1. You continue the savings from Baby Step #1, which already has $1,000 in it. Sorry I didn’t clarify; I assumed readers could read my mind. I’ll change it.

2. Just a wild guess that paying off house debt means not getting a tax break, or that you can invest the same amount at a higher interest rate? Dave gets those questions all the time. If that isn’t what you were going to say, then nevermind, but here’s his answer:

about investing:
“Warren’s mortgage balance is $58,000. It’s got 11 years left on a 15-year fixed rate of 5.75 percent. He actually has the $58,000 to pay it off. Should he just pay it off or use the money for investing?

Pay it off. Why would you keep a house mortgage? I like mutual funds, but there is this thing called risk.

Take your old house payment and put it into mutual funds. You’ll be free in a place you didn’t know existed deep down inside. The grass feels different when the house is paid for.”

about the tax break:
“Alvin can pay off his mortgage. However his financial advisor is telling him not to, to invest extra funds into mutual funds and get a great tax deduction. What’s wrong with this reasoning?

Here is what you do: fire your financial advisor! Let’s say you take out a $200,000 mortgage from the bank at 6 percent interest. Twelve thousand dollars would go to the bank in interest payments.

Since you are in the top tax bracket, which is 35 percent, you would be able to write off $4,200 of the $12,000. In layman’s terms, your advisor is telling you to take out a mortgage and pay the bank $12,000 in interest so you can avoid sending $4,200 to the government.”

Now I’m too frustrated to try again.

The question I had was how you got the 10,000 figure from putting 1,000 away each month for 9 months because I can’t come up with it and it has been bugging me. And then I told you about my new checking account which gets 5.5% interest. And then I talked about house debt.

Oh well.