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It depends on your pucker factor. If your assets went down in value by 30% over a period of let's say a few weeks or months, would you be tempted to sell? Would your SO be tempted to sell?
I saw the market decline back in 2000 and we held tight. We invest a percentage of our income each month and up or down we place the same amount in our investments. The majority is in our 403B accounts. Not exactly a couple of sophisticated investors but we have done ok for the long haul. Our goal is way down the road.
For us, I guess it is all for the future so we don't worry about it too much. My financial advisor keeps us updated and on track. My wife wants to be done working by the time she is 55 and I want to keep working into my 80's. Either way we will be fine. I don't know what will happen with the market.
With the house we do want it paid off in another 10 years or so. Still I have looked at it and thought how much better off we would be if we put that money into the market.
9 Years ago we took out construction loan for 30 yrs. We paid on that for about 6 years and converted it to a fixed 20 yr loan. Paid on that about 3 and put a chunk on the principal also. The lower year mortgage sure gets paid off quicker. Finally was able to sell the rental house which had no mortgage on it and used that money to pay current house off. Still have enough left over to more than cover capitol gain tax and increased medicare for 1 year. The amount left went in the retirement fund.
We've lived with mortgages and without. The peace of mind living without one is priceless.
it works both ways . many times being house rich and cash poor can suck .
having cash in the bank at bad times can trump having it tied up in a house and a far better feeling too . you can't spend the living room at the super market and you can't pay an equity loan when you have no job and little money . .
so you need a balance of things .
i also know so many people who set a goal of having a paid off mortgage . the markets grew their money and instead of taking the carrot off the stick and the money that met their goals out of the risk pool they left it out of greed .
well now the markets hit a down turn and they don't want to risk the house money so they bail doing worse than had they paid off the house in the first place .
the best balance may be to set goals and use markets to grow the money to meet your goals . once they meet that goal , adhere to it and work on growing the other goals .
most small investors suck at investing . they neither have the discipline to invest nor the pucker factor to stay . many of those who do end up shooting themselves anyway as they try to outsmart things by timing markets .
in the end few achieve market or fund returns and paying off the mortgage may be the best return they are going to get .
study after study show most investors do not get the returns their investments do because of bad investor behavior . the more volatile things get the worse the investor results get .
Last edited by mathjak107; 02-21-2017 at 03:07 AM..
My loan was originally a 30 year. Around year 11, 2 years ago, we refied into a 12 year loan, cutting about 7 years off the original term without actually increasing the payment (although really we did, because the old mortgage escrowed and this one doesn't, so really my payment went up about $120/month). We'll probably pay that off when the balance gets low in the last year or two. So probably around 21 years total. Interest rate is very low though, so I might not, in which case, it'll be 23 total.
Either way, it'll be paid off before hubby and I are 50.
I am the OP, many threads the OP starts one, and never shows up again, SO, I am.And I'm stay clear of any ramblings that can lead off topic.
I see many who responded ARE paying off early like we are.
I also see the arguments for holding tight very well.
Personally, It is simply I can't stand to owe something if I don't have to. My grandmother used to say "the day is over the sun is down, and as I rest I don't owe no one"!
At the end of this year, the remaining 18 years will be down to about 12 years,and next year will be ALL paid off, or close to it.
My last car note was for 5 years, I paid it off in 2 years, 3 months a long time ago...the second car was replaced with a brand new one for cash 2 years ago.
We have accrued some debt in remodeling the house, and it, too, will be paid off in less than 4 years. The house and updates and any and all payments will be over in less than 5 years. There will be absolutely no debt then, unless we have to finance new/newer vehicle, which we MAY need, and I believe that will be cash paid for again.
To those who have had/will have a "mortgage burning ceremony" EARLY, CONGRATS.
To those who think it more prudent to wait, Great! At least you HAVE A mortgage you can afford! That means all is well and good for you!
I am the OP, many threads the OP starts one, and never shows up again, SO, I am.And I'm stay clear of any ramblings that can lead off topic.
I see many who responded ARE paying off early like we are.
I also see the arguments for holding tight very well.
Personally, It is simply I can't stand to owe something if I don't have to. My grandmother used to say "the day is over the sun is down, and as I rest I don't owe no one"!
At the end of this year, the remaining 18 years will be down to about 12 years,and next year will be ALL paid off, or close to it.
My last car note was for 5 years, I paid it off in 2 years, 3 months a long time ago...the second car was replaced with a brand new one for cash 2 years ago.
We have accrued some debt in remodeling the house, and it, too, will be paid off in less than 4 years. The house and updates and any and all payments will be over in less than 5 years. There will be absolutely no debt then, unless we have to finance new/newer vehicle, which we MAY need, and I believe that will be cash paid for again.
To those who have had/will have a "mortgage burning ceremony" EARLY, CONGRATS.
To those who think it more prudent to wait, Great! At least you HAVE A mortgage you can afford! That means all is well and good for you!
Keep em coming!
We even had the two different points of view in our house. My wife wanted raid our Roth IRAs to pay for the house we are moving to in Tennessee in cash as she doesn't like owing money. I was in favor of taking advantage of cheap money and getting a 30 year mortgage. We compromised by paying 50% down and getting a 15 year mortgage. We both can sleep at night with that outcome.
I paid mine off last month. It took me 7 years and also paying out my ex. Refinanced twice. I still owe my parents $30k but oh my god, I tell you, it FEELS SO AWESOME to not owe the bank anymore!!!!!!!!!!
IT IS THE GREATEST THING!!! The past year or two was like a countdown. I just couldn't stop staring at the numbers. I was foolish and just put every Cent in it to make it go away. I didn't even keep an emergency fund, I just was so excited to see the last $20-30k go down.
I didn't even buy clothes or anything anymore, I just got too nuts on going down to zero. Now I paid it off and I feel SO FREE.
I bought it for $270k. Renovated for a total of about $40k incl. yard. Right now it is worth $410k.
That maybe for psychological reason but not financial reason.
Sure, psychological reasons. From a financial perspective, eliminating your mortgage debt service (P+I) opens up additional cash for investment activity as well.
the problem with that is when it comes to investing time is your friend . by starting to invest later after the mortgage is paid you cut the chances of seeing greater compounding at work .
we know so many friends who put all their resources in to paying off the mortgage and then first started to really start socking away the money and burned themselves because they bumped the lost decade
Last edited by mathjak107; 02-23-2017 at 10:01 AM..
I took out a 30-year mortgage when I was 52, so the reality is that I won't likely live long enough to EVER pay it off. HOWEVER, I am reserving the hope that perhaps I might refinance down to a 15-year, if things work out the way I hope they do, and also if I get the rest of my debt down and can make extra payments. It would be nice, but I planned my mortgage to be something I could pay for with my pension in case I can never pay it off.
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