Author Topic: Do you regret paying off your mortgage early?  (Read 250157 times)

dandarc

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Re: Do you regret paying off your mortgage early?
« Reply #600 on: December 05, 2017, 09:46:20 AM »
What's with the sudden influx of trolls?  Went about 4 years on this forum with nobody on my Ignore list, now have 4 in the last couple of months.

slythr

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Re: Do you regret paying off your mortgage early?
« Reply #601 on: December 05, 2017, 10:03:29 AM »
What's with the sudden influx of trolls?  Went about 4 years on this forum with nobody on my Ignore list, now have 4 in the last couple of months.

That's funny.
I was just thinking the troll tag was going to come out
That happens when responses run out, we resort to "troll"

nereo

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Re: Do you regret paying off your mortgage early?
« Reply #602 on: December 05, 2017, 10:12:42 AM »
pretty much what happens when you tell people that a thread entitled "do you regret paying off your mortgage" is for celebratory statements only, and that "if you have regrets, start a new thread about them." 

That's the most direct way of telling those who don't agree with you to f-off that I've heard on this forum for a long time. You have literally co-opted a thread that you didn't start or participate in until very recently.

FWIW we have a threads specifically for celebrating paying off a mortgage and a mortgage payoff club.

arebelspy

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Re: Do you regret paying off your mortgage early?
« Reply #603 on: December 05, 2017, 10:16:14 AM »
Mod Note: Please don't feed the trolls.

Probably best for everyone to take a break from this thread for a few days. 

Cheers!
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shawndoggy

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Re: Do you regret paying off your mortgage early?
« Reply #604 on: December 05, 2017, 10:21:51 AM »
Back on topic, no ragrets here.  I have enough stuff to lose sleep over.  Knowing that the mortgage is paid (and in my state is also exempt from execution) is not one of them.  It's quite comforting in fact. 

NorthernBlitz

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Re: Do you regret paying off your mortgage early?
« Reply #605 on: December 05, 2017, 10:55:05 AM »
This is an interesting topic.  The board has me convinced that I should invest instead of continuing to pay down the mortgage.  The market makes me nervous as well, because I believe there will be a correction.  I'm currently saving up to buy some VTSAX, which I should have enough by April.  Those shares are expensive to get into ($75 fee). If I am investing in large chunks, it could end up being horrible market timing.  Not that I am trying to time, but I can probably only afford maybe one investment per year.  10K at one wack makes me nervous.

Also, there is a Fidelity fund that I can get for less induction fee that are the same type of investment.  Example: FSTVX

I know that this is off topic, but who is charging you that $75 fee?

I thought that there was no commission if you buy from Vanguard (you'd need to set up an account there, but that's pretty easy to do).

You can also get the following products which are essentially the same as VTSAX:
- VTSMX This is the same total market index, but the MER is slightly higher. You would roll into VTSAX when you balance passes $10k
- VTI This is their "total market" ETF. It's the same thing, but an ETF instead of a mutual fund.

I thought that VTSMX / VTSAX / VTI were all available commission free if you get them from Vanguard (you would need to open a brokerage account).

From Vanguard's Website:

Mutual Fund Fees: https://investor.vanguard.com/mutual-funds/fees
<Contains a link to a list of funds with commissions...the list doesn't include VTSMX or VTSAX (VTI is an ETF)>

No fees on ETFs: https://investor.vanguard.com/etf/fees

If someone is charging you commissions on these funds, you might want to consider opening a Vanguard account and buying them yourself.

JLee

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Re: Do you regret paying off your mortgage early?
« Reply #606 on: December 05, 2017, 11:12:29 AM »
This is an interesting topic.  The board has me convinced that I should invest instead of continuing to pay down the mortgage.  The market makes me nervous as well, because I believe there will be a correction.  I'm currently saving up to buy some VTSAX, which I should have enough by April.  Those shares are expensive to get into ($75 fee). If I am investing in large chunks, it could end up being horrible market timing.  Not that I am trying to time, but I can probably only afford maybe one investment per year.  10K at one wack makes me nervous.

Also, there is a Fidelity fund that I can get for less induction fee that are the same type of investment.  Example: FSTVX

I know that this is off topic, but who is charging you that $75 fee?

I thought that there was no commission if you buy from Vanguard (you'd need to set up an account there, but that's pretty easy to do).

You can also get the following products which are essentially the same as VTSAX:
- VTSMX This is the same total market index, but the MER is slightly higher. You would roll into VTSAX when you balance passes $10k
- VTI This is their "total market" ETF. It's the same thing, but an ETF instead of a mutual fund.

I thought that VTSMX / VTSAX / VTI were all available commission free if you get them from Vanguard (you would need to open a brokerage account).

From Vanguard's Website:

Mutual Fund Fees: https://investor.vanguard.com/mutual-funds/fees
<Contains a link to a list of funds with commissions...the list doesn't include VTSMX or VTSAX (VTI is an ETF)>

No fees on ETFs: https://investor.vanguard.com/etf/fees

If someone is charging you commissions on these funds, you might want to consider opening a Vanguard account and buying them yourself.

That confused me a bit as well - I had no fees opening my Vanguard funds.

