With the wife’s new job and accompanying pay raise we are looking at all our lifestyle inflation options. Should we increase the amount we invest in stocks? Bonds? Peer to peer lending? A larger cash reserve? Due to our low commitment levels we’ll probably do a bit of all the above. But one we’re leaning towards is paying off our house’s principle. This gives us a good opportunity to pretend to be investors and time the market 😛 Putting even more money into stocks right now probably is a reasonable long term plan, but we’re guessing is unlikely to return much for a decade or so at these prices. Instead – despite locking in returns under 4% for the next few decades – putting more towards our principle payments both brings us closer to the very rare peace of mind we hope comes with owning our house outright, and accelerates our journey toward true Financial Independence.
Our principle payments (including the base portion we aren’t optionally putting towards debt payoff) will increase by about 10% of our total monthly investments. Since this all comes from new money it isn’t detracting from our current investments and therefore won’t slow our asset growth. As this won’t eat through all of our new income, I also expect to increase some of our automatic index / mutual fund / P2P investments.