I know all the math but I'm struggling with not paying off my mortgage early. It just bugs me to have it. I've managed not to pay it off in full three times in the last three years, when various events brought in enough cash to do it with. But it's getting harder each time.
I feel like I'm at an AA meeting,
"Hi, I'm SwordGuy and I'm debt averse."
The biggest problem with prepaying a mortgage is when people do it at the expense of other saving/investing. Not getting your employer's match on your 401k? Not maxing out every tax-deferred option you qualify for? Have a low, fixed rate on an affordable house? Don't have a fat EF to see you through should the shit hit the fan? Then you have no business prepaying the mortgage, much less crowing about it on a site dedicated to optimizing every single green soldier in order to reach FI and retire early. (I know you don't do this, SG, but those threads are far more active than this one, which is a shame, IMO.)
If you tend to be a worrier you're always going to find something to worry about. If it's not the taxes, it's the utilities, or the insurance or the roof in winter or the HVAC in August. Having more money than you ever imagined possible eases far more worries than killing off the mortgage will.
HOWEVER, if you've already hit your number and you have enough beyond that to erase the mortgage, it's harder to justify keeping it. I get that. Paying off the mortgage isn't the worst decision, provided that you make it at the right time. In your situation, I wouldn't necessarily disagree with paying it off. Shocker, I know.
Everyone has had great points, as expected!
We FIRED 17 months ago. We have multiple sources of passive income (rental houses, rental farm land and social security) as well as our stock and bond stash. This year we needed a 0.34% WR from our stash to cover our budgeted expenses. Next year it will drop to 0% as the income from our last two rental houses kicks in and I go on SS. We'll actually have a significant budget surplus not counting any RMDs or any other stock/bond withdrawals.
So there's no burning financial need to pay it off early before I retire or to lower our WR to a safe level. But there's also no burning financial need to amass more wealth either.
We used to be very poor and it was sometimes a real struggle to have the cash to pay bills when we needed it. That was decades ago but some things stick with you.
The other thing is that stocks are, in some ways, just funny money, not real money. It's this abstract thing I buy and hold and do very little with otherwise. But writing that mortgage check is very real, each and every month. I know that's silly but feelings are what they are.
Part of it is that I've felt constrained with our current budget the last year because we've had a lot of one-off or occasional expenses all showing up (broken leg, injured ankle and knee, wife and I got really sick, replaced my 19 year old car, etc. So that mortgage check coming out of our checkbook each month was even more noticeable. I would have cash-flowed more of tthat rather than draw down on savings.
Staying the course and paying the minimum pays off the mortgage in 11 years and 10 months.
Putting our budget surplus to work on it pays it off in 4 years.
Putting our budget surplus and the RMDs on it pays it off in 2 1/2 years.
Actually making a 4% stash withdrawal two years in a row (as opposed to 0% otherwise) plus the budget surplus pays it off in 14 payments. That would only be done if stocks stayed at or above their current levels.
And if stocks went on sale at 30% off, I would be buying stocks instead of paying off the mortgage early, with no qualms whatsoever!
Then stop over thinking it and do whatever you want.
I was going to ask if your monthly mortgage payment amount is enough to crunch your cash flow in tough times, and it sounds like it is. This can really motivate the urge to be rid of it. See, our mortgage payment is only about 5% of our after tax income, so we don't even really notice it. My income is variable and it varies per month more than our mortgage.
Your issue is that although the math favours investing, you would probably rather gnaw your own arm off rather than cash in some of those investments in tough times if it came to that, hence why paying off the mortgage *feels* like such a better option, because not paying it off, if the payment is large enough, could necessitate actually using some of your capital....*GASP*!!!
It's not silly to give credence to the feelings behind your financial motivations, in fact, it's critical to understand and respect your own feelings, because ALL financial decisions are just feelings. Sure, there's math and numbers behind them, but what those number represent are feeeeeeeelings.
Disregard them at your own peril.
Examine those feelings, look rationally at the options available to you to manage those feelings, and move confidently forward with a plan that actually fits your personal goals and risk tolerances.
The DPOYM club is all about feelings, we are all about respecting that feeling that paying off the mortgage would be nice, and we do our best to quantify what that feeling is worth, and then compare it to the computed cost of that transaction and decide if the trade off is worth it.
We don't choose this path because the numbers are better for investing, we choose this path because the particular numbers in our particular cases, combined with the increased risk isn't worth the value that the nice feeling would give us.
That's what we harp on over and over, is really looking at the feelings involved and deciding if they're worth it.
If they're worth it for you, then cool, they're worth it for you. Go nuts.
If they aren't...then what is fueling the dissonance, because that means you are somehow in conflict with your own motivations and risk tolerances, and that's actually a serious issue that you should internally address, because that means your compass is fucked up.