ACyclist

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Re: Do you regret paying off your mortgage early?
« Reply #607 on: December 05, 2017, 11:23:03 AM »
I have a fidelity account where we keep most of all our wealth.  They charge that fee to buy funds on the site. 

Every vanguard purchase is $75.  I think I am going to opt for similar Fidelity funds due to cost.

https://www.fidelity.com/mutual-funds/investing-ideas/index-funds

nereo

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Re: Do you regret paying off your mortgage early?
« Reply #608 on: December 05, 2017, 11:26:42 AM »
I have a fidelity account where we keep most of all our wealth.  They charge that fee to buy funds on the site. 

Every vanguard purchase is $75.  I think I am going to opt for similar Fidelity funds due to cost.

https://www.fidelity.com/mutual-funds/investing-ideas/index-funds

Fidelity has excellent index fund options, sometimes slightly beating Vanguard in cost.  Consider FUSVX (SP500 w 0.035% expense ratio) or FSTVX (total market index).  If you're with Fidelity there's little reason to buy Vanguard's equivalent index funds.

JLee

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Re: Do you regret paying off your mortgage early?
« Reply #609 on: December 05, 2017, 11:36:23 AM »
I have a fidelity account where we keep most of all our wealth.  They charge that fee to buy funds on the site. 

Every vanguard purchase is $75.  I think I am going to opt for similar Fidelity funds due to cost.

https://www.fidelity.com/mutual-funds/investing-ideas/index-funds

I just went through the process (all the way up to the 'submit' button) to buy VTSAX and I'm not seeing a fee. Is this establishing a new account or something..different?

protostache

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Re: Do you regret paying off your mortgage early?
« Reply #610 on: December 05, 2017, 11:52:06 AM »
I have a fidelity account where we keep most of all our wealth.  They charge that fee to buy funds on the site. 

Every vanguard purchase is $75.  I think I am going to opt for similar Fidelity funds due to cost.

https://www.fidelity.com/mutual-funds/investing-ideas/index-funds

I just went through the process (all the way up to the 'submit' button) to buy VTSAX and I'm not seeing a fee. Is this establishing a new account or something..different?

VTSAX isn't actually available to buy to Fidelity retail customers, or in fact retail customers of anyone outside of Vanguard. Are y'all using employer-sponsored accounts to do this? I know ACyclist didn't actually mention VTSAX, so maybe they're buying non-Admiral funds.

JLee

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Re: Do you regret paying off your mortgage early?
« Reply #611 on: December 05, 2017, 11:54:58 AM »
I have a fidelity account where we keep most of all our wealth.  They charge that fee to buy funds on the site. 

Every vanguard purchase is $75.  I think I am going to opt for similar Fidelity funds due to cost.

https://www.fidelity.com/mutual-funds/investing-ideas/index-funds

I just went through the process (all the way up to the 'submit' button) to buy VTSAX and I'm not seeing a fee. Is this establishing a new account or something..different?

VTSAX isn't actually available to buy to Fidelity retail customers, or in fact retail customers of anyone outside of Vanguard. Are y'all using employer-sponsored accounts to do this? I know ACyclist didn't actually mention VTSAX, so maybe they're buying non-Admiral funds.

Ohhhh, I misread - they're trying to buy Vanguard funds through Fidelity.  I buy through Vanguard directly and have never had a fee, Admiral fund or not.

It's easy to establish a direct relationship with Vanguard. I have Fidelity and Vanguard accounts.

ACyclist

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Re: Do you regret paying off your mortgage early?
« Reply #612 on: December 05, 2017, 11:59:10 AM »
This is why I HATE investing, sometimes.,  I know so little about it.  I end up screwing myself.  I thought I was doing great buying some Vanguard, cause it was touted so highly, BAM...$75 fee.  I figured it was just the cost to play.  :(

I have a few vanguard funds in our fidelity acct.  I wil stop buying those and stick to transaction free Fidelity.  I suck...I suck...I suck.  :(

JLee

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Re: Do you regret paying off your mortgage early?
« Reply #613 on: December 05, 2017, 12:01:06 PM »
This is why I HATE investing, sometimes.,  I know so little about it.  I end up screwing myself.  I thought I was doing great buying some Vanguard, cause it was touted so highly, BAM...$75 fee.  I figured it was just the cost to play.  :(

I have a few vanguard funds in our fidelity acct.  I wil stop buying those and stick to transaction free Fidelity.  I suck...I suck...I suck.  :(

Don't beat yourself up over it - the best time to learn is now! :)

BTDretire

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Re: Do you regret paying off your mortgage early?
« Reply #614 on: December 05, 2017, 12:02:31 PM »
One item worth noting in this discussion is timing, re: interest rates. ;-)
Over the last 54 years in 25 of those years the interest rate for a mortgage was over 7.5%!
Would you want to invest money while paying a 7.5% mortgage?
Maybe! I tried to pick a bad time, '73' looks like a good candidate.
The average national  interest rate was about 7.7% and no favorable
chance to refinance at a lower rate for 30 years.
I'll use $100,000 as the mortgage amount.
So 7.7% for the term of the 30 year mortgage.
If you had invested in the S&P 500 in '73' the 30 year
return on a $100,000 turns that into $1,430,700.
Adjusted for inflation this is $348,950.
 Now to get complicated.
Assume you paid off your home and started investing the $713 dollars which would have been your mortgage payment at $7.7% on $100k, after 30 years you would have invested $257,400 and it would have grown to $1,799,000,
Adjusted for inflation adjusted value $438,780.
 Now it seems like you are $89,830 ahead by investing, using an historical mortgage rate and S&P gains for 1973  to 2003, that I thought looked like a bad time to invest rather than mortgage.
 I didn't get the answer I expected
 I was going to try to find a worse period, but I'm not sure I did everything right.
Looking here might give you incite into a worse period.
http://www.macrotrends.net/2526/sp-500-historical-annual-returns

