DONT Payoff your Mortgage Club

[nereo]

That’s about as close to the bank saying “you can pay us all now or you can pay us the same amount over time” and choosing the latter.
I guess I have better uses for my money.  Oh well.

[bryan995]

From elsewhere on the forum:

"My husband and I (late 20's) just paid off our mortgage and even though it was a financially stupid idea with our 1.80% interest rate,  it just feels so good to have no debt. We keep our finances private so I had no one else to share the excitement with."

Is it okay if I weep for the loss of all that lovely, lovely 1.8% money?

If you want to comment, please do it here. I don't want to rain on anyone's parade.

Lol I was about to comment the same thing. 1.80% GOODNESS.  That poor poor mortgage.  Borderline criminal to pay off such a loan IMO :)

[talltexan]

Just to re-iterate that I am team "Do not pay off the mortgage". 344 payments to go!

[Fomerly known as something]

From elsewhere on the forum:

"My husband and I (late 20's) just paid off our mortgage and even though it was a financially stupid idea with our 1.80% interest rate,  it just feels so good to have no debt. We keep our finances private so I had no one else to share the excitement with."

Is it okay if I weep for the loss of all that lovely, lovely 1.8% money?

If you want to comment, please do it here. I don't want to rain on anyone's parade.

Lol I was about to comment the same thing. 1.80% GOODNESS.  That poor poor mortgage.  Borderline criminal to pay off such a loan IMO :)

My only thought is “at least” they are young enough that now that they are redirecting $ to investments they still have time to compound.  But I can’t help but think they will change houses in a few years and do the same thing again.

[Tyson]

After the divorce, I was decimated financially (3.5 years ago).  I gave all the $$ in order to keep the house (and the very low interest mortgage on it).  I've kept paying the minimum on the mortgage and have been aggressively shoving my money into investments instead of paying down the mortgage.  I'm pleased to say that I'm back up to $220k in my 401k account which is kind of astonishing to me.  The investments have grown at a much faster rate than what I would have been able to pay down on the mortgage (had I gone down that route). 

Once again, thank you DPOTM thread!

[FragglesRock666]

Sooooo.
Still haven't paid anything extra on my mortgage.  And continue to funnel money into my first-ever taxable brokerage account.

And also decided along with the fiance that A) we're going to look for a vacation property nearby and B) we are going to get a mortgage and not pay it off early, either.  Even if the interest rates look to be going up for the foreseeable future, so we won't get as great of a deal as I got when I refi'd the house in 2020.  We will only put down the minimum amount needed to keep the monthly payments within a budget that we're comfortable with. 

[Villanelle]

Sad to say, I think I'm leaving the club.

We are planning to list our rental property (the only home we own) for sale in a few months.  Unless the markets shifts between now and then, we will make a boatload of money, even after owning through the 2008 crash.  But one thing I'm sad about is losing my low-interest loan, just when interest rates start to rise.

I will happy not to deal with being  long distance landlord though.

[dandarc]

Sad to say, I think I'm leaving the club.

We are planning to list our rental property (the only home we own) for sale in a few months.  Unless the markets shifts between now and then, we will make a boatload of money, even after owning through the 2008 crash.  But one thing I'm sad about is losing my low-interest loan, just when interest rates start to rise.

I will happy not to deal with being  long distance landlord though.

Selling and not buying something else is the ultimate DPOYM move in my mind. Granted, not a mortgage, but the whole idea is to keep your money working for you - not sinking a chunk into the next home means you have maximum money to invest.

[rmorris50]

From elsewhere on the forum:

"My husband and I (late 20's) just paid off our mortgage and even though it was a financially stupid idea with our 1.80% interest rate,  it just feels so good to have no debt. We keep our finances private so I had no one else to share the excitement with."

Is it okay if I weep for the loss of all that lovely, lovely 1.8% money?

If you want to comment, please do it here. I don't want to rain on anyone's parade.

Some bank was made very happy too.


