Opinions on financial matters

[Droopy]

I'm very fortunate to have a good job right now and some discretionary income. I've paid off all of my debt except for my condo and I only owe $32,000 on that. I have a little Chevy that's paid off and still in good shape. I'm contributing to my 401k.

I've thought about doing something nice for myself and buying a new car. My car is in pretty good shape, but it's a low end model. Then I thought that I should pay down the mortgage on my condo instead. It would take me about three years to pay it off. Then I did a little research and found that some financial gurus are of the opinion that I should invest the money instead of paying down my mortgage. The reason being that I can probably get a better interest rate than the 6% I would gain by paying down my condo. I don't know where I'd find that kind of investment right now, though.

And the last thing I thought was: Why don't I just save? It would seem to be the prudent thing to do in the current economic climate. What do you think? Are there any other options that I haven't thought about?

[latebloomer]

1. I'm no expert, but

I would save, and I would pay extra on the condo each month- but not as quickly as 3 years. In this economy it's important to have a good bit of cash in the bank. I don't know where you can get 6% interest now, so paying down the condo is good, but don't neglect saving.

If the car's still in good shape, I wouldn't get another yet. Why deal with car payments again if you don't need to?

Full disclosure- I am kind of frugal and conservative about money- except I do buy organic food and go on yearly vacations.

[LNM]

2. Droopy are you saying that some financial gurus think you can get better than 6% on an investment?

If that's the case, please let me know who they are. I'd suggest paying the mortgage instead.

[LeftyMom]

3. I remember your reason for getting another car was wanting 4wd for the snow

Can you keep your eye open for a beater pickup or cheap used SUV or something to get you back and forth a bit more securely in the winter and hold out with the present car until you're all paid up on your house?

Or split the difference and get the spiffy little small SUV you want, but keep your eye out for one that's a few years old you can buy outright, and put the insurance and payment savings into your mortgage.

[Generic Brad]

4. I have a suggestion

You are in a sweet spot. I recommend you take out a home equity line of credit. Use that to pay off your house. Then your monthly payment will drop to almost nothing on the equity loan. If you want more cash on hand for savings, you have that option. If you want to pay off your house as fast as possible, you have that option too. Also - if you lose your job or hit a rough patch, it is a snap to meet the low monthly payment.

I did this last year. My minimum monthly payment was less than $100. But instead of paying the minimum, I poured every spare cent I had until I paid the whole thing off at an accelerated rate. I was able to pay off all the debt within a year and now I am saving as much as i can since I have no more bills.

But what the hell do I know? I've only worked in banking for around 20 years.