<p>We paid off our mortgage right before the oldest started college. Took out a HELOC a few years before with a variable rate, paid off the first mortgage, and aggressively paid off the HELOC as if we were paying for an out of state public out of current income. Remodeled the bathrooms the summer before S started college (five years ago, I couldn’t stand the 70" colors anymore). That is the only balance left. Currently paying interest only on the small balance, but plan to pay loan off in the year or two after younger S graduates. We have no other debt.</p>
<p>This allowed us to pay for college (except the year that they were both in together) out of current income - no loans - no outlay from savings. Has worked well so far. Have a two year emergency fund in cash and retirements are well funded. Since we are very conservative have lost little money over the past year.</p>
<p>Key was buying a house in 1985. When oldest S quit school in the fall of his senior year, the only good thing is that we didn’t take out any loans to pay for his education. Hoping to get the history major through with no loans for any of us. Two more years.</p>
<p>When H lost his job late last year, was thankful that there was no debt. Now that he is working again, we are hoping to be able to aggressively save more when they are through.
I recommend paying off debt if possible for piece of mind and cash flow. H wants me to pay off the HELOC. Cash is making 2% and the loan is at 3.25%. It is a small amount and I like having the money in the bank. We’ll see. You never know what is going to happen.</p>