Some money decisions aren't about hard numbers
During our Meet a Frugal Girl Reader series, a number of the interviewees shared about their efforts to pay their mortgages off, and that sparked discussion in the comments, weighing the virtues of investing vs. paying off a mortgage.
(Which is fine. It's all been polite and calm!)
Reading these discussions has gotten me thinking about how sometimes, we make decisions that are not the Optimal Very Most Best Decision According to the Numbers. And I personally think that's ok, as long as the general direction of your financial decisions is good.
Most of us aren't living a fully optimized life in any area.
We're not eating the very healthiest diet we could.
We're not spending our time 100% efficiently.
We're not spending 100% of our time at work doing optimal tasks.
We're probably not maintaining an optimized exercise routine.
I think that if we focus too much on full optimization, we risk losing longevity.
What do I mean?
Well, take exercise as an example.
If you know a fully optimized routine would involve weights 4x/week and running on the other days, but you loathe running....well, you probably are not going to stick to that routine for very long.
It would be better to do a weights routine combined with walking if that's what you could actually stick with.
Better to do a walking/weights combo for the rest of your life than to do a running/weights combo for a month (followed by quitting exercise altogether for a while).
The same could be applied to what you eat. If you try to eat a fully optimized diet with no treats whatsoever, you are going to have serious trouble sticking to that for the rest of your life.
It would be better to try something less optimized if it meant you could actually stick to it for the rest of your days.
Sometimes I think about this principle when I read blogging/business advice. There are a lot of things I could be doing differently to optimize my blog and to monetize it better.
But sometimes, those thing would make me hate blogging. And if I start to hate blogging, odds are good that I will quit. I've been doing this since 2008 because I find it to be mostly fun and rewarding.
If I make a bunch of smart monetization moves, but then I quit blogging, I will not, in fact, be money ahead! Better to pick something I can stick with.
Anyway. All of those non-monetary examples illustrate a principle that can easily apply to money as well.
A sustainable plan has to be something that you feel good about and that you can stick to.
This is exactly why people often begin a debt pay-off plan by socking it to the smallest debt, even if it doesn't have the highest interest rate. The quick win and the satisfaction of feeling progress means people are more likely to stick with the debt pay-off efforts.
So, even if it doesn't make as much sense on paper, if this method helps people hang in there with debt payoff, it's worth it.
Paying off a huge, high-interest debt can be a demoralizingly slow process, and it might cause someone to stop trying. And then that whole, "This is, mathematically, the smartest way to pay off debt." argument becomes rather invalid.
With almost anything in life, longevity of a habit is one of the top contributors to success. Steady plodding will get you so much further than a sprint-then-quit approach.
When it comes to the pay off the mortgage vs. invest the money and then pay off the mortgage debate: yep, on paper, the latter is smarter.
But some people have good reasons for wanting to knock out that mortgage, like that they are older, or that there's been housing insecurity in their past.
Money decisions are not always about the numbers.
Plus, it's not like you have to make a black and white decision between either of these two choices.
For instance, if you have $500/month to spread between the two options, you could send half toward the mortgage principal each month and you could invest the other half.
_______
So, I think the correct solution to this issue depends on lots of individual factors, which means the "right" answer will vary from person to person.
Hello all,
We paid off our mortgage, much to our accountant’s horror! He wanted us to draw on the equity to invest. But as I mentioned way back in my meet a reader, we lost our family home due to debt growing up and I want my housing as secure as I can make it. Rentals are crazy here and now with interest rates going up, I’m feeling very fortunate we have paid off our home. But I know the maths tells us we could have invested and made more money elsewhere than we would have paid in interest.
It’s never just the maths going into the decision though.
As for running, that’s never been on my agenda! Kudos to all runners, I admire your dedication very much.
@Emma,
I resonate with this so much! It's hard to assign a dollar amount to the feeling of security that having no mortgage payment means. I tend to save more in our emergency savings than is recommended but this gives a daily peace knowing that it is there. I tend to be an anxious person and this is one item that I CAN control and it makes me feel better.
I am very much in the pay off mortgage, do only well investigated investments and save money corner.
I do not think I can oversee the non-monetary impact of my investments*. For instance, an investment package may contain shares that can be traced to companies trading weapons to regimes I could never support. Or, be traced to sweatshops or mines where my interest is earned by children who should be housed, fed, educated. Or to our waste being shipped to other shores.
This even goes for the investments that are done in my name through our company's pension scheme. Dubitable investments have been discovered in one of our country's biggest pensions organizations so I may well ask myself if my own pension fund is "clean".
A few personal investments I have made are in technologies in the green sector from companies that are local so I can contact and question them directly. I will never be FIRE, but I am quite ok with that.
* For people who have been brought up in families that invest, it might be more clear how to follow the money and see how the interest on a share is earned. I am a doubter - if something sounds to good to be true, I think it is unlikely to be true.
@J NL,
Amen J NL! You describe exactly my thoughts and opinion.
Thank you
I am in the pay it off category. I remember a spirited discussion with my economics teacher on this issue. The benefits of having a mortgage do not outweigh the benefits of having a paid off home in my opinion. He contended that the tax benefit was the best reason. I contended that the mental benefits of having a home without a mortgage outweighed any tax benefit. Typically, a mortgage is a person's highest monthly payment. When you no longer have a mortgage, you have options regarding employment.
To me, that means retirement is much easier to achieve and you may be able to avoid having a soul sucking job-just to pay the mortgage. Having said that, I do currently invest and pay a mortgage. I pay extra on the mortgage with the goal of paying it early.
Just my opinion,
Frugal_JD
@Melanie, Did your conversation with your teacher include putting a price to the risk premium? Paying off your house is a less risky investment than not paying off your house and investing the money instead.
When my husband and I owned homes, we always tried to pay down our mortgages as much as possible. It felt like a noose around our necks to owe so much to a bank.
Having said that, we have seen aging family members stuck because too large a percentage of their retirement assets was tied up in real estate (which they could not live on....unless they got a reverse mortgage....which is another discussion altogether). On both sides of our families, homes were sold to fund the cost of assisted living/independent living situations. Ugghh.
So, I see both sides of the issue, and I'm not sure which way I'd go again, if we buy another home. Maybe somewhere in between is the best spot for me?
@Brooke, do you rent now, and if so, how do you see the pros and cons?
@Deb, Yes, we rent now, mostly because when we stopped moving the market for buying a home was crazy (we moved while my husband was in school and then landed in a town where we knew we wouldn't stay long, and then recently moved again, where we will hopefully stay long term).
