Speed up mortgage payments or increase your investments?

Jeff Hupman

Updated: Jul 25, 2007, 9:03 AM

Published: Jul 3, 2007, 9:09 PM

Most people who have mortgages dream of a day when they won’t. In fact, many mortgage-holders speed up their payments to make that day arrive sooner. Is that smart, from a financial standpoint? Not necessarily.

This point is highlighted by a 2006 study prepared by economists for the National Bureau of Economic Research. About 38 percent of U.S. households are making the wrong choice when they speed up their mortgage payments rather than use the extra money to save in tax-deferred accounts such as 401(k) plans or IRAs, according to the study. These households are giving up a yield of 11 to 17 cents for every dollar they spend on extra mortgage payments, depending on their choice of investments in a tax-deferred account.

While these survey results are certainly interesting, they don’t tell the whole story on the issue of making extra mortgage payments versus investing. If you have a quantitative nature, however, you can do a little analysis on your own. For example, if you were to pay down a mortgage with a 5.5 percent rate, it would be essentially the same thing as earning 5.5 percent on some type of investment. But if you are in the 25 percent tax bracket, and you deducted your mortgage interest payments from your taxes, your 5.5 percent mortgage would really “cost” you just 4.125 percent. So, if you could find an investment that paid more than 4.125 percent, you’d come out ahead by investing, rather than paying down your mortgage. (Keep in mind, though, that you may have to pay taxes on your investment.)

It might not be that hard to find an investment that pays more than your after-tax mortgage rate. But that’s not the only reason why it may make sense to choose investing over mortgage reduction. Here are two other factors to consider:

• Paying off your mortgage early won’t boost your ultimate return. Obviously, you want your house to appreciate in value. But paying off your mortgage early won’t make your home worth more, though it will enable you to pocket more of the proceeds when you sell. On the other hand, the more shares you purchase of an investment, such as stock, the greater your potential for boosting your net worth. Of course, investing also has its risks; when you sell your stocks, you could receive more or less than the original investment amount.

• Investing provides you with greater liquidity than paying down a mortgage. Once you make extra payments to your mortgage, you can’t get at that money, except indirectly, through a second mortgage or home equity loan. But if you were to invest the money instead, you’d have access to it (though, again, you might have tax implications). This liquidity could be important if you lose your job or if you face an unexpected financial need, such as a major medical bill.

Still, there’s another side to the mortgage/investment issue. If it just makes you feel better to whittle away your mortgage — or possibly pay it off altogether — that’s something to consider. And if you’re close to retirement, it may make particularly good sense, from both the psychological and cash flow perspectives, to get rid of that mortgage.

So, weigh all the factors carefully when deciding whether to pay down the mortgage or invest. Your choice can have big consequences for your future.

Jeff Hupman is a financial advisor with Edward Jones in Rincon.

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Effingham ECCA Students Build Electric Car with Hyundai

From wiring to problem-solving, Effingham juniors Rowand Smart, left, and Dexter Bohlman tackle the challenges of building an electric car alongside engineering director Aaron Parker. (Mya Taylor / Effingham Herald)

ECCA electric car — From wiring to problem-solving, Effingham juniors Rowand Smart, left, and Dexter Bohlman tackle the challenges of building an electric car alongside engineering director Aaron Parker. (Mya Taylor / Effingham Herald)

Mya Taylor

Updated: Sep 23, 2025, 1:44 PM

Published: Sep 23, 2025, 1:47 PM

SPRINGFIELD, Ga. — For five months, 10 engineering students at Effingham College and Career Academy spent afternoons with wrenches, wires and instruction manuals, turning boxes of parts into something extraordinary — a working electric car.

The build was part of a partnership between ECCA’s engineering lab and the Hyundai Motor Group Metaplant America in nearby Ellabell. Funded through $150,000 in state grants and supported by Hyundai’s donation of tools, the project gave students hands-on experience in electric vehicle technology while tying classroom learning to one of the region’s most significant new industries.

Finding their place in the project

Junior Dexter Bohlman hadn’t expected to be part of the build. A scheduling error placed him in a higher-level engineering class, and before long he was wiring railings, connecting a key fob and shaping the steering panel.

Much of the work he did alone. The wiring — 250 to 450 terminals in all — was especially tricky.

“You have to figure out how to manage the wires to make it so that they’re less complicated,” Bohlman said. “On the top rail it’s a little bit of a mess, but down there we managed to get it a little more concise.”

For Bohlman, the project became more than an assignment. It gave him experience to add to his aerospace résumé and a sense of ownership in something bigger than himself.

Classmate Rowand Smart also joined by accident, after his schedule shifted. At first, he said, his enthusiasm for engineering was fading. The project changed that.

“It turned into something that I was actually interested in because it’s kind of a hobby working on my truck and seeing the less mechanical and more electrical part of it,” Smart said. “The wiring, the programming, all of that was really interesting.”

Smart’s father and grandfather were both mechanics, and he said their influence helped guide him through the toughest parts of the build.

Learning by doing

Students worked four days a week on the car, often troubleshooting unexpected problems.

“We had to figure out what we were going to do, find the parts, read the instructions before we put it together, and make sure we had the right equipment,” Smart said.

Together they learned not only how to wire circuits and measure voltage but also how to rely on one another.

Engineering Director Aaron Parker said the students’ persistence reflected what he calls the “four C’s” — creativity, critical thinking, communication and collaboration.

A proud moment

By May, the car was ready for its first test run. Getting it out of the lab was almost as hard as building it — four adults and 10 students had to tilt and lift the vehicle through a doorway.

Once outside, the students each took turns driving. For Bohlman and Smart, it was the highlight of months of effort.

“It was probably one of my proudest moments of students, especially upon completion,” Parker said.

The car later went on display at Stemposium, a community event where STEM students showcase their work. Families and staff stopped to admire what the team had built.

Looking forward

Bohlman said he dreams of an affordable electric rally car, while Smart imagines a Mustang with electric power. Both said the project changed how they see engineering.

HMGMA Chief Administrative Officer Brent Stubbs shared his gratitude for the partnership with ECCA.

“HMGMA is thrilled to sponsor the EV lab at Effingham College and Career Academy. ECCA is teaching young students about electric vehicles and giving them an opportunity to get hands-on experience, so when we learned about their need, we jumped at the opportunity to help. We are proud to be a long-term partner in educating future generations of EV and automobile enthusiasts. We hope one day some of them will become Meta Pros at HMGMA,” Stubbs said.

As for the car itself, Parker said it will soon get finishing touches — a light and dash cover — before being used to promote the program. Another frame, bright red and untouched, waits for the next group of students to take on.

“At the end of the day we want to set these kids up to be successful adults so that they can be independent when they get out in the real world,” Parker said.