Question: >I am looking for advice on financial strategies. My fiancee and I have just >purchased a home with repayments at $AU1050 per month and are bringing home >about $4000 net per month. Up to now we have been investing in investment >funds but have used these investments for a down payment on our house. Other >factors – car loan $4900 owing, ccs around $2000 between us. I would be >interested in hearing your advice on whether to focus on extra house >repayments or investing or overall debt reduction. We are both in our mid >20s with steady jobs, no kids.
Answer: Assuming you have some cash/investments for emergencies and assuming the credit card debt carries a fairly high rate of interest relative to your mortgage or car loan, I’d pay off those credit cards and then pay the balances in full each month. At that stage, you can consider your investment portfolio again. I have no idea how your tax system works but if it is anything like the US system, with deductions for home mortgage interest, I would favor investing in instruments which you control (mutual funds or individual shares) over paying down the home loan.
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