Sent from my iPhone using Tapatalk

[joedad189]

Anyone thinking of doing a cash out refi right now? We have a 2.875% 30 year with about 348 payments to go. My thought was if we cashout refi we could clear ~$115k due to the crazy price increases of late, but at the expense of starting over on the mortgage and an increase in monthly payment of ~$1200 a month due to added principal and higher rates of ~4.5%.

If you compare Option A) investing $1200 a month and Option B) invest a $115k lump sum both assuming a 7% interest, Option B or the $115k is a better deal for ~13-14 years at around which time the saving balance for Option A or saving $1200 a month has a higher balance. Seems like an interesting conversation

[talltexan]

How easy would it be to keep the primary mortgage, and do a HELOC on the extra equity you want to access? That would mean paying a higher rate, but only on a tranche of the funds.

[joedad189]

How easy would it be to keep the primary mortgage, and do a HELOC on the extra equity you want to access? That would mean paying a higher rate, but only on a tranche of the funds.

i should have said vaguely entertaining the concept instead of thinking about it. we don't need that cash for any specific purpose, taking advantage of the crazy equity gain and putting it to work in an index fund seems like an interesting idea as i hope we are retired in less than 13 years so the math theoretically works out. But i believe DW would never agree, she is debt averse

[talltexan]

Agreed: accessing that equity at a low price is the trick.

[Telecaster]

If you compare Option A) investing $1200 a month and Option B) invest a $115k lump sum both assuming a 7% interest, Option B or the $115k is a better deal for ~13-14 years at around which time the saving balance for Option A or saving $1200 a month has a higher balance. Seems like an interesting conversation

I probably would not do this.   I haven't run the numbers but with that time frame you'll have a good chance of not breaking even.    And there is some utility to having a lower monthly payment too. 

[Holocene]

Anyone thinking of doing a cash out refi right now? We have a 2.875% 30 year with about 348 payments to go. My thought was if we cashout refi we could clear ~$115k due to the crazy price increases of late, but at the expense of starting over on the mortgage and an increase in monthly payment of ~$1200 a month due to added principal and higher rates of ~4.5%.

If you compare Option A) investing $1200 a month and Option B) invest a $115k lump sum both assuming a 7% interest, Option B or the $115k is a better deal for ~13-14 years at around which time the saving balance for Option A or saving $1200 a month has a higher balance. Seems like an interesting conversation

I'd think long and hard before giving up that sweet 2.875% 30 year rate.  You might never get a rate that low again.  You're looking at a pretty huge rate jump.  I agree that you should at least look into a HELOC to access the equity.  I think HELOC rates are higher, but at least you get to keep the existing low rate on the main mortgage.  I personally wouldn't do it, but I'm not one to fully leverage my house either.  I could've done a much bigger cash-out when I refinanced last fall.  I only did $30k and that was only to get a better deal.  I found that I got used to my low mortgage payment and wasn't too keen on the idea of a much larger payment with FIRE on the horizon.  May have been a bit suboptimal, but no regrets.  I still turned my 30 year mortgage into a 39 year mortgage, pulled out $30k, and my payment is still less than my original payment.  So I could've done worse.

But i believe DW would never agree, she is debt averse

And this is another good reason not to do it!

[achvfi]

With 30 year fixed mortgage rates hitting > 5%, I feel like a genius for doing cash out refinance couple years ago for 2.875% 30 year fixed and investing 60 K in proceeds.

Thanks to this thread for reinforcing the strategy.

[Fomerly known as something]

With 30 year fixed mortgage rates hitting > 5%, I feel like a genius for doing cash out refinance couple years ago for 2.875% 30 year fixed and investing 60 K in proceeds.

Thanks to this thread for reinforcing the strategy.

Heck, I super excited I got locked back in 2 weeks ago at 3.875%.  Should be signing paperwork sometime next week I think.  CA “closing” on new purchases are different.

[Dicey]

With 30 year fixed mortgage rates hitting > 5%, I feel like a genius for doing cash out refinance couple years ago for 2.875% 30 year fixed and investing 60 K in proceeds.

