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Should I Pay Down My Mortgage or Invest My Extra Cash?

Thirty years can seem like a really long time to be giving a large chunk of your paycheck to someone else each month. Being able to put that money into your pocket instead of your mortgage is such a nice thought, so obviously using any extra cash to pay down the principal balance on your mortgage is the smart thing to do, right? Not necessarily. There are many factors to consider when it comes to paying off your mortgage early. For example, you could invest that cash elsewhere for a much higher return on investment. We know, we know. You’ve always been told that putting more money toward your mortgage principal each month is the best thing to do. While it is a smart move in many cases, there are some instances where that money would do more for you in a different type of investment. Confused? Here are three reasons you should and three reasons you should not use your extra cash to pay down your mortgage.

Reasons to Pay Down Your Mortgage

Peace of Mind. Owning your home free and clear gives you a little more financial freedom and peace of mind. You’ll never have to worry about foreclosure because you lost your job, for example, and can’t make mortgage payments for a few months. And if you do ever decide to sell your home, there won’t be any mortgage payoff to make; you’ll have a large chunk of money to make a down payment on your next house, or simply buy it outright with cash. Paying off your mortgage could also help motivate you to become completely debt-free, which is always a good feeling!

Interest Savings. This one’s relatively simple to understand. Since you pay interest on the principal balance of a mortgage each month, the earlier you pay off your mortgage, the less you’ll pay overall. For example, say you have a $300,000, 30-year fixed rate mortgage with an interest rate or 4.5%, and your monthly payment is $1,520. If you committed to paying a little more toward the principal balance each month, say $1,820 total, you’d save almost $80,000 in interest and pay off the loan eight and a half years earlier. That’s a lot of savings!

Cost of Living Reduction. It’s probably safe to say that your mortgage is the most significant bill you pay each month. Eliminating that bill earlier than you have to means you’ll be able to live on less income, save more for retirement, put money toward opening your own business or even travel more often. Having more cash each month gives you the flexibility to live your life the way you want it and not be a slave to your mortgage.

Reasons Not to Pay Down Your Mortgage

Opportunity Cost. While it’s true that you’ll have more financial freedom in the long run, paying down your mortgage early ties up all your extra cash. Every extra dollar you spend on your mortgage is a dollar you can’t invest elsewhere. Therefore, if you have a low interest rate, paying more toward your mortgage might not make the most financial sense. You might be better off putting those extra dollars in a retirement fund or other investment that will get you a higher return on your investment. While you might be saving $80,000 on your loan over time, you might very well have the opportunity to make $100,000 if you invest in a different financial goal. Consult your financial planner to see what other investments are available to you for a better ROI.

Tax Breaks. Don’t forget that mortgage interest is tax-deductible. If you itemize when doing your taxes, this might be something you need to think about. You’ll be losing out on a deduction if you pay off your mortgage early. Additionally, if you choose to pay down your mortgage instead of putting money into a tax-advantaged savings account for retirement, you’d be losing out on that tax break as well. So if you contribute an extra $5,500 toward your mortgage instead of putting the same amount in a 401(K) or an IRA, you would be missing out on $1,210 in tax savings if you’re in the 22% tax bracket.

Lack of Diversification. When it comes to investing, putting all your eggs in one basket isn’t usually the best move. If you sink all of your extra cash into your mortgage, you’ve essentially just tied yourself down to real estate investing. If your home doesn’t increase—or even worse, decreases—in value over the years, what do you really have to show for your money? Your net worth won’t have increased unless you have money invested in other assets. You won’t have any liquid assets, which means getting money back from your investment will be a lot harder.

As you can see, just as with any financial planning advice, this is a decision that must be made on a case-by-case basis. Weigh the pros and cons and decide what’s most important to you. If reducing your cost of living and being able to retire early is more important to you than having liquid assets, then paying down your mortgage early might be the best choice for you. If you’d rather diversify and take a chance on higher-yield investments while continuing to pay your low-interest mortgage, investing your extra cash elsewhere is the better decision.