Anyway, the pros are that we aren't responsible for repairs or maintenance. If we choose to move, it's easy to do that (at the end of our lease). We also aren't pre-paying on a mortgage and are potentially able to put more toward savings and retirement. (In our case, our goal is to max out my husband's 401k to make up for the years we didn't contribute while he was in school.)
The main con is that our rent will increase or decrease with the market. We aren't locked into a set monthly amount for the very long term. If the home owner decides to sell this home, we could also be forced to move. So there is definitely uncertainty that goes along with renting
Such a personal decision.
We opted to pay ours off, we refinanced from 30 years to 15 about 6 months after we built in 2000 with the same payment amount. Then paid it off in 12. Had we invested instead our money would have been in the market crash of 2008. Our In-laws lent us the money for our first house. We paid them back and sold it, used the cash from the sale for a down payment on the new house, that left us with a much smaller amount to finance and we still had our 401k's going. Our financial advisor still thinks we should do a reverse mortgage and invest it. For us our only income in retirement we be SS and from our 401k, no pension for either of us. It might be logical if it was not for health insurance. Our biggest cost when we retire will be health insurance. I will say once our mortgage payment was gone I took that amount and invested it & upped our 401ks.
Now my brother who is 70 financed 100% of his house at the time we bought our house in 2000. He still owes 100% of his loan. He has refinanced several times so his payments are all interest all the time. However he has a pension so he has guaranteed income to pay his mortgage.
@Mar, if you had invested in the market in 2008, you would have recouped your losses by 2012, and if you'd continued to hold, you would have benefited from the latest bull market.
@Rose, easy to say -- hard to do. Especially with the losses posting right now from the "latest bull market." It may get nastier in the future, too. Frankly, I expect it to.
But if you don't pay your mortgage off, the interest keeps building. (Which is the point about her brother's situation.) At the very least, you are 'earning' that interest on the money you use to pay off the mortgage. (The tax writeoff on this interest is rapidly becoming negligible, considering how many people just take the standard deduction.)
Technically, you may be right -- depending on when you're checking your account. And I see the point you're making. But overall... I still would have paid off our house when we did.
I always find this question intriguing. My answer is it depends. Historically interest rates have not been as low as they have been over the last two years. This, combined with a hot stock market, makes it more desirable to earn 10%+ through investing than paying 1.5% in interest to a mortgage company.
However, it was only a little over a decade ago when people were walking away from their homes because they were unable to pay their mortgages. Worse yet, the value of home was declining and individuals were unable to sell their homes even if they wanted to. Foreclosures and job loss was not unusual. The stock market had plummeted. All investments resulted in a negative return. During those times, someone who approach homeownership more conservatively was in much better shape.
Without a doubt the economic climate is changing again. Inflation and higher interest rates are challenging especially when combined with a stagnant stock market. Your money buys less everyday. So if you earned 10% on your investment last year, inflation averaging 8.5% has eaten up most of those earnings.
At my age and stage of my life —late 50s— paying off my mortgage has become part of my retirement plan. By making my monthly expenses as low as I can, I will be able to enjoy myself during those golden years. If I put all my extra money in the markets now, I may need before I see any earnings, and I do believe I may see great losses. However if I was 40, I might continue to invest, because I would have time to recoup my investments and see some growth.
Honestly, if I had to do over again, I would have paid off my mortgage quickly as a younger person. I think owning a home outright gives you much more flexibility in your life. Hindsight is always 20-20.
@Bee, you bring up an important point: what stage are you in? Young people have long investment horizons and can ride out most investment fluctuations. Middle-aged people less so.
Already paid off, wooo! We bought our house four years ago, and then the abandoned house next door the following year. The two properties together were $50,o00. We paid it off within three years. I hate owing money on anything. My husband doesn't feel secure unless he owns his home outright. Neither of us had ever had a mortgage, and it really didn't sit right with us that defaulting on payments would mean losing our home.
So, it's paid off. And it made both of us very, very happy. It never even occurred to me that people DIDN'T do this, but then, I'm notably home-centered, and I need that safety of knowing that my home is MINE, no matter what happens. After seeing two of our siblings lose spouses last year, and subsequently have to radically change their lives including in one case sell a house he could no longer afford on his own, the peace of mind of knowing that we will always have somewhere to live is worth more to us than any other investment.
@kristin @ going country, Well, people might do it more if they could buy properties for $50,o00....
@Rose,
So true! Houses in my street have sold for 300k and that is in the cheapest part of the country. Prices for young starters are prohibitive, the more so if on one income only-
@kristin @ going country,
Alas, no one's home us ever fully theirs. There will always be taxes, insurance, and maintenance. Don't pay your taxes and soon enough your home will be sold out from under your feet. Dropping insurance can be catastrophic. Neglecting your property can jeopardize your health and safety and make your home lose its value. It's important to plan for these expenses, too.
@Dicey, True, although in our case, we moved here in large part because we could afford to buy a house here, and the taxes are incredibly low. Like about $100 a year. I can't foresee a situation in which we couldn't pay that. In addition, we're not very concerned with the re-sale value of our home (which, obviously, wasn't much to begin with--again, that's a big reason we're here) because we're not planning on selling it. Our idea is that we wanted a paid-off property so our children will always have somewhere to come to. My husband had this in his family, and that security made a tremendous difference for many in his family when things didn't go according to plan because of divorce/job loss/whatever. Not that we're going to let it become unlivable, but we don't make decisions based on its market value. It is a shelter, in the generational sense.
@kristin@goingcountry, Dropping my jaw at $100/year. I paid over $20,000 a year in property taxes on our marital home.
@kristin@goingcountry, clearly, your situation is atypical, but a new roof, septic, etc. will still be required at some point. Replacing a couple of major items in succession could cost more than your house.
@kristin@goingcountry, whoa, I would have LOVED being able to find two houses, however junky, for $50,000! Our house in Castle Rock (south of Denver, CO) was purchased for $163,000 or so (thought a very good price back then), and sold for $465,000 or so in 2019. We paid roughly $2000 in property tax, and more than that in insurance.
The house value went up to more than $700,000 after we sold -- but is definitely less now. Colorado has been badly hit for declining real estate values.
Where do you live? We might move in next door!
@Rose, I sense a lot of bitterness/ judgment from you throughout your answers. Why?
When i was growing up the conversation every night at the dinner table was finance. My father loved the stock market and investments and my mother loved real estate and precious metals. Blah blah blah blah blah.
