 TITLE: What Happens When You Pay Off Your Mortgage? CONTENT: Allocate the Extra Funds\n------------------------\nOnce you no longer have a mortgage payment, a big chunk of your monthly income is now freed up for other goals and expenses. To make sure you don't fritter it away, put careful thought into what you'll do with the extra money. Here are some ideas:\n*   **Pay off your other debt.** Whether you have credit card debt, an auto loan, student loans or other obligations, consider paying off your debt with your new disposable income. By shortening your debt repayment timeline, you'll lower the amount of interest you pay over the life of the loan. Just make sure any other loans you have don't have a prepayment penalty.\n*   **Put it in an emergency fund.** Financial experts recommend having at least three to six months of living expenses saved in an emergency fund. That ensures when life's unexpected expenses pop up, such as a broken refrigerator, surprise medical bill or a last-minute flight for a family emergency, you can pay for it rather than going into debt.\n*   **Maximize retirement savings.** If your retirement account balance isn't where it needs to be, now is the perfect time to start using some of your former mortgage money to beef up that 401(k) or IRA. The sooner you start saving for retirement, the better due to compounding interest.\n*   **Work toward other savings goals.** What are your other financial dreams? Buying an investment property or vacation home? Going on a dream trip? Start setting aside some of this income toward your goal. Consider creating a separate savings account specifically for it to avoid any temptation to spend that money on something else.\n*   **Start investing.** While you can use this new cash cushion to invest in retirement, you can also put some of it toward other types of investments for shorter-term goals. Consider opening a brokerage account and buying stocks, bonds or mutual funds depending on your risk tolerance. Investing in the stock market can bring much higher returns than the low interest rates typical of checking and savings accounts, but it carries higher risk. If you're getting close to retirement, you could also invest in CDs, which are safer than investing in the stock market since the returns are somewhat low, but guaranteed. END