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Four years ago we moved from a very low cost of living area to an area where you would pay twice as much for the same house/condo. We did it in case I retire and we would be close to family and grandkids.
We sold our southern home and bought what we wanted here but to get what we wanted a mortgage was necessary. Either a mortgage or take money from our retirement accounts which wouldn't be a smart tax move.
Our mortgage payment is $426.19/month.
While I am working we can now easily pay $3,000.00/month up from the $2,000/month we paid last year. The idea was to get away from the mortgage but would it be smarter to keep the money in cash?
We owe $65,000 and the interest rate is 2.50% so the interest is only about $135.00/month and I am wondering if I would feel better with an extra $60,000 cash in savings or get away from the $426.19?
The $426.19/month mortgage isn't going to kill us it represents just 8% of our total retirement income once I stop working. We could actually pay it off in six months without having to dip into our retirement accounts but it would wipe out our cash savings and I don't like that.
I just like the idea of the extra cash. If I want $50,000 in cash I like the idea I can just go to the bank and get it.
Oh, and the love of my life is taken care of, if something happens to me there is enough life insurance where she would be able to knock out the mortgage and live comfortably.
If you can get enough of a risk premium on the money I wouldn’t pay it off ...liquidity is a comfort food ...
Having to use property as collateral to take costly loans to get your own money to use is not a comfortable feeling when you are strapped for cash .
Just think about the expense of unexpected illness ... we were lucky that the insurers waived all deductibles and copays for covid cases ..with both my wife and I getting it and getting it at the end of the year when old deductibles end and new ones restart could have cost us a lot of money ....so far the bills are up around 250k for the two of us and still coming in .
We have to pay under 50 bucks so far because thousands in deductibles and copays were waived if it was due to covid, and we have Medicare and a high deductible F plan
Last edited by mathjak107; 02-25-2021 at 05:31 AM..
If you can get enough of a risk premium on the money I wouldn’t pay it off ...liquidity is a comfort food ...
So true!
I was never a big cash person but over the past year or two, I've taken to having cash in the house. Not a huge sum just $1,500 to $2,000 and I have been thinking of upping the squirreled cash to $3,000.
I was never a big cash person but over the past year or two, I've taken to having cash in the house. Not a huge sum just $1,500 to $2,000 and I have been thinking of upping the squirreled cash to $3,000.
My daughter knows where it is hidden.
Is this what happens when we get older?
Let me tell you , here in nyc we already had 2 times where we had trouble getting cash ..
One was 9-11 when many bank and atm net works were down ....the other was sandy when atms and many banks were shut down .
The other thing we ran in to was after my wife and I came home from the hospital and our bout with covid , the first week home we couldn’t get out of bed much ...we needed all kinds of services to bring us food ,groceries, even domestic help ..we went through a lot of cash , luckily we keep some handy in a go bag I keep .
After a five alarm fire next door in the building next to us , we were evacuated ....we had little time for grabbing anything so we made a go bag up with all the essentials and paper work we may need plus some cash .
But we don’t keep a lot of cash , no real reason for us to to keep more than a grand at best.
Let me tell you , here in nyc we already had 2 times where we had trouble getting cash ..
One was 9-11 when many bank and atm net works were down ....the other was sandy when atms and many banks were shut down .
The other thing we ran in to was after my wife and I came home from the hospital and our bout with covid , the first week home we couldn’t get out of bed much ...we needed all kinds of services to bring us food ,groceries, even domestic help ..we went through a lot of cash , luckily we keep some handy in a go bag I keep .
After a five alarm fire next door in the building next to us , we were evacuated ....we had little time for grabbing anything so we made a go bag up with all the essentials and paper work we may need plus some cash .
But we don’t keep a lot of cash , no real reason for us to to keep more than a grand at best.
I really need to do that as well. I've always been horrible about keeping any cash at home. I've been lucky and not had any emergencies where I needed it and couldn't get it out of the bank.
As for the mortgage, I think I'll keep mine as well. It's really small, about $30,000 and will be payed off in a few years. I can't see any way it will be a burden on me to make the small monthly payment.
Last edited by marino760; 02-25-2021 at 06:25 AM..
I was never a big cash person but over the past year or two, I've taken to having cash in the house. Not a huge sum just $1,500 to $2,000 and I have been thinking of upping the squirreled cash to $3,000.
My daughter knows where it is hidden.
Is this what happens when we get older?
It is also smart to have cash on hand
We just went through a week of no water, power etc.
Even after power came back some stores could only take cash or checks. So no food for you! LOL
I shouldn't laugh, but the stories I hear from my nieces and nephews of never having cash and then being caught in situations like this - they still don't learn.
I will always have a mortgage. I only cared about having enough equity for a grubstake if I had to sell or move abruptly. I just refinanced for cash out for debt consolidation. I think I live quite well for my needs and desires and want to have the cash now. According to zillow, I have about $160k in equity and that's fine for my estate. I'm 68.
My personal philosophy is that all mortgage questions should be resolved before you retire. Have a mortgage or don't. Just answer that question early on.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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We owe $65,000 and the interest rate is 2.50% so the interest is only about $135.00/month and I am wondering if I would feel better with an extra $60,000 cash in savings or get away from the $426.19?
The $426.19/month mortgage isn't going to kill us it represents just 8% of our total retirement income once I stop working.
I will always have a mortgage, I use the 3% money for far more fun and asset gain. + it keeps my budget tuned up for future option of being a renter.
You can also figure out a way to annually acquire the funds needed to cover your house payment.
Even a paltry 8% gain on $65k would more than cover your annual house payment obligation. If you are into some simple stock trading options, you could make the $5k / yr with a couple trades of $50k. Or a one week / yr consulting gig @ $125/hr.
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