The answer to this question will be different for everyone. It will be based on your personal situation and financial goals. Once you define and prioritize your goals, you can develop the plan that works best for you.
If you come into some extra cash from an inheritance or a bonus from work, you may be narrowing the choices to spending it on paying off your mortgage or directing it to your child’s education. Investing in a 529 college savings plan allows you to contribute to the savings account and withdraw funds tax-free to pay for college tuition and other educational expenses.
Deciding on the college expenses choice will be dependent on your child’s age. Paying off your mortgage will be the better option if your child is elementary school-age or younger. You can still open a 529 savings plan and gradually grow it over the next several years until college age comes.
Evaluate your home’s equity. If you have less than 20% equity in your home, then paying down your mortgage is a good choice. Doing so will help you get closer to eliminating private mortgage insurance.
If your mortgage interest rate is higher than 3%, you should favor paying off your mortgage. Typically, 529 plans do not pay a very high interest rate, so paying off your home would be a wiser move.
The desired liquidity of your assets and tax benefits will also contribute to your decision-making. Call me, and I can help you decide which option best fits your personal financial situation.