Here are the tools I used to do my calculations.
http://mortgage-x.com/trends.htm
https://dqydj.com/sp-500-dividend-reinvestment-and-periodic-investment-calculator/
https://www.google.com/search?q=mortgage+interest+calculator&ie=utf-8&oe=utf-8&client=firefox-b-1


boarder42

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Re: Do you regret paying off your mortgage early?
« Reply #615 on: December 05, 2017, 12:55:19 PM »
This is why I HATE investing, sometimes.,  I know so little about it.  I end up screwing myself.  I thought I was doing great buying some Vanguard, cause it was touted so highly, BAM...$75 fee.  I figured it was just the cost to play.  :(

I have a few vanguard funds in our fidelity acct.  I wil stop buying those and stick to transaction free Fidelity.  I suck...I suck...I suck.  :(

we sent you to the JLCollinsNH stock series in one of your first posts here.  go read that and before you make any moves feel free to discuss in investor alley your plan before you act on it.  I sometimes forget people may not understand when we say VTSAX it could easily mean the fidelity fund equivalent if that is where you choose to keep your money.

NoraLenderbee

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Re: Do you regret paying off your mortgage early?
« Reply #616 on: December 05, 2017, 01:57:09 PM »
LOL "scientific analysis." It's a freakin poll about how people FEEL. But flog away at that grease spot.
I'm sorry Nora, but as a statistician I have to take issue with the poll, and how it could be potentially interpreted.
For starters, we must consider the pool of sampled individuals.  Given the thread topic we're heavily biased towards
i) individuals who have paid off their mortgage
ii) feelings (vs analysis) towards having a mortgage.
iii) people who would participate in such a thread to begin with (I'm guilty I guess...)
by design its not going to do a good job capturing people who decided not to pay of their mortgage.

Are you serious? The poll is specifically directed toward people who have paid off. Of course it doesn't represent those who haven't paid it off. That's not bias. It's asking a specific question of a specific group with certain characteristics.

 
Quote
IOW it's biased against capturing the 'hold-a-mortgage' camp and biased towards those that paid it off.  By inclusion of the word 'regret' we invoke emotion and (i would argue) favor responses from people who have deep feelings about a mortgage.  That can illicit two different responses.  Clearly Boarder22 hates the idea of paying off a mortgage early, but many others have a deep disdain for paying a mortgage each month (which reads in sentences like: It's just so wonderful not to pay a mortgage each month!)

I appreciate that you went through the thread and tallied up the available responses, but I don't think we can say much about how people in the broader MMM community think about paying down a mortgage vs. investing. Short of polling randomly selected members (almost impossible to do with a forum poll) it might be more informative to ask a question like; at current rates which do you think is a better financial strategy for you; accelerated mortgage payments or holding your mortgage to term.

just my 2¢

I see. You think this is a poll about whether paying a mortgage is a good idea. THAT'S NOT THE QUESTION. The question is, "If you have paid off your mortgage already, how do you feel about it?" The question is 100% directed toward those who HAVE paid off. (And it is also 100% about their emotions.)

It's as if someone asked, "Parents: Do you regret having children?" and you are complaining because they didn't include childfree/childless people's opinions about whether having children was a good financial decision.

Sheesh.



Dicey

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Re: Do you regret paying off your mortgage early?
« Reply #617 on: December 05, 2017, 02:11:26 PM »
Gosh, I chose an interesting time to excuse myself from this debate...

Does anyone else find it interesting that every single one of "slythr's" posts to date are on this thread?. "slythr" has literally not a posted a single word anywhere else on this whole forum. At this writing, "slythr" has 39 posts.

Y'all can debate and discuss whatever that means while I go back to calmly contemplating my navel, or brand-new car shopping, or....something.

Ahem...soon to be 40+ posts. Maybe even 50.
What is the opportunity cost of 5000+ posts?
I find post count correlation to be interesting, but everyone has their contemplating thing.
Nice attempt at deflection, slythr, but no dice. I did NOT compare my post count to yours, though I'm flattered you noticed. (Dicey bats her long, long walrus eyelashes prettily and stubs her flipper shyly). The point is that you aren't posting anywhere else! HUGE difference!

PizzaSteve

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Re: Do you regret paying off your mortgage early?
« Reply #618 on: December 05, 2017, 03:42:27 PM »
Mod Note: Please don't feed the trolls.

Probably best for everyone to take a break from this thread for a few days. 

Cheers!

+1

I for one am enjoying hearing from people who paid it off, both pro and con.