Thanks to this thread for reinforcing the strategy.

I'm thankful to all the folks who keep this thread bouncing along. It gives me no small thrill to read posts like yours, @achvfi. Congratulations!

On another recent thread, someone called us "haters" which is very um, impolite, IMO. In a way, they might have a point, because we don't love seeing people choose sub-optimal financial options. Cheers to everyone who has embraced their long, lean mortgages.

[talltexan]

I believe in the DPYM club strategy for myself, at the rates that we've seen during much of the last ten years.

I also don't go over to the mortgage payoff thread and rain on their parades, even as I believe they'd be richer if they'd followed the path I'm following.

[joedad189]

But i believe DW would never agree, she is debt averse

And this is another good reason not to do it!

Yeah - i kept this idea in my brain and brought it up here to see how crazy the brain trust thought it was, i dont think i will even bring it up with DW. At current rates, at this refi it would increase total payment by $1,070, while Decreasing principal payments by ~$90 and increase interest payments by ~$1,160 per month over our current 2.875% rate

[nereo]

With 30 year fixed mortgage rates hitting > 5%, I feel like a genius for doing cash out refinance couple years ago for 2.875% 30 year fixed and investing 60 K in proceeds.

Thanks to this thread for reinforcing the strategy.

I'm thankful to all the folks who keep this thread bouncing along. It gives me no small thrill to read posts like yours, @achvfi. Congratulations!

On another recent thread, someone called us "haters" which is very um, impolite, IMO. In a way, they might have a point, because we don't love seeing people choose sub-optimal financial options. Cheers to everyone who has embraced their long, lean mortgages.

who's calling us "haters"?

[Psychstache]

who's calling us "haters"?

Antiha?

[achvfi]

With 30 year fixed mortgage rates hitting > 5%, I feel like a genius for doing cash out refinance couple years ago for 2.875% 30 year fixed and investing 60 K in proceeds.

Thanks to this thread for reinforcing the strategy.

I'm thankful to all the folks who keep this thread bouncing along. It gives me no small thrill to read posts like yours, @achvfi. Congratulations!

On another recent thread, someone called us "haters" which is very um, impolite, IMO. In a way, they might have a point, because we don't love seeing people choose sub-optimal financial options. Cheers to everyone who has embraced their long, lean mortgages.

who's calling us "haters"?

:) I think DPYM is an advance concept for many to digest. Its hard to convince people, what we can do is point people to it and people have to go on their own journey to accept it.

I had trouble convincing my dear wife about DPYM and even worse when I wanted to do cash out refinance to invest, she wouldn't let me at first and even brought in my father in law to convince me not to.

By the time I got a reluctant go ahead from her after months, we probably missed out about 50% gain on the invested cash. Still I am happy we did it and made good returns from it.

[Telecaster]

Some posters have been, uh, a little evangelical about promoting the DPYM Club.   Perhaps a bit too strong at times. 

One thing to keep in mind, is the that PYM Club always talks about the feeling of not having a mortgage.  You can't rationalize with someone about how they feel.   At least not forcefully.   It will just cause them to retreat and dig in.  That might be the reason for the "hater" comment.

However, with the perspective of hindsight and nearing the end of my accumulation journey, I can see the power of compounding taking over.   The hundred dollars I didn't pay on my mortgage 20 years ago is worth something like $550 today.   In not very many years, it will be $1000.   But in the early years that $100 would be come $108.  Big whoop.   Hard to see much benefit. 

[Fomerly known as something]

Some posters have been, uh, a little evangelical about promoting the DPYM Club.   Perhaps a bit too strong at times. 

One thing to keep in mind, is the that PYM Club always talks about the feeling of not having a mortgage.  You can't rationalize with someone about how they feel.   At least not forcefully.   It will just cause them to retreat and dig in.  That might be the reason for the "hater" comment.