I own my car and home. If I could pay every bill in life once a year I would. One and done. My mom says I never walked I hit the ground running and never stopped. I have never been to a gym and will never buy exercise equipment. If i can't just use what I was born with forget it. I raised a family and bought, cooked, and fed healthy balanced meals 3 times a day everyday of the year. This became such a habit it was real hard to break once they were grown but I think I finally have. It surprised me I didn't know how to shop for and feed just one person. My food bills are very low now. If i buy that giant great deal I'm going to have to chow on it a long boring time before its used up. And the "I don't buy stuff I buy experiences"? I live in a tourist town and see people experiencing themselves into debt every day. Life is a free experience, pay attention.
@Tiana, “I don’t buy stuff I buy experiences” is just a snotty, holier than thou expression people use to imply they're so nonmaterialistic and superior. I always say, "I buy stuff. Stuff doesn't start a huge fight with its sister in the back seat and ruin the experience."
Oh, of course I like experiences too. I just dislike the implication that all experiences are great and wonderful and blah blah y blah. Taking your toddler to the American Museum of Natural History? Great! Until he sees the diorama of Neanderthal Man and is terrified and crying. Though the teasing potential for that is eternal.
Whoa, pump the brakes here...it's true that some people could say that in a snotty way, but man, I really never get the impression that Tiana is snotty or holier-than-thou. I don't know her whole story, but I gather that she's been through some seriously tough financial times that you and I could only imagine, and I really don't think she's being snotty.
Enjoying buying stuff is fine. Enjoying buying experiences is fine. I think both of those things can be enjoyed responsibly, and it's not necessary to pit one against the other. Properly and thoughtfully done, stuff-buying can bring a lot of joy! 🙂
Maybe I need to mull over this in a blog post, but I think both experiences and stuff can be purchased thoughtfully or not-thoughtfully, and if either is purchased in a not-thoughtful way, it could be a waste of money.
@Tiana,
"I live in a tourist town and see people experiencing themselves into debt every day."
I live in Florida. Same, Tiana, same. Amen.
I didn't mean to imply Tiana is snotty or holier than thou--just the opposite. That phrase gets my goat, though. And I think it does Tiana's too.
Ohhh, ha, I misread this then! Apologies.
@Rose, I kinda took Roses posts as a bit antagonistic also, so glad Kristen posted.
Life is large.No one way.My husband and I have NO STOMACH for the stock market.Have very little holdings. Waaay conservative with our investments. Paid off our home in the 1990’s.Retired at age 60 in 2013. Downsized and voila..pocketed the money! Living Happily ever after.Many ways to go about investing and retiring.. investing in real estate: PAYING OFF YOUR OWN HOME is a pretty nice feeling!!!!!
So is “stuff” i guess if that’s what you’re into.My 20 year old couch is still in good shape.I’d rather hike in my home state (Arizona) than go to Europe. ANd my kids did not cry in art or history museums, lol!!
Thanks for a kinder gentler blog,Kristin!
@Madeline, Agreed - Kristin, thanks for encouraging everyone to be kind. I do prefer experiences to things (although I'm careful to stay within my budget), and it doesn't feel great to be called snotty and holier than thou because of that approach. With that being said though, I also have some "stuff" that brings me tremendous joy. I agree that these two approaches don't need to be mutually exclusive, and to each their own!
Kristin, as always, thanks for encouraging kindness in people's comments! This is part of why I love your corner of the internet.
@Rose, lol...I didn't take it as Rose calling me or anyone snotty or holier than thou...she called it that kind of an "expression".
I like Rose's comments.
We paid off the mortgage. I knew that investing the additional $ made more sense and I didn't care. It was for piece of mind. Ironically, the month we paid off our mortgage, we ended up with a major home repair costing about $13K. Having the mortgage paid off allowed us to replenish the emergency fund relatively quickly.
We still invested while paying off the mortgage. Now we can invest even more (and stuff is on sale now!)
Funny you should mention exercise and housing.
My mantra has always been that the best exercise is the one(s) you'll actually do.
For housing, I am - mindfully and deliberately - buying a new house that is more than I strictly need. By the numbers I could meet my needs with a lesser house: not as well located, not as large, not as sunny. This, however, is the house I want and I'm going to take advantage of my modest habits and do something immodest that will make me happy for decades.
On a much smaller scale I will almost always fix something[1] rather than replace it, even if fixing is nearly the same price. I reupholstered chairs rather than buy new, I'm paying someone to mend my pillowcase rather than get a new one. My interest in reuse is greater than my interest in saving every single penny I can.
[1] Electronics and major appliances are exceptions.
@WilliamB, Electronics and major appliances are actually fairly easy to fix. I'm a complete stumblebum and I do it all the time. Generally, you just figure out what part is broken and replace it, and most electronics/appliances will tell you what's wrong if you look up blink codes.
@WilliamB, buying a house in a wonderful location that you will enjoy life for years to come is a wonderful gift to yourself. We purchased our home 22 years ago. Every day I say,”I am so happy to live here.” (well except maybe in July and August when Florida is hotter than the hinges of hell.) Yes, we’re getting to the point where we need to do some work, but I love where I live. I hope you too will enjoy your home for years to come!
@Bee, * enjoy living in for years to come is a gift
@Rose, i don't mean that I never fix electronics and major appliances. In fact, my roommate is well-qualified to do so. What I mean is that I don't go as far to fix those items as I do anything else.
I'm team pay off the mortgage. My husband and I both have our CFA designation and work in asset management so are very skilled in investing/finance/etc, but for us, the peace of mind of having our house paid off is priceless. We also work in a very volatile industry and obviously have no diversification of income since we work in the exact same industry (although I work with bonds and he works with equity). So we are just more conservative in general and are mindful of the fact that one or both of us could lose our jobs with little warning. He worked at a hedge fund that blew up in 2008 and I had a forced relocation in 2013 that I wouldn't have taken if I had the savings to roll the dice on finding another job in 6-12 months (jobs in finance are not plentiful in Minneapolis where we live). So yes, I am sure an accountant would tell us we chose poorly, but it made sense for us and we haven't looked back. That said, we met with a financial advisor in 2020 and he did not "scold us" for paying our mortgage off. He completely understood why we made that decision.
I also recognize the privilege we have in being able to pay off our home in our late 30s! But we have lived very frugally and are very mindful of living well below our means. Being able to pay off our home was important to us, so we bought at much lower price point than we could have. But we lucked out in being drawn to an industry that pays well. But part of why it pays well is because of the volatility of your earnings, so that is something we are very mindful of. I have heard of several coworkers who lost their jobs and hadn't adequately saved and were in quite a panic and that is a situation I would NEVER want to be in!
Great post, Kristen!