What I am not enjoying are the random ego-driven debates about whether return on investment assumptions are reasonable or whether the risks of using leverage, interest rate arbitrage, real estate as collateral, or market equities (reversion to the mean....honestly....)are properly factored into advice for those who will be making future decisions.  Lets keep that in the proper thread.   
« Last Edit: July 18, 2018, 01:48:16 PM by PizzaSteve »

desertadapted

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Re: Do you regret paying off your mortgage early?
« Reply #619 on: December 05, 2017, 06:24:12 PM »
Regret?  Yes and no.  We paid off the loan on our house in ~2013.  It felt great at the time.  We were skittish coming out of the market crash and wanted a sense of control, which paying off the house gave us.  Spending time on these boards, being convinced by B42's (ahem) commitment, and being a student of the obvious, I'm aware that had I put all of the extra money into the stock market instead (we started extra payments in 2008), I'd be sitting pretty right now.  So sure, I regret it.  But my emotional experience of risk aversion means that if you offered me a home equity loan on 50% of my property value at a 3.0% rate and zero transaction costs, I wouldn't do it.  Yeah, the math indicates that I'm likely to do better investing that money over time.  But no way would I feel comfortable with the risk.  No matter how much I try, I can't unlearn the feeling of stability in the (sub-optimal) sure thing I've got in a free and clear house. 

TheWifeHalf

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Re: Do you regret paying off your mortgage early?
« Reply #620 on: December 05, 2017, 06:33:50 PM »
TheHusbandHalf and I bought our house a year before we married. In 1980 interest rates were at 12% (I believe they went a bit higher)
When they seemed to start going down, and he got a severance pay, we decided to just pay the mortgage rather than refinance, 10 years later.  That was the last thing we bought that had a monthly payment, with interest.
There were a couple of times we got car loans but only because the interest rate was 0%.

I think 1980 was similar to 2008, but maybe not? It taught us that we didn't need anything if we had to borrow money to get it.

aspiringnomad

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Re: Do you regret paying off your mortgage early?
« Reply #621 on: December 05, 2017, 07:59:40 PM »
no ragrets here.

You should get that tattoo.

Telecaster

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Re: Do you regret paying off your mortgage early?
« Reply #622 on: December 05, 2017, 08:34:13 PM »
This is why I HATE investing, sometimes.,  I know so little about it.  I end up screwing myself.  I thought I was doing great buying some Vanguard, cause it was touted so highly, BAM...$75 fee.  I figured it was just the cost to play.  :(

I have a few vanguard funds in our fidelity acct.  I wil stop buying those and stick to transaction free Fidelity.  I suck...I suck...I suck.  :(

No you don't.  Doing something wrong is how you learn to do it right.  I guarantee if you talk to 100 investors, you'll get 100 stories about mistakes.  Unless I'm one of the 100.  Then you'll get about 112 stories. 

dragoncar

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Re: Do you regret paying off your mortgage early?
« Reply #623 on: December 06, 2017, 01:35:32 AM »
Top is in


 oops wrong thread

boarder42

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Re: Do you regret paying off your mortgage early?
« Reply #624 on: December 06, 2017, 03:55:10 AM »
This is why I HATE investing, sometimes.,  I know so little about it.  I end up screwing myself.  I thought I was doing great buying some Vanguard, cause it was touted so highly, BAM...$75 fee.  I figured it was just the cost to play.  :(

I have a few vanguard funds in our fidelity acct.  I wil stop buying those and stick to transaction free Fidelity.  I suck...I suck...I suck.  :(

No you don't.  Doing something wrong is how you learn to do it right.  I guarantee if you talk to 100 investors, you'll get 100 stories about mistakes.  Unless I'm one of the 100.  Then you'll get about 112 stories.

Very true at spent 17 years as a stick picker before finding this site. That's much worse than your minor purchase snafu.

sea_saw

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Re: Do you regret paying off your mortgage early?
« Reply #625 on: December 06, 2017, 04:45:59 AM »
My parents paid off their mortgage very aggressively, in the mid 90s/early 00s. It is something they're proud of, that they got it done in about half the term.

My dad has since come to learn about passive investing, building a diverse portfolio etc (he started me on this journey!) and understands that he would have been better off investing the money this way. 

He was originally put off the idea of prioritising investments over mortgage payments by some mixed success at stock picking, and some absolutely disastrous months spent day-trading (talk about mistakes ACyclist... you've got nothing!). I think he regrets those things far more than he regrets putting all available resources towards paying off the house, but he does wish he had the knowledge then that he does now and acknowledges that they'd be a lot better off financially if they'd gone that route. However they're more than comfortable so luckily it's not a pressing issue.

My mum would say she has no regrets – at the time they were self employed with periods of high income and periods of nothing, and she'd felt that they had taken on too high a mortgage to begin with.

BTDretire

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Re: Do you regret paying off your mortgage early?
« Reply #626 on: December 06, 2017, 05:17:48 AM »

No you don't.  Doing something wrong is how you learn to do it right.  I guarantee if you talk to 100 investors, you'll get 100 stories about mistakes.  Unless I'm one of the 100.  Then you'll get about 112 stories.

Very true at spent 17 years as a stick picker before finding this site. That's much worse than your minor purchase snafu.

