Assuming you aren't a General or running other side buisnesses that create a lot of deductions, there's a good chance on your military salery, the mortgage deduction is rather pointless to the discussion.
- First, you have to subtract the Standard Deduction you get with or without paying mortgage interest.
- Then on the remaining part, you likely get maybe 10-15% back depending on your tax bracket.
- Assuming 10% interest on $40,000, that would be $4,000 which is less than the Standard Deduction. Even if you had other deductions to meet the Standard Deduction, you are looking at a whopping $400-600 in reduced taxes
in exchange for giving the bank $4,000.
Playing the leverage game
with the loan, doesn't make sense for something that will be happening within a couple years. Volitility adds too much risk. You need to be saving, not investing.
My suggestion is to follow these steps:
- Set asside $1000 baby emergency
- Pay off all the other debts.
- Increase the emergency
fund to provide for 3-6 months living expenses.
- Pay off the Boat
- Stock up the cruising kitty.
With no debt, we live very nicely on $2000/month. If we had to we could get by on $800/month (it wouldn't be a fun lifestyle but we could do it).