I am a real estate investor, in single-family homes and multi-family dwellings. I am in the never pay it off category. The bank's money is "too cheap" not to use and leverage for another property. I currently still work my day job but my investment properties now make more a month than I do. Hope to double my portfolio by the end of 2023 so I can leave my job.
I grew up without a lot of money and with ZERO money skills. I want to provide for my family using my talents. I truly believe that investing is something that anyone can do. It democratizes the wealth- plus there are SOOOO many tax benefits.
@Hannah, yes, money is cheap right now but what will you do when Interest rates head north of 10%?
@Bee,
Fixed rate mortgages don't go up. Yet another reason for hanging on to them. While inflation and rate increases do their thing, the cost of your mortgage drops. Incomes tend to rise over time, making that fixed rate mortgage ever cheaper.
@Bee, If the numbers work and I can make moeny, I will continue to buy. If the rates are too high, then I will just wait them out. 🙂
Perfect is the enemy of good.
I've paid cash for houses and it didn't necessarily make me feel any more secure, because of all the expenses of homeownership and property taxes are very high where I live. Plus, having a paid-off house and few investments can make you house poor. You need a decent amount of liquidity in case of emergency.
So I guess I'm in the invest camp. But then again, nothing wrong with the other way round.
Also, Kristen, just as a by-the-bye, you mentioned something about being concerned about health insurance in the near future, I think. Your divorce agreement is none of our business, of course, but keep in mind your stipulation/agreement/etc can easily say your ex has to cover you and the children on his insurance for X number of years. It struck me the other day and I didn't remember to comment.
Ah, I definitely knew that about the kids, but I wasn't sure about the spousal situation. I had assumed that coverage was not able to be maintained if the marriage was dissolved.
@Kristen, PAL. You need a lawyer to tell you these things. If you don't have one, get one. PLEASE.
I just haven't even started the process of anything legally; thus, my cluelessness. Just floating through the year of separation right now.
OK. Though an initial consult with the best divorce lawyer in town is still a good idea for future plans. The first time I saw mine, I brought pages of information for him to skim: our names, ages, kids, assets, etc. He said he wished all his clients did that.
@Kristen, My parents divorced while I was still in diapers. (For the best, trust me—I don’t know how they got along long enough to have me!) Even so, I was always on the insurance of whichever parent had the best coverage, including my step-mom’s policy when my dad remarried years later. If kids are still in college and/or under 26, they should be covered by a parent’s policy.
@N, Actually, it's really under 27. Once they turn 26, they still have a year on a parent's policy.
As for Kristen herself, she can insist she's covered throughout nursing school, or until she gets her first nursing job with insurance (which should be fairly immediate, because she's Kristen), etc.
@Kristen, when you mentioned health insurance, I was going to point out you may qualify for student insurance through your college or an ACA subsidized policy. Either could be an affordable option for you.
@FG - Rose is correct. Whether you end up back together or not, you should consult a divorce attorney now. That will give you an idea of what questions you'll need to answer and how not to get taken advantage of. With that info in your pocket, you can have a better outcome, whatever the outcome is.
I'm happy to give you more advice if you'd like. PM me.
@Rose, that is correct concerning spousal health insurance …… my attorney insisted that My health insurance be paid by my ex for a total of five years (until I qualified for Medicare)…..but we were married for 30 plus years and he was the one who met someone new and moved on……
@WilliamB, And usually the initial consultation with an attorney is free. Figure out which is the best in your area---this is not something to skimp on---it may be the most important financial decision you ever make. Divorce is about finances more than anything else, I find, and you want the best and brightest in your corner.
If you're worried about paying for an attorney, you can maybe borrow from your parents. OR set up a GoFundMe. Frankly, I think many of us would be honored to donate to help you as much as you've helped us.
@Rose, YES! Kristen, because you worked as a “SAHM” for so many years, it is reasonable in a court of law for you to BE SUPPORTED WHILE YOU LEARN A CAREER!!!!!!!! Please do go get a lawyer soon.You should also be able to get financial assist to help cover your training so you can BECOME more self supporting. AND I am feeling a little bad this post has turned to your personal life so just tell us to BUTT OUT!
@Rose, children lose their parent’s health insurance on their 26th birthday. Here’s the link to the HHS website: https://www.hhs.gov/healthcare/about-the-aca/young-adult-coverage/index.html
@Clara B, I agree. On my child’s 26th birthday my employer dropped their coverage. They were eligible for expensive COBRA but opted to register for Obamacare. But I was surprised that there was a transition month in between where they had NO coverage because of the way the regulations are written (makes no sense, but is what it is). The insurance agent said that if during that transition month they had something catastrophic occur, they could retroactively elect COBRA because you have 60 (?) days to elect it from the date you lose coverage - which gave us some peace of mind.
Also agree that a good lawyer can negotiate a divorce agreement or legal separation that can protect or provide health benefits for many years. Finding a good lawyer to be your advocate is very important. Perhaps consider a legal separation. A consultation will at least give you some things to consider and mull over.
@Rose,
Just jumping in to echo what everyone is saying about seeking legal counsel, and I don't think it's intrusive to say so because you have shared with us your struggles and your worries and all these people who just care about YOU are saying you need to look into this! Even the most amicable of splits need lawyers because the law is very complicated and health insurance is the one thing that you do not want to find yourself without. Yes, your children are almost all adults now, so it's easier than if they were all still very dependant on you, but you don't want to find yourself in a situation where your health takes a sudden turn and you become a burden to them because you are not properly insured. Please, please, please do one of those free consults before this year of separation is through just so that you understand your options and can plan your future accordingly. Better yet, ask around for recommendations. Sending you love and strength, but also the reminder that you can do hard things!!!
I certainly would -- and I don't just donate to every Tom, Dick and Harry down the pike. (In fact, only a couple over the years.)
Kristen, you could consider any money raised from a GoFundMe as a "pay it back to someone else who needs it" situation.
Personally, I never want to own a home again. I grew up thinking that adults buy homes, and only young people and transients rent. My parents always referred to this one sort of junky house down the street as "the rental" like it was a horror movie title!
I made a bad decision to buy a home we were renting at the time. We had just moved into the neighborhood, didn't really know it, but the owners were complete jerks who were renting it but wanted to sell it, so they were showing it while we lived there. I had a year old baby and was probably in the middle of some postpartum stress when I voiced that I didn't want to move again if they sold it, so we bought it. Terrible mistake. The house turned out to be a money pit, the neighborhood was sneakily horrible (one of those "nice looking" neighborhoods that has nasty people living in it), and the city police were corrupt.