 Here's a chance to reminisce about old times. :-)

boarder42

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Re: Do you regret paying off your mortgage early?
« Reply #627 on: December 06, 2017, 05:38:56 AM »
4th from the right would be my pick - let me know how it turns out in `10 years.
« Last Edit: December 06, 2017, 07:05:16 AM by boarder42 »

nereo

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Re: Do you regret paying off your mortgage early?
« Reply #628 on: December 06, 2017, 06:44:58 AM »
4th from the left would be my pick - let me know how it turns out in `10 years.
WRONG!! 
The correct answer of course is that you buy bundles of sticks from a client-owned stick broker.
have you learned nothing??!!

boarder42

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Re: Do you regret paying off your mortgage early?
« Reply #629 on: December 06, 2017, 07:02:12 AM »
4th from the left would be my pick - let me know how it turns out in `10 years.
WRONG!! 
The correct answer of course is that you buy bundles of sticks from a client-owned stick broker.
have you learned nothing??!!

but the others look so much more mature and over grown.  My current analysis is showing that the market is undervalued for sticks with sharp pointy off shoots and do you see how it appears to be growing.  Its a sharpe redundancy point that if you've studied the stick market like i have you'd know this stick is way undervalued and going to outperform the other sticks over the next 10 years.  I'm quite confident it will regress to the mean.  and then we'll see who's laughing.

and sorry for anyone who acted on my first analysis i got left and right confused i meant 4th from the RIGHT.  if you hurry you can make the swap before the opening leaf drops at 830CST on the oak tree stick trading floor
« Last Edit: December 06, 2017, 07:06:39 AM by boarder42 »

AdrianC

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Re: Do you regret paying off your mortgage early?
« Reply #630 on: December 06, 2017, 07:19:11 AM »
On topic, my wife and I have mixed feelings.  We enjoy the simplification of our lives (less hassle) but acknowledge we would have more assets if we had kept or refinanced the house.  We have a lot of equity not working for us, but it is also not material to our retirement.  We were never all that fully leveraged (20%+ down payment).  I admit to using less leverage because we didnt need to be leveraged to meet our retirement goals.  I have always been 'on plan' with or without leverage to help.  We are lucky to have income that exceeded our needs to more than meet our goals.  Perhaps that is a  factor in my decision.  Leverage was not needed to make our FI plan, but I understand that it might need to be for some more ambitious plans or lower income forum members.   For us it wasnt, so the decision wasnt a hugely passionate one for us.   I just eventually cut a check because I was tired of the loan (which at the time was small relative to our overall portfolio, less than 5%).  Why would i both be lending money via a percentage in bonds and borrowing money via a mortgage?  The marginal impact eventually wasnt enough to matter, though earlier in our career we benefited from the consistent commitment to stock investing for a long period.   We did have more to invest due to holding debt.

+1

This is us, too.

No regrets. We've reached our financial goals. No need or desire to bother with a mortgage, so we don't.

boarder42

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Re: Do you regret paying off your mortgage early?
« Reply #631 on: December 06, 2017, 07:24:24 AM »
On topic, my wife and I have mixed feelings.  We enjoy the simplification of our lives (less hassle) but acknowledge we would have more assets if we had kept or refinanced the house.  We have a lot of equity not working for us, but it is also not material to our retirement.  We were never all that fully leveraged (20%+ down payment).  I admit to using less leverage because we didnt need to be leveraged to meet our retirement goals.  I have always been 'on plan' with or without leverage to help.  We are lucky to have income that exceeded our needs to more than meet our goals.  Perhaps that is a  factor in my decision.  Leverage was not needed to make our FI plan, but I understand that it might need to be for some more ambitious plans or lower income forum members.   For us it wasnt, so the decision wasnt a hugely passionate one for us.   I just eventually cut a check because I was tired of the loan (which at the time was small relative to our overall portfolio, less than 5%).  Why would i both be lending money via a percentage in bonds and borrowing money via a mortgage?  The marginal impact eventually wasnt enough to matter, though earlier in our career we benefited from the consistent commitment to stock investing for a long period.   We did have more to invest due to holding debt.

+1

This is us, too.

No regrets. We've reached our financial goals. No need or desire to bother with a mortgage, so we don't.

so dont both of you think you should be promoting keeping a mortgage to all of the other peoples around here and that it would be a benefit to the community as a whole.  I mean once you've made FI what you do with your money isnt really helpful to those who are not and could greatly benefit from advice that you infact followed.  This is why in my mind regardless of the choice that people personally made and whether they regret it or not is detrimental to a FIRE community as a whole b/c it doesnt convey the real message that needs to be conveyed.  Similar to starting a thread about "who bought a tesla model S and do you regret it" - if your answer is i have more money than i know what to do with and I'm FIRE so i bought myself a toy - no regrets here - this shouldnt be a case to influence others who did

to modify your statement

No regrets. We've reached our financial goals. No need or desire to bother with a gas pump, so we don't.

