I received a good bonus this year and am trying to figure out the best way to use it. I have no credit card or student debt, maintain an emergency fund, and am maxing out tax advantaged retirement savings; I'm also paying off two loans - a car loan and a mortgage.
Reading personal finance advice, it seems they generally say first pay off all debt except a mortgage and then either save more for retirement or pay off the mortgage. But my mortgage has a higher interest rate than my car loan (3.1% apy vs 1.9% apy) and I'd generally think I should pay off the highest interest debt first. I know the mortgage interest tax deduction should be factored in, but does that outweigh the difference in interest rates?
Also I question whether I should prepay either of these loans vs investing in an index fund? I know some people like the security of owning their home outright, but honestly I can't see my parents (the mortgage holders) evicting me if a life catastrophe resulted in a missed payment.