Then the housing market crashed. We lost so much money on that house, it isn't near being funny even years later. If we hadn't owned it, if we had just been renting, we could have just moved. And that's the decision we came to, that owning homes is, for us, a fool's game. If you own, and the neighborhood goes south, or the market is bad and your job changes, you have to try to sell it. Selling by owner is difficult in a lot of markets, because the realtors don't like SBO. And realtors take a chunk of your profit, if there is any. And lately most buyers want nicely flipped houses, or they try to bargain down because they say your house is a "fixer upper". I do not seem to have the knack of decorating or redoing houses to other people's tastes!
Kristin@goingcountry mentioned that her husband doesn't feel secure unless he owns a house outright, and I realized that my husband and I, by contrast, feel trapped when we own a home! If we're renting, and want to move, we can just move. With this mentality, any annoying neighbor problems are less annoying, because we're not stuck with them, really.
We have, thankfully, recovered financially from that awful mistake. And we started saving money really well after we started renting, rather than owning--all those hidden costs of home ownership really do add up. This is just our experience, and I'm sure that home ownership is a great thing for those who are inclined towards it and who like to work on houses.
@Karen A., I like your comment.
@Karen A.,
like Tiana I also like your comment. I do own my flat. No debts. It was bought without having to borrow money from the bank. But still - I can very much relate to your feeling of being trapped by owning property. I actually am pondering to move and rent a flat - much less hassle than dealing with all the responsibility houseownership entails...
@Karen A.,
Having awful neighbours is a nightmare and I can understand that you want to be less dependent on how other people behave. Is the market good for renters where you live? Are there sufficient houses, and are they affordable?
Sadly, over here it is as bad for renters as it is for buyers, for lower incomes and starters especially but not exclusively. Private rentals go at 1200E a month excl utilities. But then we are a very densely populated country and although there are plans to build many more houses, these are very much at the expense of what few green areas we have. It is saddening, and worrysome.
Perhaps I should add that the modal income (= the income most people have) at present is just over € 3k a month before income taxes which will be something like 37%.
@J NL, There is a military base (a large one) near us, and there always seem to be properties for rent, all sorts, at pretty affordable prices. Because there's always military PCSing (moving), the rental market is pretty good. We were willing to downsize when we found our most recent rental, and that has saved money as well.
@Karen A.,
That is excellent! And that makes the decision to rent much easier
We paid off our mortgage last December, after doing the math (an essential frugal living skill) and realizing that if we did a big push of no silly spending, we could do it in about a year, freeing us up 5.5 years early on a 15 year mortgage. We've been married nearly 37 years and have struggled through the wave of recessions that seem to come every few years in that time. We craved the security of owning our home, especially after the Great Recession of 2008.
We continued to fund retirement savings and pay down some consumer debt while doing the Year of No Silly Spending toward being mortgage-free. The year actually took about 13 months, and in the end it wasn't that hard because we're not big consumers, so we extended it to paying off the rest of our debts. Except for my husband's car loan -- he replaced his aging sedan with a hybrid Honda a couple of months ago -- we will be completely debt free by the end of this year.
@Ruby,
The Great Recession Had a profound impact on me. Prior to the fall of 2008, money was cheap and easy to get much like it is now. Yet seemingly overnight all funding sources dried up. All my investments — 401(k), stocks and property—
were suddenly worth half of what they were at the beginning of 2008. Many of my friends lost their jobs and were in dire straits. So yes, I too believe security is important especially the closer I get to retirement. The economy is making me quite nervous.
I think Mar and I did almost the exact same thing. We bought (built) in 1999, financed for 30 years, re-financed for 15, and paid off in 12.
I am very much into security, as is my husband. He was even freaking out that our new mortgage meant we could lose the acre of land that we had owned outright before we added the house to it, if we couldn't pay for the house.
I was already adding extra each month to the mortgage payments before we started to see the handwriting on the wall at his job - the company depended a LOT on roadwork, and when 2008 happened, roadwork basically all got put on hold. I started doubling house payments as much as I could to finish the mortgage off before his employer finally had to close down due to lack of work. I also started socking money into savings, where it would be liquid. It was such a relief to know we didn't have to worry about house payments once DH was not working, and the taxes on it are low here, so we knew we could pay them.
But, yes, we could have been investing and actually, it would have made more sense to do so, financially at least. But: our parents saw people ruined in 1929, knew of people who killed themselves, and they warned strongly against counting on the stock market. Both sets of our parents were old enough to not only remember the Depression, they got married during it, and their stories were vivid and sobering. And now I'm getting ready to retire and my retirement fund is steadily losing in this down market. So, as was already pointed out, what stage of life are you in? I was in my forties when we built our house and I sure didn't want to be paying on a mortgage in my 70's. Had I been in my 20's or 30's, I would have taken the full time to pay it off, as my kids are doing.
Ours was only a few years from being paid off, and with my oldest child about to go away to college, I didn't want to be concerned with a house payment and college tuition. So I made sure ours was paid off by the time he graduated from high school.
I've always thought that one of the unofficial mottos of this blog is "Different strokes for different folks," and this topic is no exception. DH and I dipped into savings about 15 years ago to pay off our mortgage, and we've never regretted it, for reasons similar to those of other homebodies and/or seniors who have commented. But my reasoning--as a childless retiree with a husband in institutional care--may be very different from the reasoning of a younger person, a person who's happier with risk, and/or a person who needs to move around a lot for employment.
And I don't forget that I'm currently a retiree in good health. When the time comes that I can't physically keep up with various aspects of home ownership, I will take whatever the best next step seems to be.
@A. Marie, Or people who are expecting to inherit money someday. Of course, nothing is guaranteed, etc, but if someone has a wealthy family with older parents, they could probably assume they'll inherit $X at some point and take that into account.
I once cracked up my former father in law when he was worrying about his feckless daughter's inability ever to save a dime or for retirement. I said, "Her retirement plan is parents' deaths." Then again, he did just get married again for like the 15th time so even that might not work.
@Rose,
Your comments sometimes sound as if you live in a movie. Truth is stranger than fiction etc. Why not write and cash in on a dark comedy called " The Parent Plan" which deals with a family where the dad is getting married for the umpteenth time while the elder children want to retire, and the younger children of a more recent relation plan to secure the nest egg promised to them, etc?
@Rose, You can never count on an inheritance. My father left me absolutely nothing. It went all to his second wife. My mom passed in 1975. I was an only child. His second wife left everything to charity. Including jewelry from my mother that was in their safe deposit box.