However, with the perspective of hindsight and nearing the end of my accumulation journey, I can see the power of compounding taking over.   The hundred dollars I didn't pay on my mortgage 20 years ago is worth something like $550 today.   In not very many years, it will be $1000.   But in the early years that $100 would be come $108.  Big whoop.   Hard to see much benefit.

I became a “hater” because I paid off my mortgage, and I felt meh.  Maybe if I hadn’t lived n an area where taxes were still $500 a month I dunno.  I will say taking out a mortgage on the next home when I could have paid cash was the best decision I could have made.  (Although it might be a bit of happy market timing with being able to double my money from 2017 to 2021 in the market).

[Dicey]

Some posters have been, uh, a little evangelical about promoting the DPYM Club.   Perhaps a bit too strong at times. 

One thing to keep in mind, is the that PYM Club always talks about the feeling of not having a mortgage.  You can't rationalize with someone about how they feel.   At least not forcefully.   It will just cause them to retreat and dig in.  That might be the reason for the "hater" comment.

However, with the perspective of hindsight and nearing the end of my accumulation journey, I can see the power of compounding taking over.   The hundred dollars I didn't pay on my mortgage 20 years ago is worth something like $550 today.   In not very many years, it will be $1000.   But in the early years that $100 would be come $108.  Big whoop.   Hard to see much benefit.

What people who kill the mortgage first don't understand is the power of compound interest. When I was just starting out, the mortgage payoff seemed almost insurmountable. Never would I have imagined that my investments would grow to the heights they have. I could smite that mortgage many times over these days. You want to talk about an amazing feeling, wowza!

[Dicey]

Some posters have been, uh, a little evangelical about promoting the DPYM Club.   Perhaps a bit too strong at times. 

Hmmm, I think you've got the sequence a little mixed up. When the payoff threads started, some people didn't realize that they were unlike almost any other thread on the forum. They were exclusively for celebration, not discussion. Zero discussion. The mere idea that it was not up for examination was unfathomable to those of us who came to MMM when facepunches were the order of the day, and all expenditures were analyzed for maximum effectiveness.

Why this particular topic was so different was a mystery to a number of people, including myself. After some behind-the-scenes discussion, the DPOYM Club was started. So no one was promoting/evangelizing the club before it existed. Nowadays, DPOYM supporters pretty much avoid commenting in the Payoff threads.

Recently, a newbie wandered into a payoff thread and started asking probing questions. They were gently invited to join the party at the DPOYM Club, which they did. What may have seemed evangelical to someone who doesn't know the back story was actually an effort to prevent a newb from getting their ass handed to them.

So here's how it works these days:

If you want celebration without discussion, see: various Payoff threads.

If you want to figure out what's optimal for your situation, come chat with us here. Sometimes paying off the mortgage is the best option. Only after a lot of other boxes are checked, of course ;-)

[solon]

What's amazing to me is that nearly everyone can grasp this concept:

     If you got a raise that is less than inflation, you're losing money.

But so many can't grasp this concept:

     If your investment returns are less than the index, you're losing money.

In my mind these are identical concepts. It is urgent - critical - that I make index returns. Just as critical as earning an inflation raise.

And when someone says, "There's no feeling like being debt free", I'm thinking, "You're going backward! You're drowning! What do feelings have to do with it?!"

[deborah]

That’s not quite true - if your returns are less than the index you’re not making as much money as you could. You’re probably still making money.

It’s probably not optimal.

However, when I was a child, I can remember debt collectors visiting. I vowed that would never happen to me. So, to me, the peace of mind when I had paid off my mortgage was worth suboptimal performance.

I guess that others have similar reactions and trade offs. But I’m never going to say that everything I have done was optimal, and I’m fairly sure that we all have suboptimal performance in some area of our finances. Part of that is to ensure that we (and our partners) feel comfortable with what we’re doing. It’s not optimal to have a divorce either.

But the DPOYM Club performs a very worthwhile function of showing that, in many cases, not over contributing is a very good thing.