 

Common Things Homebuyers with Children Regret About Their Homes

Whether you had children when you bought your home or welcomed them once you’d already established your nest, there might be a few things about your home that you wish were different. You can babyproof a house all you want, but there are some things that just aren’t compatible with having young children in the home. Let’s take a look at some of the most common regrets homebuyers with children end up facing from time to time.

The Home’s Layout

At first, a two-story home might seem like a great idea. When you have company over, you can just toss all the clutter and toys in a basket and hide it upstairs. But then you think about hiking up and down the stairs while carrying a baby or toddler multiple times a day, and it starts to seem a little bit unnerving. If you have a small child, you might worry about the safety issues stairs present and the hassle some safety gates can be. And if the master bedroom happens to be downstairs, there’s the issue of being far away from the nursery (although having bedrooms on separate floors might be great when the kids are older). If you have small children or think you might soon, you’ll definitely want to think twice about what sort of layout you really want.

Not Asking Neighbors’ Opinions

Before you pull the trigger on buying a house, it’s always smart to talk to the neighbors, especially if they have children too. They’ll have lots of great insight and firsthand advice about what it’s actually like to live in the neighborhood. Don’t feel shy about asking them for their opinion about the area, including any safety concerns they have about the street or neighborhood, what they think about the local schools, and how many family-friendly spots are nearby. Speaking of neighbors, don’t hesitate to check the national sex offender registry, especially if you have kids who are old enough to be at home alone.

Backyard View

If your kids like to play outside a lot, it’s important to have a good view of the back yard from a window or storm door. If you have a good view of the yard, older kids can enjoy playing outdoors while you get things accomplished inside.

Outdoor Safety

When you find a home you like, don’t forget to check out the safety of the entire area, not just the property itself. What is the traffic like on the surrounding streets? Are there sufficient sidewalks and crosswalks in the area? Book an extra showing for high traffic times so you can see what the street is like at the end of the day. You don’t want to move in and be surprised to find out your street is a regular shortcut for speeders during rush hour!

Not Hiring Help

Parents who have young kids will be doing themselves (and everyone else involved!) a favor by hiring help on moving day. That might mean simply hiring a babysitter to take the kids to the park or another local hangout for the day, or it might mean enlisting professional help with packing and moving so one parent can clear out with the kids for a while.

Amount of Upkeep

Think about how much maintenance and other upkeep a house will require before you fall in love completely. You don’t want to spend every weekend mowing, pulling weeds, cleaning, and doing boring old chores when you could be spending time with your growing family.

No Other Children in the Neighborhood

Picture this: it’s day three of summer vacation, and your kids are lolling on the sofa and lamenting about being bored and having no one to play with. If only you’d checked to see if there were any other kids living nearby before moving in! It’s definitely a plus when kids have friends in the neighborhood. It means they’ll always have someone to play with, and you won’t have to spend as much time driving them to friends’ houses for playdates.

School Districts

Last but certainly not least on our list, check out the local school district before you sign on the dotted line. You might want to see if you can tour the schools your children will attend, research their curriculum, and decide if it’s a good fit for your family. And again, speak with the neighbors who are also parents. They should have great firsthand information and opinions about the local schools.

 

How-To Tuesday: Decorating Your First Home

If you’re a first-time homeowner, you probably don’t have a whole lot where matching furniture and quality home decor are concerned. But that’s okay! Even if all you own are the bare necessities, your new place doesn’t have to look like a frat house living room. Give your starter home a more grown-up and put-together vibe with the following tips.

Fill Spaces with Live Plants

Greenery is a surefire way to make a house feel homey almost instantly. Adding live plants throughout your space will not only elevate your decor, but will also help create a healthier living environment. Plants and people are natural partners. They take in carbon dioxide and release oxygen, and we do the opposite. They help remove toxins from the air and also release moisture vapor. It’s a win-win situation. Even those of us who don’t have the greenest of thumbs can use low-maintenance plants like succulents to liven up a space.

Utilize Trays on Horizontal Surfaces

Trays help contain clutter and add a certain polished look to surfaces like coffee tables, islands, and sideboards. Instead of spreading out everyday items on the table or counter, arrange things like remote controls, candles, flower vases, coasters, tissue boxes, and the like on a tray. Doing so makes things look more deliberately placed and also makes it easier to move it all when you need to clear the space.