This completely depends on one's situation and, frankly, not a little luck. We went house hunting with a comically strict budget, as we wanted something we could buy outright if at all possible. Against the odds, we found an under-priced gem, and our realtor (a long-time friend) fought to make it ours. We weren't the highest bid by a long shot, but he adamantly pointed out that we were the only ones who actually wanted the house as a home vs. a flip or an Air B&B. That made the difference to the seller, as it turns out!
We put half down and then took out a small loan--NOT a mortgage--for the rest on the advice of our credit union, so that we had money available in case anything had been missed during inspection. Six months in, our loan was out of the penalty period and our house had proven solid, so we paid off the loan with room to spare. This freed up $400 a month, which is allowing us to increase the money going to savings and while decreasing hours worked so that we can actually enjoy our home.
Having worked so hard to be debt free, having debt again for the small house loan was driving us nuts. We're so much happier with it being paid off, with our home being truly ours, and the ability to keep shoring up savings for future medical expenses that we know are coming down the pike. However, this play of events was only possible because of a modest inheritance that we had the good sense to tuck aside; years of saving our tax returns and one salary; a realtor/friend who took our financial limits as a personal challenge; a bank that smartly suggested a regular loan vs. a costly mortgage; years of living in a below-market apartment and riding the neighborhood's ups and downs for the sake of the long-game; driving our older, paid off cars; finding a WAY under-priced house; and having a seller who wanted the property to go for more than money. Not everyone can or wants to make these choices (i.e. when someone NEEDS a car and a car payment is the only way). If just a few pieces fell differently, we wouldn't be here, in our home, at long last. That's not denying us credit for having busted our keesters to make it happen--we flipping earned this!!!--but that is acknowledging that what worked for us was an incredibly unique set of circumstances. We're young-ish (30s-40s), so we're keeping our paid off house news to ourselves for the most part to avoid awkward conversations or ill-feelings, as it is such a rare place to be.
Inthink that the other examples like exercise and eating are too different. Eating a cookie will not take a factual day off your life.
Paying lower interest debt off when the money could pay higher or be invested with a (market proven) higher rate of return is just wiser.
I think more numerically accurate decisions are the difference between those who tend to do well and those who really do well financially.
@Heather, in theory, you are 100% correct, but if you factor in the intangibles of life, for many of us "well" is good enough and "really well" is not a goal we care to pursue. 😉
I agree that it’s ok for some decisions to be more emotionally based. I’ve been staying home with kids for the last ten years. That is definitely NOT the optimal financial decision. And yes, I’ve seen all of the calculations about how much value a SAHM adds but for real, we would not have hired a chauffeur or personal chef or any of those things if I had been working.
But at least do run the numbers before you decide. Don’t just assume that paying off the mortgage (or even buying a house at all!) is the only way to go.
My mortgage is at 3.25%. We are not planning to pay it off early. Instead we are maxing out our available 401k, HSA, and IRA space. We also recently bought some iBonds. It’s not just the higher returns on these- it’s also that we are only allotted so much space each year in which to invest in these. We can’t get that time back.
I’ve also seen my grandfather refuse to invest in anything other than property and then run out of money to live on. He was absolutely unwilling to sell any of it. My dad was able to give him a reverse mortgage. But my dad was only able to do this because he had diversified his investments throughout his life. If he had followed his dad’s advice and only invested in property, he would have been forced to sell.
PS- Having been born and raised in coastal FL, I also may have a different idea of the risk of owning property! I have not only seen the value of property alternately plummet and skyrocket, we have also seen property actually wash out to sea. I know people who own lots that are now literally as well figuratively under water.
I think it depends on your goals.
1) If the goal is to have the lowest payment possible for housing every month, then it would be beneficial to invest the "extra" money.
2) If the goal is to pay off the mortgage, then it is beneficial to throw every extra penny at the monthly payment. One scheme is to double the principle during the first five years Another scheme is to make an mortgage payment every December-- Supposedly even $5 extra (curtailment) during the first few years of a loan can have a significant impact.
One thing no one imagines is that, depending on where you live? By the time you get the mortgage paid off? And you are finally retired with zero housing payments? Your property taxes may be more than you can afford on a fixed income. The possible Catch 22 of homeownership.
Another thing no one imagines is the potential volatility of the stock market. Because the DOW went down over 20% this year. It took a similar dive in 2008. Which means that a 401K investment that was worth a million dollars in January? Might have a value of under $800,000 today.
@Millicent, I think people do take those things into account. Part of the reason I never felt incredibly secure in my no-mortgage house was I was paying $1,000-2,000 a month in property taxes. That's without repairs, insurance, and heat on a giant old house.
@Millicent, I agree with your Point of view. Market volatility is something that needs to be considered depending on what your age and stage of life is. However, I must point out that between October 2008 and March 2009, the market dropped by 50%. It was terrifying to watch most of what she worked for disappear. Hopefully we won’t see that again.
@Bee,
And then the market recovered.
And then it grew even more.
I so agree with this perspective. We can't really compare our own financial situations to someone else. We can glean ideas & learn how to do better but we can't really copy someone else completely.
My husband & I bought our house in 1989 & paid off the mortgage in 1999. When we were engaged, a mentor of mine showed us a plan for paying off a mortgage in 7 yrs & it sparked a goal for us. We didn't make it in 7 yrs because we had a baby, dropped an income & was diagnosed with an incurable illness in that decade. But we were consistent & so glad that we were because it made the years easier as my husband's health has deteriorated....plus medical bills. We have the security that we own our home.
But my son, who is 29 is not on the same track with a mortgage. He bought his first house by 22, his second a few yrs later but he divorced earlier this year so now he rents. But he is far ahead of us with his retirement planning & investing because he started working on it in his teens...we didn't really focus on it until our mid to late 20s.
Our big bump(mountain) in the road is illness & his is divorce. Set backs happen to everyone ...usually many set backs......but being consistent through them & showing grace to ourselves goes a very long way in reaching our goals & still having a contented & happy life.
“The ‘right’ answer will vary from person to person” you are exactly right Kristen! I’ve started to listen to the Lazy Genius podcast and she always says name what matters! You have to name what matters to you and it might be different to someone else. BTW I feel like Kristen and Kendra would be great friends or at least have a lot to talk about!
I am doing NEITHER greatly but doing some on both ends. Best I can as a teacher with kids in college and choosing no side hustle.
It could be a lot better but then I would have to do a side hustle. Constant stimulation is bad for my personal mental health. So IT IS WHAT IT IS.
I am frugal everywhere I can be but big chunks of EXTRA are not a thing in my teacher world. And I am not complaining!