[achvfi]

What people who kill the mortgage first don't understand is the power of compound interest. When I was just starting out, the mortgage payoff seemed almost insurmountable. Never would I have imagined that my investments would grow to the heights they have. I could smite that mortgage many times over these days. You want to talk about an amazing feeling, wowza!

I was wondering about current higher inflation conditions, buying a house in general and even better having a fixed low interest mortgage is such a great inflation hedge.

10 years ago I was renting a small place and same house now rents for more than double the price if you can find one.

Savings are now so big and if we can invest it for long term in securities that can beat inflation now we are adding power of compounding to the mix.

We keep the housing costs low while compounding the assets and cashflows from it. An efficient way to work towards completing financial independence pie.

[Telecaster]

I was wondering about current higher inflation conditions, buying a house in general and even better having a fixed low interest mortgage is such a great inflation hedge.

10 years ago I was renting a small place and same house now rents for more than double the price if you can find one.

Savings are now so big and if we can invest it for long term in securities that can beat inflation now we are adding power of compounding to the mix.

We keep the housing costs low while compounding the assets and cashflows from it. An efficient way to work towards completing financial independence pie.

Inflation is one of the best reasons to not pay off your mortgage.   The long term inflation rate is about 3.5%.   If your mortgage is around 3.5% or so that means you are getting use of the money for free, or something close to it.   That's a pretty sweet deal. 

But the best reason is that not to pay off your mortgage, is that you would be using full valued dollars now in order to save puny, inflation valued dollars in the future.   If you want some laughs, ask your parents what their first mortgage payment was.   It was probably some laughably small number.  But to them at the time, it was probably a bunch of money.   

Part of the appeal of paying down the mortgage is you have this great big payment you want to get rid of.  But it gets small all by itself if you wait long enough.   

[Telecaster]

However, when I was a child, I can remember debt collectors visiting. I vowed that would never happen to me. So, to me, the peace of mind when I had paid off my mortgage was worth suboptimal performance.

I guess that others have similar reactions and trade offs. But I’m never going to say that everything I have done was optimal, and I’m fairly sure that we all have suboptimal performance in some area of our finances. Part of that is to ensure that we (and our partners) feel comfortable with what we’re doing. It’s not optimal to have a divorce either.

Totally agree.  In the MMM community in general and the DPYM Club in particular, I think we get a little too fixated on optimization.   Having a good feeling is worth something.   If you understand the costs of paying off the mortgage early, and still want that feeling, then go for it. 

[solon]

However, when I was a child, I can remember debt collectors visiting. I vowed that would never happen to me. So, to me, the peace of mind when I had paid off my mortgage was worth suboptimal performance.

I guess that others have similar reactions and trade offs. But I’m never going to say that everything I have done was optimal, and I’m fairly sure that we all have suboptimal performance in some area of our finances. Part of that is to ensure that we (and our partners) feel comfortable with what we’re doing. It’s not optimal to have a divorce either.

Totally agree.  In the MMM community in general and the DPYM Club in particular, I think we get a little too fixated on optimization.   Having a good feeling is worth something.   If you understand the costs of paying off the mortgage early, and still want that feeling, then go for it.

It feels about like getting a raise that is smaller than inflation.

[Fomerly known as something]

However, when I was a child, I can remember debt collectors visiting. I vowed that would never happen to me. So, to me, the peace of mind when I had paid off my mortgage was worth suboptimal performance.

I guess that others have similar reactions and trade offs. But I’m never going to say that everything I have done was optimal, and I’m fairly sure that we all have suboptimal performance in some area of our finances. Part of that is to ensure that we (and our partners) feel comfortable with what we’re doing. It’s not optimal to have a divorce either.

Totally agree.  In the MMM community in general and the DPYM Club in particular, I think we get a little too fixated on optimization.   Having a good feeling is worth something.   If you understand the costs of paying off the mortgage early, and still want that feeling, then go for it.

Did you not see that I didn’t get a great feeling when I paid mine off in 2016.  To the point that when I moved 1.5 years later I got a mortgage?  I felt for the most part indifferent at that point.  Maybe it’s because I’ve always run the numbers before buying a home.  I’m perfectly fine with the cost of obtaining my future home.