Style Your Bookcases

Don’t just shove all your books on the shelves and call it a day. Organize them in an aesthetically pleasing way. Arrange books both horizontally and vertically, and add in accessories for interest and as space fillers.

Coordinate Throw Pillows and Blankets

Coordinated throw pillows and/or afghans make for a quick and easy way to pull together furniture that’s seen better days or doesn’t necessarily go together. Pillows don’t have to match exactly, but they should go together in some way, through color, size, style, etc. If you want to mix and match for a boho feel, make sure the vibe matches the rest of the room.

Get Some Nice Matching Frames

Find a nice, simple style of picture frame that you like and buy that style in several sizes. Use the same type and color of frame for photos, prints, and posters for a put-together feel.  Even if your wall art consists of different styles and colors, having the same type of frame will pull it all together.

Go for Grown-Up Window Treatments

Ditch the blinds and roll-up shades and add some nice curtains to your windows. Curtains add a certain something that helps pull a room together. They also help keep out heat in the summer and cold in the winter while adding a layer of privacy as well. Make sure to install a good curtain rod to add some polish, not just one of those cheap bent aluminum bars.

Decant Your Soap

Pour your hand soap, dish soap, and laundry detergent into pretty dispensers or bottles. Promotional plastic packaging can add visual clutter to countertops and shelves.

Invest in Matching Dishes

Donate or toss your mismatched hodgepodge of plates, bowls, and glasses and get a new set. This doesn’t have to be anything expensive. You can find nice matching sets at places like Walmart, Target, TJ Maxx, and even the Dollar Store. If you like the mismatched look, make sure it’s intentional and not just cheap-looking a mess of plates and bowls of different sizes and materials.

Create a Bar Cart or Coffee Cart

Solve your kitchen storage problem by making room on a rolling cart for your bar or coffee-serving items. For a bar cart, store wine and liquor bottles on a bottom shelf and organize your best glasses, an ice bucket, a corkscrew, and some other pretty accessories on top. For a guest-pleasing coffee cart, put your French press or Keurig on the top shelf along with all your coffee and tea needs, like creamers, sugar, tea bags, stirrers, etc. If you run out of space, you can always add hooks or glass racks under the top shelf for storing those mugs and glasses.

Friday Five // March 1st, 2019

Happy Friday, everyone! It’s the first day of March, which means spring is just around the corner. We can’t wait for these occasional warmer, sunnier days to stick around for good, but in the meantime, there’s lots of fun to be had in the Charleston area. If you’re looking for something to do this weekend, we’re here with this week’s roundup of five fun events happening throughout the Lowcountry over the weekend. Go to a teddy bear picnic, celebrate the reopening of a beloved green space, sample some beer and barbeque, and more. Whatever you choose to do, the staff and agents here at Johnson & Wilson Real Estate Company wish you a very happy and safe weekend!

Friday evening marks a long-awaited grand re-opening in Summerville. The public is invited to the Ribbon Cutting Ceremony in Hutchinson Square at 6pm to celebrate! Grab the family and come out for an evening of fun with live music, food trucks, and enjoyment of the restaurants and retail shops around the square. The event is free to attend. Presenting sponsors include The Greater Summerville/Dorchester County Chamber of Commerce, Ed Carter Appraisal Service, and Four Green Fields Gifts.

Come eat and drink the best Charleston has to offer at the Charleston Craft Beer and BBQ Festival. This event, featuring 20 Charleston area breweries, takes place on Saturday from 11am until 5pm at Bohemian Bull Tavern and Beer Garden. Your general admission ticket ($55 in advance, $60 at the door) includes unlimited tasting of craft beer and BBQ with sides. While you enjoy your libations, sway along to live music from Seitu Solomon and the Jaykob Kendrick Band. Please note that this event is strictly for ages 21 and up. No infants or children will be permitted to attend.

