Q.: I'm five years out from retirement and looking ahead at all my options to make that time successful. Right now, my focus is on cleaning up all debt. By this time next year, I will have everything paid off except the house mortgage ($180,000).
When I finally roll over my 401(k), what if I take part of it and pay off my home? I know this flies in the face of all common wisdom, but is this ever a smart move? I plan to live in this house for the rest of my life. – S.I., via email
A.: You are taking money out of one pocket and putting it into the other. Your net worth doesn't change; it's just a matter of convenience.
If you make this move, from this point forward will you be better or worse off? Among other things, you will lose a tax deduction. If your income continues to be strong, that is definitely a loss.
On the other hand, you are likely paying more in interest on the mortgage than you are earning in interest from the money that is currently invested.