[nereo]

However, when I was a child, I can remember debt collectors visiting. I vowed that would never happen to me. So, to me, the peace of mind when I had paid off my mortgage was worth suboptimal performance.

This is something I’ve struggled to understand. To me, having a big pile of money is the biggest security blanket, the best defense against debt collectors. You don’t escape payments by paying off your mortgage - you just make them smaller. You’ve still got taxes and insurance. There are still emergency repairs and basic maintenance. Fail to promptly address those and you are just as likely to lose your home. A bigger pile of money helps with all of that, and the continued mortgage payments and then some. I hear people say not having a mortgage helps them sleep better at night. I can’t really relate. My PI payments are a pretty minor portion of our monthly expenses - I’m worried about how to cover the other 80%. Which is why I prefer saving those dollars instead of putting them into my home.

[Telecaster]

Did you not see that I didn’t get a great feeling when I paid mine off in 2016.  To the point that when I moved 1.5 years later I got a mortgage? 

You didn't.  And I don't.  And the most of the people here don't.  But some people do.  And neither you nor I are in a position to place a price tag on their feelings. The best and most we can do is make sure people undersand the implications of paying down the mortgage.  Which sadly, many people don't.

[Dicey]

Did you not see that I didn’t get a great feeling when I paid mine off in 2016.  To the point that when I moved 1.5 years later I got a mortgage? 

You didn't.  And I don't.  And the most of the people here don't.  But some people do.  And neither you nor I are in a position to place a price tag on their feelings. The best and most we can do is make sure people undersand the implications of paying down the mortgage.  Which sadly, many people don't.

Sorry, I completely disagree. Mastering your "feelings" is the whole damn point of mustachianism.

Ooh, the following things might make a lot of people "feel" great:
- Private jet/yacht
- Personal limo - with driver, of course
- Monster trucks/multiple ORV's/"toy" haulers
- Lamborghini/Maserati/Bentley, etc.
- Designer clothing (see: Birkin handbags, Louboutin footwear)
- Designer hair/make-up/mani-pedi
- Posh private schools
- Personal staff (hairstylist, makeup artist, masseuse, personal trainer, chef, etc.)
- Box season seats to [fill in the blank] team(s).
- Fancy pants alcohol labels, designed to impress.

Not an exhaustive list by any means, and mustachians freely spend their money where their passion is, but FFS, plenty of people buy this shit and more because it makes them "feel" good.

Note to @deborah, and all our friends who live in places where mortgages aren't as advantaged as they are in the USA: not throwing shade at you. It's a much harder decision. Well, except during inflationary times.

[dragoncar]

Don’t hate the hater hate the game

[talltexan]

I think feelings are a way of checking whether your choices align with your values. The opulent things you list wouldn't feel as good to us because we have spent some time pondering what we truly value, and...it ain't that.

[Dicey]

I think feelings are a way of checking whether your choices align with your values. The opulent things you list wouldn't feel as good to us because we have spent some time pondering what we truly value, and...it ain't that.

Feelings lie. Ever been scared to do something that turned out just fine?

The list wasn't designed to be anything more than a top-of-mind sampling.

[talltexan]

Speaking of feelings, I'd like to dive back into our shared purpose:

my wife has a taxable investment account (it's really her money, from a deceased relative) with Edward Jones. I've succeeded in prying some cash lose from investments in the forms of dividends/capital gains. So now the chance is here to live out our values...transferring that money away from the rabid wolves of EJ and into productive investments.

First phone call has unlocked $3,500...more to come!

[Holocene]

Speaking of feelings, I'd like to dive back into our shared purpose:

my wife has a taxable investment account (it's really her money, from a deceased relative) with Edward Jones. I've succeeded in prying some cash lose from investments in the forms of dividends/capital gains. So now the chance is here to live out our values...transferring that money away from the rabid wolves of EJ and into productive investments.

