I’d just say pay down/off all debts & invest in a safe long term investment that maximizes capital safety. The phrase “past performance is no guarantee of future returns” always haunts me. Rainy days can & do happen.
(…says the man who isn’t a patient clinician & is hoping that they are hiring in other capacities as well)
If your mortgage is your only debt, then I see no downside to putting a major dent in it. True the interest is tax deductible (for now), but you still pay more in interest than you get back in tax refunds.
I think the answer is obvious: two chicks at the same time.
I see a small one. It’s this: money spent is money gone. Let me just throw out some numbers. You have $100,000 left on your mortgage and you cut a check to your lender for $50,000. Long term you’ve cut the amount of interest you’ll pay down significantly and you’re really close to owning your house outright. Awesome right?
Except you no longer have that $50,000 for emergencies. So if, for Devil’s advocate’s sake, you aren’t able to pay your mortgage one month the lender isn’t going to care that you just cut them a check for 50K last month. They care about this month’s payment. Now. Or you’re out of a house.
Or your car breaks down. Or your kid (if you have one) needs braces. Or something else.
Sometimes it’s best to hold on to a largish chunk of money even if it could best be served paying off debt and even if you’ll save on interest later down the line if it’s a means of an insurance policy against something bad happening where you really wish you still had that money.
Now if you’ve got a large stockpile of money in a savings account ready for any emergency, this advice may not be that applicable. But if not, consider holding on to a portion (which you can still use to make double payments on the mortgage if you so desire), lest you find you REALLY need it and don’t have it anymore.
We have always saved most of it. Savings for us included paying off a mortgage in seven years. It includes putting money towards the educations of two kids. It includes keeping six months of expenses set aside for a “rainy day.” But “savings” also includes short term savings that we spend - a car when you need it comes out of savings. A vacation.
I say, max out your 401k and IRAs for this year and last year, before anything else. Then look at not just paying down your mortgage, but whether it makes sense to restructure your mortgage- is it enough money to pay down the mortgage to the point where you can move to a 15 or 10 year mortgage with a lower rate than you currently have ?
Also, invest in the long term- is your house older ? Could you put in more insulation, a more efficient heater or hot water tank ?
And I hate it when people point out the mortgage interest deduction as reason to keep the mortgage- you only are really saving tax money on the amount of interest above the standard deduction - so you need quite a bit of house to be paying a huge amount more than that, and in any case the spread between savings/money market interest and your mortgage interest, even now, is probably was more than the tax savings.
We ended up taking out a mortgage. I’m making 6-8% on most of my original investment in dividends in the market. My mortgage is at 4% - and I get to write it off. At this point in our lives (and its sort of a ‘where are you’ question - different people will have different answers), it seems rather silly to not take the 6%+ in dividends so we can “save” 4% in interest.
About half my portfolio is in dividend stocks and I never buy anything that doesn’t have a dividend yield above my mortgage rate and isn’t a pretty good company. Two years ago, that wasn’t hard to do AT ALL.
No thanks. I can barely keep up with the one chick I have. 
When I’ve gotten checks like that (although not quite that big) I’ve usually done the following:
1/3 towards any debt I may have at the time (there are times I have none, in which case it goes to long-term saving/investing)
1/3 towards my rainy day fund
1/3 on stuff for me - new shoes/clothes, books, airplane time (that usually takes care of any “leftover” money!) and the like. Which, given my natural frugality, may take me a couple months to pay out.
Alas, it’s been years since I got anything like that. On the other hand, I still have no debt, my vehicles are paid off, and I’ve been able to meet my bills despite years of underemployment.
I’m close to where you are. The return on my investments and the interest yield on my mortgage are just about a wash with my investments winning by a tad, so whether I do or don’t pay down the mortgage, I won’t be in a better or worse situation than I’m in now…other than having a lower mortgage balance that is, which I admit is attractive.
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This! It would add value to the house and it’s something you can see and use and appreciate every day.
Ditto for any energy-saving things you can do to your house. Some improvements are tax deductible and some things really pay off, like geo-thermal heating.
Yep, I see this in my future once my rapacious, compassionless, and not at all fun accountant gets a hold of me. 
I dunno man, you put off coming over to this lovely island paradise until you can stay–but with big fat tasty bonus checks like that one, will you ever want to leave your CRO? And if yer thinking of coming aaaalllll the way to Hawaii, you’d only be 7 or so hours from here. AND Haneda now has international flights, so getting in to Tokyo proper is much less of a ballache these days.
::cough:: onsen season::cough::
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The nice thing about no mortgage is cash flow. Its nice to know that if you need to cut expenses, you don’t have the mortgage as an obligation. You can do this one of two ways - pay off your mortgage - or have enough cash set aside that if you need to get rid of that obligation (or make payments on it), you can. However, often when you need to get rid of the obligation, the stock market is also in the dumps and you don’t have as much cash as you’d like. We’ve chosen door number two for the moment. Our mortgage obligation is small (less than $1000) and assets could be sold to cover it if we need to.
Are you going to retire in NJ? If not, take a vacation or two to places you’d like to retire. Real Estate is down now - maybe a retirement home or acreage would be a good investment. Don’t blow it on the new car yet (autos are always a depreciating asset).
Congrats!!
You have an accountant, but do you have a financial planner? I got hooked up with one in order to set up a college saving plan when my first daughter was young. I was glad I had when AT&T paid me a boodle of money to resign for a better job during the trivestiture. That money has really multiplied over the past 15 years, and, most importantly, the financial planner put me on to many opportunities I never would have thought of for myself. Accountants are great for the tax implications of things, but not necessarily for investment advice. Interview a bunch until you find someone who asks for your goals and whose initial advice makes you comfortable.
We have an hour long chat with ours twice a year, and make contact as needed. You clearly will have enough money to put in to get decent service and attention.
I know. That’s probably why they call it ‘golden handcuffs’; it’s just too difficult to walk away.
Yeah. Don’t remind me. And 花見 (Hanami) is less than two months away.
Really? That’s great! Did they extend Haneda? How are they accommodating large planes?
Now you’re just being cruel. 
Description of the hooker he’s offering.
Heck no, :cough:, I mean no, I’m not going to retire in NJ.
I’ll probably retire somewhere in Japan, where real estate is not only expensive, but small.
Probably you want to wait until May or June until November or so. This time of year, there’s lots of rain.