@Stephanie, I also do not choose to do a side hustle. My job requires face-to-face interaction with many, many people every day and I'm naturally an introvert, so I have to have quiet time when I'm not working. I often joke that practicing frugality on the level at which I do it qualifies as a side hustle. 😀 I don't deprive myself, but there are just not very many material things I desire any more, and I can use the internet to find them at a great price.
I think it matters where you live too. I live in an area where housing is cheap, so when we bought a house, the payments were very affordable and left us some room for savings and investments. However, our house will never double in value - if we ever sell it, we'll probably get just a little more than we paid. So investing too much income in the house would not be a brilliant investment strategy.
We had the opportunity to pay it off recently; we didn't as the monthly payment is small (and at this point the payment is mostly principle) and doesn't affect our savings and investing much. We put the money into IRA's instead. We have a large family, and we don't want to burden our kids when we get older, so we sock a lot of money into retirement accounts.
However, I do want to own a house, and have it as mine, as I am very skeptical about investing as I don't know enough to be confident of getting a good return. With low housing costs where I live, taxes and insurance will never be too bad even if we have a bad financial situation.
So I guess I'm really on team pay off the house, provided it makes sense for your life.
Personal finance is, perhaps obviously, personal. Sometimes it's just not about the math. And the people who try to insist it IS about the math are forgetting that people make personal decisions based on personal experiences and for personal reasons.
We can think their decisions are bad (sometimes they are) and that we'd never do the same thing (and we could be right) but we can't forget that the personal is always a factor.
(That said, I'm team "trying to pay off our house early", but not at the expense of living like misers or forgoing all joys along the way.)
@Karen @ Living Unabridged, Totally agree!
A no-brainer for us to pay off the mortgage. It wasn’t big enough to offer much tax benefit and we are minimizing expenses we will have in retirement. With the cost of food and gas soaring, and the investment market volatile, it feels like a better and better decision. Hard to beat the piece of mind for me.
My husband works in investment and understands interest rates and the stock market on a whole other level than I do. We invest most of our extra funds, because he is able to get the most of our money that way. Thankfully, we have also been able to take out loans, like our mortgage, at a low interest rate.
Thank you for this thoughtful, humane, permission-giving post! I think it makes sense on all fronts. Not sure we will ever dig out of our financial pinch, due to years of family illness, job insecurity, and extremely high cost of living where are. But as always, I find your approach to life comforting and wise. (Long-time off-and-on lurker here!)
It really depends on your future plans. I have no intention of ever paying off my current home. We refinanced to a great rate last year and consciously extended our mortgage. We don't plan to stay where we are in the long term, so for us it doesn't make sense to pay any more than necessary on this house. In the meantime we can build up our savings for whatever we decide we want to do. I like my house, but I much prefer to have the flexibility of money in the bank.
My husband is much more comfortable with the debt than I am. When we bought our first condo, I was all about paying double mortgage payments. We were two professionals with no kids so we were in a cash flow position to do so; it was a condo so the cost was much less than a detached single family home. To me it felt good to relieve that debt, to him it felt like missed opportunity to do something else with that money. I felt that if we didn't put it away, we'd just spend it. So we compromised and would do a double mortgage payment or even just a partial payment every other (or every third) month. It worked for us. I am SUPER thankful that he is very much like me in his attitude about credit card debt, though - we don't carry a balance.
My mortgage was paid off when I was 48, now 50. As a single person it was my main focus everyday. Now that money is now invested into my Roth IRA. Being debt free is the most freeing experience one can have. Having peace everyday I come home knowing this is mine is overwhelming great fullness. I am very proud of myself.
@Laurie, I think if I were single, I'd have the same mentality as you. I'd want that part of my life settled and secured and I would have put a focus on it as well. Congratulations on paying off your mortgage! That is HUGE!
I'm on team pay-it-off. We paid our 15-yr mortgage in 7.5 so hubby could ditch a hated job. We've never regretted it.
Pay off the mortgage. It will alleviate money stress and honestly over the long term I’ve done better on real estate than my portfolio and been able to enjoy my house vs watch stocks go up or down.
We downsized in 2019. We wanted to retire on the early side, and I was noticing something was not quite right with my spouse. We now have a townhome that is paid for and a bad diagnosis. Nothing can be done about the diagnosis, but I have a range of other options because I have financial flexibility due to low housing expenses. I view money as security, and I am most secure when I have options.
Paying off a mortgage at the cost of losing an employer's matching investment is also something to consider. I wish we'd invested more and sooner.
Paid off our mortgage five years early. Never regretted it. We inherited the paid-off family home in 2008. Having our own home paid off, meant we were able to keep both homes with just utilities, property tax and insurance to pay for. Since we split our time between the two, summers in MI and winters in TX, one of the houses is usually a minimal utility expense.
We don't deal with interest (both giving and receiving), so we'd rent and invest. When we have enough money to buy, we'll buy a house. We choose not to be in debt or deal with any interest.
When we very paid off our mortgage because it felt more secure than playing with the investment market, my father said, "Why? When the Nazis or Communists take over this country, they will just take it away from you. You should have bought gold instead." Part of me agrees with my father but the other part of me is still glad we own the house.
I am a scientist and logic looms large in my life, so I am in the "invest the extra money" category. Agree with previous poster that I don't like the idea of money tied up in the house that is hard to access (though I do have a $100K HELOC available if I ever need instant money - given most of my funds are in retirement and investment accounts, the HELOC saves me from having to sell investments if I ever needed funds quickly). I refinanced a year or two ago and have a 15 yr at 2.5%, an amazingly low rate that is destined to be less than the market overall during the time that I live here, making it logical to keep the mortgage and invest any extra cash (for instance I recently bought a $1o,ooo I bond that has a guaranteed interest rate of almost 10% for 6 months). Also, I live in a very high cost of living area (6 miles outside of Boston). My 1280 sq ft 3 bed, 1 bath house on 1/4 acre is worth $1.4M. When I bought it 12 years ago it was around $500K, which was high at the time - hard to pay off that much for most people and I am a Single Mom by Choice, so only one income. I still have around $200K on my mortgage and I am perfectly happy with that. As noted above, stage of life matters - I am 63 and plan to stop working in the next few years. I have at least 10X my mortgage saved so I could pay it off anytime, but just do not feel the need to!
Thank you so much for these very wise words! We no longer have a mortgage, having downsized and paid cash for the house. We had a 15 year mortgage on our previous home and we paid the monthly payment. It is true for me that the freedom of owning our house free and clear is just wonderful. It's worth a lot to me, and I don't know whether that's logical or not. I just know that I want to maximize those good feelings in my life.
I want to pay off the mortgage to not have the expense and to not worry about the bank taking our house! We do save for retirement and college as well.
