Finance wiz, please help!?

i have finally paid off all my debts and now have 1000 a month to invest. here are my stats at this time.

I have just issued 500 extra a month to pay off my house and 500 in a tax deferred 403b.

someone told me to refinance my mortgage to a neg atmorization loan and pull the equity out. next store the equity in a universal life insurance plan. he claims you can really build wealth by this method. it seems a little scary to me. plus i'd like to pay off my mortage before retiring.

secondly, is it worth it to do a tax deferred 403 or non-tax deferred. we may get taxed to death down the road.

ugh, i'm so confused. thanks ahead of time.

First, it is not always optimal for you to pay off your mortgage. It is one of the few non-recourse loans available to you, and that lets you keep the upside while giving the bank the downside (they get the house, but nothing else if things go bad).

Although I do not recommend negative amortizing loans, I would recommend that you change your goal of "paying off your mortgage before retiring" to "maximize my after tax wealth." Depending on your real estate market, and the interest rate on your loan (after tax interest rate of course), etc, it may be optimal to take the equity out, invest it in a way such that you can still draw from it to pay the increased mortgage payments... (i.e. do not use the extracted equity to buy a new Porsche).

Additionally, make sure that BEFORE you do teh 403b (unless they match in which case do the minimum required to get the match asap!), take advantage of the ROTH IRA. It has many advantages over a traditional IRA (untaxed at retirement, no required distributions at retirement), and the only disadvantage I can think of is the fact that you don't get the tax deduction today (although even this one is not entirely true depending on your income level). However, if you assume that tax rates will be higher at retirement (we all want to retire rich, right?) then the ROTH dominates teh traditional. Also, income tax rates are at historically low levels today, I'm assuming that our trade deficits and national debt levels will require increased taxes in the future... the ROTH is indifferent and protects you from such a development :)

Forget Universal Life. Start with Term, if you have a reason for life insurance at all. The rule of thumb would say that disability insurance makes more sense for younger workers than life insurance... Another rule of thumb: trust very few insurance salesmen, and those that you do trust almost always tell you that you need more than actual.

Best of luck, hopefully this bit on personal finance helps.
As they say, it's just my $0.02!

The best thing to do is sit down with a financial planner to get all of you financial goals in order. Also if you like Excel, like I do, you can do financial forecasting to try different scenarios. I don't know what you age is, or your income level, how large you family is etc..and all of these come into play. Paying off you house might be a great idea. You're paying it off early, and you can keep more of your money down the road. But its best not to be greedy or look for the next big money maker.

In Financial Planning you have some questions to answer:

1. What if I die too soon?
2. What if I take too long to die?
3. What if I fall ill and cannot earn a living anymore?

The first concerns the people who you are responsible for, who remain behind alone when you die.
The second concerns whether your retiremenent fund will run out before you do, and also the level that it will maintain your lifestyle at.
The third concerns what will happen if you become seriously ill, but don't die. So you have no income and increased medical bills, on top of your normal obligations.

Once you have answered those questions, you have the information to start your financial planning with: what kind of life insurance do I need, medical insurance? How do I save for my pension, how much will I get from my current employer/state, if applicable.

I would NEVER take out a bond to finance share purchases (Which is what life insurance in essence is) - Ask yourself "Would a banker lend me money to do that?"

The best investment you can make, is in your personal financial education. There are lots of books available out there, that can help, I am personally a big fan of the Rich Dad Poor Dad series from Robert Kiyosaki.

Depending on in which country you are, I would be careful of investing in the stock market, e.g. US & Europe. The rich old millions are going to start retiring soon. The rich young billions are where the action is going to be for the next 50 years or more.

Poor old millions - The populations of the first and new world, relatively old, wealthy, and millions of people.
Rich young billions - Developing world, with relatively young populations, that are typically very poor. (China, India South-Africa, etc.