The general human psyche will not vew these two statements the same thought.  since one is spending money and the other is "saving money in an inefficient way"

powersuitrecall

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Re: Do you regret paying off your mortgage early?
« Reply #632 on: December 06, 2017, 09:59:36 AM »
On topic, my wife and I have mixed feelings.  We enjoy the simplification of our lives (less hassle) but acknowledge we would have more assets if we had kept or refinanced the house.  We have a lot of equity not working for us, but it is also not material to our retirement.  We were never all that fully leveraged (20%+ down payment).  I admit to using less leverage because we didnt need to be leveraged to meet our retirement goals.  I have always been 'on plan' with or without leverage to help.  We are lucky to have income that exceeded our needs to more than meet our goals.  Perhaps that is a  factor in my decision.  Leverage was not needed to make our FI plan, but I understand that it might need to be for some more ambitious plans or lower income forum members.   For us it wasnt, so the decision wasnt a hugely passionate one for us.   I just eventually cut a check because I was tired of the loan (which at the time was small relative to our overall portfolio, less than 5%).  Why would i both be lending money via a percentage in bonds and borrowing money via a morgage?  The marginal impact eventually wasnt enough to matter, though earlier in our career we benefited from the consistent committment to stock investing for a long period.   We did have more to invest due to holding debt.

+1 PizzaSteve.  We feel the same way.

The decision to pay off our mortgage ASAP was made when we purchased our house and the 4 years that followed.  Our "pre-FIRE-awareness" years.  Both DW and I had great jobs and early retirement was not even a consideration.  Once we realized that our money would be better served in the market, it was too late - we had paid down 75% of our principal.  Since then, we have stretched out the remaining payments and invested everything else.  Our mortgage was paid in full this year.

So yes, I do have regrets about paying it off early, but I place it in the same bucket as other regrets from my "pre-FIRE awareness" years such as our lack of spending tracking, an expensive car purchase, and having high commission mutual funds through a FA.

The question is, do I regret it enough to line up at the bank today and take another mortgage on our paid-off house?  We are on track to semi FIRE within a year, and fully within 2.  In hindsight we would be months ahead if we hadn't paid it off, but I don't see a compelling reason to change our plan right now.

MrMoneySaver

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Re: Do you regret paying off your mortgage early?
« Reply #633 on: December 06, 2017, 01:36:22 PM »
It's worth noting that we're having this discussion amid a very long bull run in the market. In fact, the MMM site and much of the current early-retirement movement developed since 2008.

How would the discussion be different if the timing and conditions were different? What if this were 2009? We're all human (I assume) and the never-pay-off-the-mortgage argument is EXTREMELY easy to make in late 2017, as is the "invest 100% in stocks!" argument.

Tunes will change when the market is down 50 percent. The math won't change, but unless you're Dr. Spock or a droid, feelings about the math will.

And please don't tell me that the depths of a recession or crash would be the perfect time to have a huge mortgage and buy up a bunch of stocks. I know that -- it's been mentioned 4,387 times. The fact is you'll have a sinking feeling in your stomach, and if you haven't been through it yet, you can't be sure what you'll do.

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Re: Do you regret paying off your mortgage early?
« Reply #634 on: December 06, 2017, 02:21:00 PM »
It's worth noting that we're having this discussion amid a very long bull run in the market. In fact, the MMM site and much of the current early-retirement movement developed since 2008.

How would the discussion be different if the timing and conditions were different? What if this were 2009? We're all human (I assume) and the never-pay-off-the-mortgage argument is EXTREMELY easy to make in late 2017, as is the "invest 100% in stocks!" argument.

Tunes will change when the market is down 50 percent. The math won't change, but unless you're Dr. Spock or a droid, feelings about the math will.

And please don't tell me that the depths of a recession or crash would be the perfect time to have a huge mortgage and buy up a bunch of stocks. I know that -- it's been mentioned 4,387 times. The fact is you'll have a sinking feeling in your stomach, and if you haven't been through it yet, you can't be sure what you'll do.

If this was 2009, mortgage rates would be 5%+.  I'm not sure what the break-over number would be, but my mortgage is 3.75%.  If it was north of 5% I'd be far more interested in paying it down.

BlueHouse

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Re: Do you regret paying off your mortgage early?
« Reply #635 on: December 06, 2017, 03:03:04 PM »
Is there any possibility that the OP could change the title of the topic to "Do you regret paying off your mortgage early AND have you actually done the math to understand the possibility of other outcomes"?   

Because this thread is way too long with a few people assuming the rest of us don't understand math. 

Scortius

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Re: Do you regret paying off your mortgage early?
« Reply #636 on: December 06, 2017, 03:23:10 PM »
It's worth noting that we're having this discussion amid a very long bull run in the market. In fact, the MMM site and much of the current early-retirement movement developed since 2008.

How would the discussion be different if the timing and conditions were different? What if this were 2009? We're all human (I assume) and the never-pay-off-the-mortgage argument is EXTREMELY easy to make in late 2017, as is the "invest 100% in stocks!" argument.

Tunes will change when the market is down 50 percent. The math won't change, but unless you're Dr. Spock or a droid, feelings about the math will.

And please don't tell me that the depths of a recession or crash would be the perfect time to have a huge mortgage and buy up a bunch of stocks. I know that -- it's been mentioned 4,387 times. The fact is you'll have a sinking feeling in your stomach, and if you haven't been through it yet, you can't be sure what you'll do.

Well, you answered your own question then.  You can't ask a question and then tell people not to give you the answer because you don't want to hear it.

MrMoneySaver

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Re: Do you regret paying off your mortgage early?
« Reply #637 on: December 06, 2017, 04:02:55 PM »
Quote
You can't ask a question and then tell people not to give you the answer because you don't want to hear it.

