conversation: User (GetThereThenRest): "I know this sounds like a weird question, but I have been in a bit of a debate with family members regarding what to do with inheritance and my mortgage. Without going into huge detail, here is a rundown of where I am at.\n\nMy mom died in August. \n\n* I inherited the following: a house which is being sold for around $95k profit, $44,000 in an inherited IRA, and $25,000 in cash.\n\n* I currently have 13.5 years remaining on a 15-year mortgage at 3% interest. I have around $110,000 remaining on the mortgage balance.\n\n* Paying off my mortgage in its entirety would cut my monthly housing payment from $1,500 to $600 (still need to pay condo fees and taxes monthly).\n\n* My wife and I have a baby on the way in January. Money is already tight as-is with our current expenses.\n\nI think it makes sense to pay off the mortgage and free up the $900 a month. Some of the extra $900 a month would be absorbed by new child expenses. The rest I would invest.\n\nMy uncles both think that paying off the mortgage is not the best use of the money. They say that I can generally beat 3% in the stock market without assuming too much risk. They also argue that people tend to fall for the trap of taking the newfound money from each month (in my case $900) and increasing their spending, intentionally or otherwise, and end up not investing the money as originally promised. They also are saying that tying up almost all of my inheritance into one asset (the condo) is not a great idea.\n\nI see their point, but also really like the idea of not having a mortgage!\n\nThoughts?"
  Self: "First, and most importantly, I'm sorry to hear about your mother.  My condolences to you and your family.\n\n&gt; My wife and I have a baby on the way in January. Money is already tight as-is with our current expenses.\n\nIn my opinion, this is a very important point.  Investing in the market is great if you can keep your money in there long enough to outlast recessions, market adjustments, bubbles, etc.  But what if you need to start pulling out money just to make ends meet?   It seems much safer to guarantee that extra $900/month from your current income rather than invest it and find out you need to start pulling money out of the market while your shares are going down in value.  It's a very real possibility over the short-term.  \n\nI'd pay off the mortgage.  If you don't have one, create an emergency fund with some of what's left after that's paid, and invest the remainder."
  