First phone call has unlocked $3,500...more to come!

I also inherited an Edward Jones account several years ago.  It was an IRA though.  I got it moved out of there ASAP.  I just went through Fidelity and requested a transfer online and they handled it.  No phone calls needed.  I think I just had to upload a statement or something like that.  Make sure you transfer the stocks/investments to the new brokerage first before selling anything.  The fees to sell things at EJ are ridiculously high, like everything else there.  Good luck!

[srad]

I think feelings are a way of checking whether your choices align with your values. The opulent things you list wouldn't feel as good to us because we have spent some time pondering what we truly value, and...it ain't that.

Feelings lie. Ever been scared to do something that turned out just fine?

The list wasn't designed to be anything more than a top-of-mind sampling.

Not for nothing, but my day job has shown me over the years, that sh1t does happen.  I work for a non performing note fund, (defaulted mortgages).  We buy loans from the big banks when borrowers stop making their payments.  Let me tell you, Divorce, Death, Hospital bills, Illness, and Job Loss are very real.   Aside from a VERY large batch of 2005 to 2007 Liar Loans, most of these people's finances were in fine order at the time of purchase until one of the above happened.  You know what we have never foreclosed on?  A paid off home.  That paid off home would feel pretty good if one of the above's happen.

[talltexan]

agreed that less cash flow can put you in a position of strength, but I've known people who faced one or more of those dilemmas, but had value trapped within their house that was difficult to extract.

[RWD]

[...] most of these people's finances were in fine order at the time of purchase until one of the above happened.

But obviously not in fine enough order to have paid off the house.

[nereo]

I think feelings are a way of checking whether your choices align with your values. The opulent things you list wouldn't feel as good to us because we have spent some time pondering what we truly value, and...it ain't that.

Feelings lie. Ever been scared to do something that turned out just fine?

The list wasn't designed to be anything more than a top-of-mind sampling.

Not for nothing, but my day job has shown me over the years, that sh1t does happen.  I work for a non performing note fund, (defaulted mortgages).  We buy loans from the big banks when borrowers stop making their payments.  Let me tell you, Divorce, Death, Hospital bills, Illness, and Job Loss are very real.   Aside from a VERY large batch of 2005 to 2007 Liar Loans, most of these people's finances were in fine order at the time of purchase until one of the above happened.  You know what we have never foreclosed on?  A paid off home.  That paid off home would feel pretty good if one of the above's happen.

Can't say I agree here. Like talltexan I've known too many people who were royally screwed in divorce because their one main asset was their home, which then had to be split - typically leaving one person deeply indebted to the other for the equity owed. In those cases they most definitely didn't feel "very good" about the situation.

And no, your finances are not "in fine order" if you can't weather some very real but very common 'very bad things'.

Which brings us around to... my financial rule of "don't have the majority of your net worth in your home".  If you've got enough in savings where you are FI, and you just want to pay off your mortgage, and doing so won't put the majority of your wealth into your home - sure, go ahead if you like, at this point you've pretty much 'won the game' and it'll be fine whichever way you go.  But having your home equity be the lions-share of your wealth..?  Then you've made yourself far more vulnerable to all the things you've described - divorce, illness, job loss, etc.

[Telecaster]

Not for nothing, but my day job has shown me over the years, that sh1t does happen.  I work for a non performing note fund, (defaulted mortgages).  We buy loans from the big banks when borrowers stop making their payments.  Let me tell you, Divorce, Death, Hospital bills, Illness, and Job Loss are very real.   Aside from a VERY large batch of 2005 to 2007 Liar Loans, most of these people's finances were in fine order at the time of purchase until one of the above happened.  You know what we have never foreclosed on?  A paid off home.  That paid off home would feel pretty good if one of the above's happen.