Calling all moms! Are you in need of a girls’ night out? Head down to the Charleston Area Convention Center Saturday night for the 6th annual Charleston Mom Prom, and “Let’s GLOW Crazy!” Charleston Mom Prom is a night out with the girls, filled with dancing, food, and fun. Throw on an old bridesmaid’s dress or get decked out in your brightest neon, and come ready to Glow Crazy while raising money for the Cystic Fibrosis Foundation. Tickets are now $60 and can be bought at the link above until 6pm on March 2nd.

What’s the best way to celebrate children? By having a day and festival dedicated exclusively to fun and learning, of course! Bring them out to the 31st Annual KidsFair Presented by MUSC Children’s Health, at the Gaillard Center this Sunday from 10am until 4pm. Kids get in free and must be accompanied by an adult. Tickets are $5 for adults, who must be accompanied by a child. KidsFair presents over 100 exciting educational, hands-on activities and exhibits for children and families to enjoy, including stages with great entertainment throughout the day. It’s a wonderful opportunity to connect with schools, local businesses, and organizations supporting children and families in the area. In its 31st year, KidsFair boasts an annual attendance of over 10,000 people and growing! Monday raised from the event goes back to support students, scholarships, and organizations in the community that share the KidsFair mission.

The Charleston Parks Conservancy invites you to attend the 10th annual Teddy Bear Picnic this Sunday from 1:30pm until 4pm. Children and their teddy bears will once again take over Hampton Park to enjoy musical entertainment, face painting, seed planting, crafts, and more. Admission and all activities are free, but advanced registration is encouraged. The popular Teddy Bear ER will be back, helping “injured” bears needing treatment and well bear checkups. New this year is a Teddy Bear Tea Party and an obstacle course geared toward older children who want to explore Hampton Park. Families are invited to bring a picnic lunch, blankets, and chairs to enjoy an afternoon in the park. Food trucks will also have food available for purchase.

How-To Tuesday: Remove Old Tile Grout

Grout. It’s not one of the prettiest words in the English language. And when your tile’s grout gets all grimy and stained, it’s definitely not pretty. Luckily, removing old tile grout isn’t really a monumental task once you know what to do. Depending on the size of the tiled area, you can remove and replace old tile grout in as little as one afternoon. The job can be done manually, or you can make it way easier on yourself and buy an oscillating multi-tool. It’s inexpensive and well worth it. Using this tool, you can remove about fifteen square feet of grout on 4” by 4” tile in about an hour.

What You’ll Need

  • A rotary tool such as a Dremel, or an Oscillating multi-tool like the Ridgid Jobma  or Bosch Multi-X Oscillating Tool Kit
  • Safety glasses
  • Utility knife with a dull blade
  • Small flathead screwdriver
  • Shop vacuum

Step 1

Fit the oscillating multi-tool with the appropriate blade, which should be one specifically intended for tile or tile grout. Start by holding the blade horizontally or vertically, depending on the seam you’re starting with. Turn the power on and lightly press the blade to the grout. Don’t press too hard; let the blade do the work. It should cut through the grout easily.

Step 2

Angle the blade gently to remove more grout. Do this slowly and carefully so you don’t damage the edges of your tile. Resting your arm on a stable surface will help keep it steady and keep it from getting too tired. Use the Shop Vac throughout your project so you can actually see what you’re doing.

Step 3

Once you’ve removed as much tile as possible with the multi-tool, use a small flathead screwdriver to scrape out any loose pieces that haven’t been completely removed. If there are still stubborn bits that won’t come out, use your dull utility knife to remove them. You want the blade to be dull to start with because a sharp blade will dull quickly or snap off anyway. It also helps prevent any injuries.

Step 4

Once your old grout is completely gone, clean up your worksite to create a blank slate for the new grout. Our best tip is to steer clear of bright white grout. Dark grout is very “in” right now, but if you’d rather go lighter, try a biscuit or bone color. Stark white shows every little stain and spot much more quickly, making your tile and grout look and feel dirty even when they’re squeaky clean.

Whether your tile grout is old and moldy, it’s chipped and falling out, or you just don’t like the color, you can get rid of it fairly easily using the method above. Just remember the old special forces saying: slow is smooth, and smooth is fast. It might seem like a slow, tedious job, but taking the time to do it correctly means you’ll be saving time in the end.

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