Meet Scott. He’s in software sales, and he sells a lot of software. His annual income is upwards of $100,000 per year, and he is on 100% commission income. But Scott’s got a problem. He’s sitting on $170,000 cash, and is terrified to do anything with it. He’s paralyzed by uncertainty.

He’s considered paying off his house with his savings, but knows his savings is probably better served working for him. It’s currently earning significantly less than 1%. Additionally, when he does consider hiring a financial advisor to manage his money for him, he doesn’t know where to begin. He doesn’t know who to trust. And frankly, he doesn’t think he has enough money for a financial advisor to actually care.

Here are his particulars:

Income: $90-105k

Employment: Software sales

Savings and Investments:

• Savings Account: $132,293.37
• Checking Account: $38,564.45
• 401k $110,000 +/-

Expenses:

• Car Payment – Lease: $198 a month
• Mortgage: $1,250.00 +/- a month
• Owes about $135,000 on my house
• Zillow estimates my house at $245,000
• Has about 11 more years remaining
• Mortgage rate is 3.25%
• Utilities: Wife Pays

Scott’s main concern, in his words:
I’ve got some money saved up and I don’t know what to do with it. I don’t know if the money I’m making now is going to be the same I’ll be making in the future so I’ve saved and saved and saved (don’t get me wrong, I’ve got a decent home, go on nice vacations, and spend probably more than I should but I try to live modestly). There is a high turnover rate in my industry, which is 100% commission based, and doing what I do for over 12 years is very rare. I don’t want to squander what I have, and I also like having the access to cash on hand in case something happens. How do I best invest, save, payoff things, in order to secure my future with this small bundle of $ I’ve saved.

BIG Question:
Should I payoff my house. Would this lower my credit score since I wouldn’t have a large revolving debt? Will I loose out on the tax credit? Does that equal out since I’m not paying any interest? Should I not even be thinking about this anyways?

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Pete the Planner®

Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.