I'm going to push back on this one.  Remember, we're talking about a cohort of savers, people who save either by paying down the mortgage or by investing.  The reasons you mention are the same reasons I recommend not paying down the mortgage.  Unexpected stuff happened.  Specifically, paying down the mortgage provides no protection from foreclosure until the mortgage is completely retired.   If you are unable to make payments as agreed, the bank will foreclose and it doesn't matter how many extra payments you've made.  So there is no benefit at all to paying down the mortgage until far in the future. 

On the flip side, in the event of an unexpected financial situation having liquid assets might be enough to keep making mortgage payments for years in some cases.  At this point in the discussion someone usually says something to the effect of that you should of course have substantial liquid assets before putting extra into the mortgage.   But that just highlights the risky nature of paying down the mortgage in the first place.    Don't even think about it unless you have lots of money stashed away already.    It is a high risk, low reward proposition.   

[srad]

I wasn't taking a side there.  I was just pointing out that life doesn't always work out.  So be careful with debt and leverage. 

FWITW - As of last year I don't have a home mortgage (I do have over 1mm of rental debt though).  Retiring that debt freed up enough monthly cash flow to where my wife was able to stop her W2 job.  As we approach fire (I'm close so very close), we are looking to make our lives as easy as possible its not about maximizing money its about maximizing time and ease of life.

[Tyson]

Not for nothing, but my day job has shown me over the years, that sh1t does happen.  I work for a non performing note fund, (defaulted mortgages).  We buy loans from the big banks when borrowers stop making their payments.  Let me tell you, Divorce, Death, Hospital bills, Illness, and Job Loss are very real.   Aside from a VERY large batch of 2005 to 2007 Liar Loans, most of these people's finances were in fine order at the time of purchase until one of the above happened.  You know what we have never foreclosed on?  A paid off home.  That paid off home would feel pretty good if one of the above's happen.

I'm going to push back on this one.  Remember, we're talking about a cohort of savers, people who save either by paying down the mortgage or by investing.  The reasons you mention are the same reasons I recommend not paying down the mortgage.  Unexpected stuff happened.  Specifically, paying down the mortgage provides no protection from foreclosure until the mortgage is completely retired.   If you are unable to make payments as agreed, the bank will foreclose and it doesn't matter how many extra payments you've made. So there is no benefit at all to paying down the mortgage until far in the future. 

On the flip side, in the event of an unexpected financial situation having liquid assets might be enough to keep making mortgage payments for years in some cases.  At this point in the discussion someone usually says something to the effect of that you should of course have substantial liquid assets before putting extra into the mortgage.   But that just highlights the risky nature of paying down the mortgage in the first place.    Don't even think about it unless you have lots of money stashed away already.    It is a high risk, low reward proposition.

I highlighted the part above, because this is EXACTLY what happened to me about 5 years ago.  I'd been paying extra toward my mortgage every month, in an effort to pay it off as soon as possible.  Wife had been out of work for a while and I lost my job.  Couldn't find work for about 8 months after that.  And guess what, all that $$ I'd paid to the mortgage had done NOTHING to protect me.  In fact it made me much more vulnerable than if I had saved/invested all those extra payments. 

Having a big pile of cash is way more safe in the case of job loss than having made extra payments toward a mortgage.  I learned my lesson the hard way.

[Dicey]

I think feelings are a way of checking whether your choices align with your values. The opulent things you list wouldn't feel as good to us because we have spent some time pondering what we truly value, and...it ain't that.

Feelings lie. Ever been scared to do something that turned out just fine?

The list wasn't designed to be anything more than a top-of-mind sampling.

Not for nothing, but my day job has shown me over the years, that sh1t does happen.  I work for a non performing note fund, (defaulted mortgages).  We buy loans from the big banks when borrowers stop making their payments.  Let me tell you, Divorce, Death, Hospital bills, Illness, and Job Loss are very real.   Aside from a VERY large batch of 2005 to 2007 Liar Loans, most of these people's finances were in fine order at the time of purchase until one of the above happened.  You know what we have never foreclosed on?  A paid off home.  That paid off home would feel pretty good if one of the above's happen.

See: https://en.m.wikipedia.org/wiki/Tax_sale