Those were rhetorical. I'll be sure to include a disclaimer next time.

boarder42

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Re: Do you regret paying off your mortgage early?
« Reply #638 on: December 06, 2017, 04:06:40 PM »
Is there any possibility that the OP could change the title of the topic to "Do you regret paying off your mortgage early AND have you actually done the math to understand the possibility of other outcomes"?   

Because this thread is way too long with a few people assuming the rest of us don't understand math.

Clearly you didn't read anything.

dougules

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Re: Do you regret paying off your mortgage early?
« Reply #639 on: December 06, 2017, 04:09:47 PM »
Not. One. Bit.

Best birthday present to my husband ever. 

NoraLenderbee

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Re: Do you regret paying off your mortgage early?
« Reply #640 on: December 06, 2017, 09:47:30 PM »
Number of no-regrets votes: +1
Number of new posts insisting that carrying a mortgage is higher ROI and completely missing the point of the question: +42,000 (in progress)

dragoncar

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Re: Do you regret paying off your mortgage early?
« Reply #641 on: December 07, 2017, 01:34:48 AM »
Not. One. Bit.

Best birthday present to my husband ever.

Hey my bday is coming up.  Just sayin

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Re: Do you regret paying off your mortgage early?
« Reply #642 on: December 07, 2017, 02:38:44 AM »
It's worth noting that we're having this discussion amid a very long bull run in the market. In fact, the MMM site and much of the current early-retirement movement developed since 2008.

How would the discussion be different if the timing and conditions were different? What if this were 2009? We're all human (I assume) and the never-pay-off-the-mortgage argument is EXTREMELY easy to make in late 2017, as is the "invest 100% in stocks!" argument.

Tunes will change when the market is down 50 percent. The math won't change, but unless you're Dr. Spock or a droid, feelings about the math will.

And please don't tell me that the depths of a recession or crash would be the perfect time to have a huge mortgage and buy up a bunch of stocks. I know that -- it's been mentioned 4,387 times. The fact is you'll have a sinking feeling in your stomach, and if you haven't been through it yet, you can't be sure what you'll do.

Probably the wisest comment I have read in this thread in a while!  Everything in moderation!

boarder42

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Re: Do you regret paying off your mortgage early?
« Reply #643 on: December 07, 2017, 03:54:56 AM »
It's worth noting that we're having this discussion amid a very long bull run in the market. In fact, the MMM site and much of the current early-retirement movement developed since 2008.

How would the discussion be different if the timing and conditions were different? What if this were 2009? We're all human (I assume) and the never-pay-off-the-mortgage argument is EXTREMELY easy to make in late 2017, as is the "invest 100% in stocks!" argument.

Tunes will change when the market is down 50 percent. The math won't change, but unless you're Dr. Spock or a droid, feelings about the math will.

And please don't tell me that the depths of a recession or crash would be the perfect time to have a huge mortgage and buy up a bunch of stocks. I know that -- it's been mentioned 4,387 times. The fact is you'll have a sinking feeling in your stomach, and if you haven't been through it yet, you can't be sure what you'll do.

Probably the wisest comment I have read in this thread in a while!  Everything in moderation!

This is one reason the forum exists. So in the depths of that market we can all be a support group for each other to help everyone stay strong. 

farmecologist

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Re: Do you regret paying off your mortgage early?
« Reply #644 on: December 07, 2017, 08:54:12 AM »
It's worth noting that we're having this discussion amid a very long bull run in the market. In fact, the MMM site and much of the current early-retirement movement developed since 2008.

How would the discussion be different if the timing and conditions were different? What if this were 2009? We're all human (I assume) and the never-pay-off-the-mortgage argument is EXTREMELY easy to make in late 2017, as is the "invest 100% in stocks!" argument.

Tunes will change when the market is down 50 percent. The math won't change, but unless you're Dr. Spock or a droid, feelings about the math will.

And please don't tell me that the depths of a recession or crash would be the perfect time to have a huge mortgage and buy up a bunch of stocks. I know that -- it's been mentioned 4,387 times. The fact is you'll have a sinking feeling in your stomach, and if you haven't been through it yet, you can't be sure what you'll do.

Probably the wisest comment I have read in this thread in a while!  Everything in moderation!

Yep, I have made this comment many times in various threads and was surprised at the negative reaction.  As an 'old timer' that has been thru it, I can guarantee that many will change their current sentiment very fast if another 'crash' happens.  I'm a bit afraid that there are many younger folks here who haven't been through a major upheaval in the markets and will be heartbroken when/if it happens.  I have seen very strong people get crushed and pull money out of the markets at exactly the wrong time...ALL due to emotion ( not math ).  The psychology of a market crash is not to be taken lightly...regardless of what people say.


« Last Edit: December 07, 2017, 08:57:43 AM by farmecologist »

nereo

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Re: Do you regret paying off your mortgage early?
« Reply #645 on: December 07, 2017, 09:29:01 AM »

Yep, I have made this comment many times in various threads and was surprised at the negative reaction.  As an 'old timer' that has been thru it, I can guarantee that many will change their current sentiment very fast if another 'crash' happens.  I'm a bit afraid that there are many younger folks here who haven't been through a major upheaval in the markets and will be heartbroken when/if it happens.  I have seen very strong people get crushed and pull money out of the markets at exactly the wrong time...ALL due to emotion ( not math ).  The psychology of a market crash is not to be taken lightly...regardless of what people say.

