Strategies to Create Wealth

Here are some strategies to help you weigh your options and make the most out of this opportunity:

1. Consider Keeping the House and Leveraging It

Since the house is mortgage-free and you’re moving in, keeping it can save you on rent and build equity while you focus on other financial goals. Here’s why keeping it makes sense:

No mortgage: Avoiding rent or mortgage gives you flexibility to pay off debt and invest.
Tax benefits: Owning a home provides deductions for property taxes and mortgage interest if you refinance later for other opportunities.
Inflation hedge: Real estate often appreciates over time and protects against inflation.
Peace of mind: Owning a home outright is a solid foundation for wealth building.

Steps if you keep the house:

Invest the savings from not paying rent: Instead of a rental payment, you could allocate ~$1,500/month toward wealth-building.
- $1,000 into an ETF (as you already considered)
- $500 toward student loan repayment or other investments.
Maintain an emergency fund: At least 3–6 months of living expenses, so you don’t dip into investments for home repairs.
Rent out a room (optional): If comfortable, renting a room could generate ~$6–10k annually, speeding up your wealth-building or debt reduction.

2. Pay Down Student Loans Strategically

Your $80k student debt is a significant burden. Here are two approaches:

Aggressive Payoff Strategy:

Allocate extra cash flow (like your old rent money) toward debt while still investing modestly. Paying down the debt faster saves interest costs and frees up income later.
Use this calculator to see how quickly you can pay it off if you contribute aggressively: Student Loan Payoff Calculator.

Balanced Payoff/Investment Strategy:

Refinance the loans: If interest rates are high, consider refinancing to reduce payments.
Pay the minimum on loans and invest more in ETFs where potential returns outpace the interest rate of the loans (~6–8% average ETF returns vs. ~4–6% loan interest).

3. Invest for Long-Term Growth

Building wealth through ETFs and other investments is smart, especially since you have a steady income.

$1,000–1,500/month into an ETF portfolio: Over 10–15 years, the power of compounding can grow your wealth significantly.
- Example: $1,000/month at a 7% annual return will grow to $208,000 in 10 years and $511,000 in 20 years.
Use tax-advantaged accounts (Roth IRA, Traditional IRA) for added benefits.
Diversify: Consider ETFs like VTI (Total U.S. Market), VXUS (International), and bond funds for balance.

4. Sell the House and Reallocate

If selling is still on your mind, here’s how you could maximize the proceeds:

$80k to pay off student debt immediately.
$70k for a down payment (20%) on a $350k home to avoid PMI.
$200k+ invested into an ETF portfolio with monthly contributions.

Pros:

Clears high student debt and keeps you mortgage-free (or close).
Gives you flexibility to invest and benefit from market growth.

Cons:

You lose a paid-off home, which is a rare and valuable safety net.
Housing prices might rise, making it harder to re-enter the market.

5. Other Wealth-Building Ideas

Start a Side Business: You work remotely, so consider leveraging extra time for a side hustle.
Real Estate Investing: With a mortgage-free home, you could save for a rental property in the future for passive income.
Maximize Retirement Contributions: You’re currently contributing to your 401k match—great! When you can, increase contributions to tax-advantaged accounts.

Recommendation: A Hybrid Approach

Based on your situation, a balanced strategy might be ideal:

Keep the house: It’s a solid asset that provides stability and eliminates rent costs.
Pay extra toward student loans: Use some of the money you save on rent to pay off debt faster.
Invest aggressively:
- $1,000+/month into ETFs.
- Use tax-advantaged accounts like a Roth IRA for additional investing.
Stay flexible: You can reassess in a year if the house appreciates or your goals shift.

This approach allows you to grow wealth while maintaining stability and reducing debt—without sacrificing your future. Let me know if you’d like specific investment or loan payoff breakdowns!