I can speak to experience on this question.
Husband inherited a nice amount of money from his mom -- enough to pay off the mortgage on our house. (Not long before that, he stepped away from the pressure of engineering, and took a job driving a schoolbus. Approx. a 75% income cut.) This was when the stock market was going great guns, and all the experts advised paying the minimum on your mortgage (or even on your credit cards, in the case of Suze Orman) -- and putting every cent possible into the stock market, instead.
We could keep making the mortgage payments. Barely, but we could do it. I could not see how having our house paid off would be a bad thing, even if the experts were screaming that it was a waste of money, you'd make so much more in stocks, etc etc.
So we paid off the house.
Within a year, the stock market had a huge meltdown -- one of the events that generally happens every decade or so. (In the 19th century, they called them "panics." Still happens today.) If we had put all that money into the market at that time, we would have lost approx. 20% of our original investment.
Instead, we were able to manage, and even put some in savings, because we didn't have to come up with a monthly mortgage payment. And when we sold our home in 2019, for a huge markup, it was an extra blessing.
There's no doubt in my mind what you should do. Don't listen to the 'experts' until you consult your common sense.
I am in the "less debt the better" camp and that includes a mortgage.
Housing is most people's biggest expense. You never know what life will bring ie market crash, divorce, death of spouse, disability, etc. People cite that they will use their pension or Social Security to pay for their housing costs, but even pensions are not guaranteed (2 large companies in my area in recent years got rid of their pensions for retirees). If you have no housing cost, these unexpected life events will make a smaller impact both financially and emotionally.
My house is paid off, it was paid off when I inherited it from my dad in 2007. However, it's a manufactured home in a manufactured home park. Space rent goes up every year but still is much less (by this I mean a minimum of 300-500 less per month) than renting even a rathole studio apartment in this tourist town.
I'm single, and planning on retiring at 67 (in 2027) and am working towards being debt-free at that time other than space rent, property taxes, and the like. I also want to have all necessary work done on my house at that time so that I can age in place. None of this would be possible except that now I'm a government employee after years of low paying retail or banking jobs.
I'm dipping my toes into investing with programs like Stash and Acorns but don't understand the stock market, bond market, etc, and feel like it's a bit late to go whole hog with investing.
Id like to share a modern-day parable. There is a place with a park with a confusing name. Recently, someone created a thread asking the community if the name of the park was Heather Farm or Heather Farms. The author stated that the majority would determine the "correct" name. Well, folks voted and determined it was the latter, by a landslide. Case closed, right? Nope. History revealed that a farmer donated his land to create a park with the caveat it be called "Heather Farm" in honor of his favorite horse, Heather. One Farm, one Horse, hence "Heather Farm". Despite the overwhelming number of votes, the majority didn't know the history, and got it wrong.
For anyone who wants to learn more about the subject of mortgage payoff, there is a book called "Ordinary People, Extraordinary Wealth" by Ric Edelman. It's old-ish and available free via your library. It will take well under an hour to read the first chapter, which neatly lays out the mortgage payoff conundrum. Understanding the math *before* making this important decision could literally change your life.
Finally, there's a saying that the only people who lose money in the stock market are the ones who sell when the stock is down. In all of history, the stock market goes up and down, but over time, the market always goes up. All of the well- meaning scare stories in this thread do not accurately reflect history.
I wanted to be mortgage free before I turned 40 and we finished paying off the house I was 39 and 10 months! I'm proud if it and I'm releives that it's done and all.purs now. Yes, we could have invested elsewhere, but the peace of mind that comes with a paid-for house was a worthy trade-off for us.
If you and Rose were having a one-on-one conversation, I would take no issue. But the difficulty in a public forum is that when someone says something definitive, like that the expression of preferring experiences to things is a holier-than-thou type of thing, then that person is making a judgment about all the people here who DO have that preference.
And while it is true that some people have a holier-than-thou attitude about it, there are also people who have a humble, non-judgmental attitude about experiences over things. It's not fair or kind to paint them with a broad brush any more than it is kind to paint "things-over-experiences" people with a broad brush.
I get that you personally weren't offended; I just do not want to create or cultivate an atmosphere here where we broad-brush people with negative descriptors.
I land on "Do money things in a specific order that reflects my values and priorities."
So, for us, that's
1. Our current living situation (money spent towards things like replacing the windows, replacing siding that's being damaged by woodpeckers, or regrading the backyard so that it isn't constantly flooding in every rainfall and we can actually use the space). This includes paying down some financing we've had to take out.
2. Our retirement
3. Our modes of transportation (keeping our cars and bikes in good repair)
4. Our children's education (sometimes that meant paying for a private Montessori, right now it's more focused on saving some money towards education/training after high school).
5. Paying off the mortgage.
Paying off our mortgage is at the bottom of our financial list right now. That may change the closer we get to retirement, specifically when we no longer have under-18 kiddos at home. Our interest rate is so low that it doesn't make a lot of financial sense *to us* to pay that loan down quickly - we'd rather invest in our retirement, and continue paying the minimum towards the mortgage.
Because property taxes are so high where we live, only about half of our "mortgage" even goes towards interest and principal - the rest is property taxes, which will never go away. So we're not exactly financially motivated to continue pouring today's dollars into the principal.
My goal is to have a paid for home before retiring. However, life has its twists and turns and I'm rebuilding after a divorce. My goal is still attainable just got derailed a little
We also chose to pay off our home early because I was a stay-at-home mom and my husband was in a creative field without a lot of potential for income growth. It was a way for us to gain security and increase cash flow. It took us six years (we bought a home that was less than we qualified for). We did it while our kids were little, when clothes and shoes and recreation were still cheap. As they've gotten older, we've felt so grateful to have that extra money to spend on music lessons, etc. Now my husband is moving into a more lucrative field, and I've gone back to work part-time, and we can increase what we've been investing. Overall, this choice has been a good one for our family.
I bought a house later in life. I put down nearly 30% of the mortgage and made double payments many months. I didn’t want a mortgage when I retired. I worked an “extra” year before retiring. I had a paid off mortgage in 7 years. (I drove a good used car had 11,000 miles on it when I bought it until I traded it in at 165,000 miles after I retired and never any major problems). Going into retirement with no mortgage (and no other major debts) was a best money decision I’ve never regretted. I feel blessed I could do this. I never “see” the money for taxes as part of my income f automatically goes in a bank account set up just for that. When taking out my mortgage, I never had taxes rolled into that but paid taxes separately. I had to sign a form acknowledging that I understood, I’d have a tax bill yearly!