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14 years left on my 15-year mortgage at 3.125% interest. Have AT&T and other stocks that pay 5%, so dividends after-tax net 4%. Tax break is now minimal. The numbers work but I am wondering if anyone found any intangible psychological benefit of just paying it off, take a small hit just to get it off the Excel budget. Forever.
Yep.
Big psychological benefit. Paid it off in '07 - about 10 years early. You should have seen us smile during the real estate and stock market meltdown. Our financial position is now an impregnable fortress.
Which is good, because we are retired.
If we had bought into the notion that paying off a mortgage is foolish because you can make more money in the market I may not have been able to retire on time.
AT&T pays me 5%. Feds and state take 1%. I give Chase 3.125%, leaving me with less than $1K in “profit”. We easily spend that much each year buying bad restaurant food. Hey, honey, paying off the mortgage early, so let’s wipe the dust off your cook book collection and get to work.
Disclosure: I do not work for AT&T or anyone else. Love the iPhone they sold me for $300. The Weather Channel app is a life saver. I happily pay the $100 a month. They are not going bankrupt tomorrow.
14 years left on my 15-year mortgage at 3.125% interest. Have AT&T and other stocks that pay 5%, so dividends after-tax net 4%. Tax break is now minimal. The numbers work but I am wondering if anyone found any intangible psychological benefit of just paying it off, take a small hit just to get it off the Excel budget. Forever.
just because the dividend is 5% does not mean your return is 5% . there is a big difference .
i will gladly pay you 6% but i keep your invested dollars .
in order to see if you are a head you need to look at the total return .
if someone bought at&t this year for the dividend to pay a mortgage so far this year they are on track for a 5% dividend , but so far lost 8% of their invested value including the dividends paid and had to pay interest on the mortgage . so far that would have been an awful outcome .
Last edited by mathjak107; 05-15-2017 at 03:37 AM..
Pay off the mortgage! One less thing to obsess over. You can run infinite financial scenario's as to what is your best course to take but they are all guesses on the future. Paying off the mortgage is certain and simplifies your financial life.
Some people like to run numbers and look at the thousand different variables. I prefer simplicity as I get close to retirement. No debt, steady income with room for growth, and cover your medical needs. Then just go have fun! As always, YMMV
I will have a mortgage in retirement, in fact, I will be starting a 30-year mortgage at age 65. It will be about 1/5 of my income stream, none of which is withdrawal from a retirement account. It's Soc. Sec., and a cash balance pension annuity from my job.
I am planning to live pretty low on the food chain- insurances, charitable giving, keeping a decent car on the road, and adopting a few dogs. I have decided it is worth more to me to retire when I will than to wait and have more money for travel, etc. I want to make a home in a new place, a place that would have been my only travels anyway. I don't really have the taste for travel and will have enough backup money from the sale of my current house if some trip demands it. I also have no interest in leaving an estate of any size.
if one of my goals was to have a paid off house in retirement than i would pay off the house .
what i wouldn't do is put the carrot on the stick and put the money i wanted for that goal back in to the risk pool chasing better returns .
but if you are a biggest bang for the buck kind of person and are not goal oriented then you may want to take advantage of cheap money and try to get a better return .
I concur. The mortgage has to go. As listener says finances can really find new life. So far since paying off our mortgage last October we have increased our net worth by $50k. First because we had realized actual net loss in sale of commercial building and used the sale of such to pay off our mortgage. With the mortgage paid off we have socked away that mortgage payment in a brokerage account that has been steadily growing.
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