so every time you get a pay raise.

I also recommend you type “tithing” into the above “Search Christian PF” and read the rich resources available here. I hope this helps.

Yes, getting rid of that PMI will free up some cash flow that could be put to better use. In our scenario, I would probably focus on achieving 20% equity after the big emergency fund is established.

Good point…thanks for your comment and thanks for reading.

The wise man always lives on less than he makes and saves; that is why he has treasure and oil. The fool spends it as soon as he gets it. I think you and your husband are wise. And still being able so save when you are only earning 1/3 of what you were three years ago…that is amazing!