The fact that this forum hasn't existed long enough to go through a prolonged economic downturn is a common topic around here.  I hope during the next downturn the people here will be a bit better informed and not sell in a panic (though certainly some will).  What I worry and wonder about is whether emphasizing emotions over data is exactly the wrong approach to prevent this sort of panic behavior in the future. This emphasis on how not having a mortgage "just feels great" is tying emotions into financial decisions. Could that not make the next crash worse?  Further, haven't we established that allowing our emotions to guide financial transactions is a really bad idea?  It's the very reason why "panic" selling happens in the first place.  We would be skeptical of someone buying stock because they just "feel like it'll take off soon"- why do mortgages get a pass?

Full disclosure - I'm approaching this topic having gone through the housing crash in a very volatile real-estate sector in California. I saw a lot of people (including friends) who had put an undue emotional emphasis on their homes and mortgages suddenly find themselves without the savings to weather a layoff and plunge in home prices (and demand).  Some continued to deplete their savings to pay off their mortgage until they were left with an asset they couldn't sell and no funds to cover daily expenses.

It's great if you can manage to pay off your mortgage and have substantial savings - better cashflow + big liquid cushion. But there's real danger in prioritizing home payoff at the expense of all other savings, particularly given that a market downturn (be it equities or real-estate) can happen at any time and are largely unpredictable. I'll argue that tying your emotions to your mortgage is a bad idea. I hope people approach their finances and future financial security with a bit more objectivity.

MrMoneySaver

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Re: Do you regret paying off your mortgage early?
« Reply #646 on: December 07, 2017, 09:47:15 AM »
Quote
The fact that this forum hasn't existed long enough to go through a prolonged economic downturn is a common topic around here.

This forum exists at a particular point in history, in a certain context, and that is not a coincidence. To understand the forum, the opinions expressed within, and the early-retirement movement itself, it's absolutely crucial to consider that.

Quote
haven't we established that allowing our emotions to guide financial transactions is a really bad idea?

No. We want to have a lot of money and retire early because that will make us "happy" (or content, or fulfilled, or less stressed), right? Those are emotions; they are guiding our financial decisions. They are the goal -- and pure maximization of dollars is not, or shouldn't be. If it was, you should just work forever and keep making money.

Quote
there's real danger in prioritizing home payoff at the expense of all other savings

I haven't seen people advocate that.

BFGirl

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Re: Do you regret paying off your mortgage early?
« Reply #647 on: December 07, 2017, 09:53:11 AM »

Yep, I have made this comment many times in various threads and was surprised at the negative reaction.  As an 'old timer' that has been thru it, I can guarantee that many will change their current sentiment very fast if another 'crash' happens.  I'm a bit afraid that there are many younger folks here who haven't been through a major upheaval in the markets and will be heartbroken when/if it happens.  I have seen very strong people get crushed and pull money out of the markets at exactly the wrong time...ALL due to emotion ( not math ).  The psychology of a market crash is not to be taken lightly...regardless of what people say.

The fact that this forum hasn't existed long enough to go through a prolonged economic downturn is a common topic around here.  I hope during the next downturn the people here will be a bit better informed and not sell in a panic (though certainly some will).  What I worry and wonder about is whether emphasizing emotions over data is exactly the wrong approach to prevent this sort of panic behavior in the future. This emphasis on how not having a mortgage "just feels great" is tying emotions into financial decisions. Could that not make the next crash worse?  Further, haven't we established that allowing our emotions to guide financial transactions is a really bad idea?  It's the very reason why "panic" selling happens in the first place.  We would be skeptical of someone buying stock because they just "feel like it'll take off soon"- why do mortgages get a pass?

Full disclosure - I'm approaching this topic having gone through the housing crash in a very volatile real-estate sector in California. I saw a lot of people (including friends) who had put an undue emotional emphasis on their homes and mortgages suddenly find themselves without the savings to weather a layoff and plunge in home prices (and demand).  Some continued to deplete their savings to pay off their mortgage until they were left with an asset they couldn't sell and no funds to cover daily expenses.

It's great if you can manage to pay off your mortgage and have substantial savings - better cashflow + big liquid cushion. But there's real danger in prioritizing home payoff at the expense of all other savings, particularly given that a market downturn (be it equities or real-estate) can happen at any time and are largely unpredictable. I'll argue that tying your emotions to your mortgage is a bad idea. I hope people approach their finances and future financial security with a bit more objectivity.
d

While I disagree with the blanket premise that math should rule and potential optimization should be the only concern,  I do think it is a mistake to pay more towards mortgage payments if there isn't sufficient liquidity to weather a downturn.  I feel it is best to save the funds you'd be paying towards the mortgage in the investment vehicle of your choice and when the total balance of the payoff has been saved, then make a decision whether or not to pay off the mortgage.

I paid for my house with cash and have no regrets.  I also have a fairly conservative allocation because I will have a small pension and am mainly in a preservation mode with my investments (and keeping up with inflation) rather than the accumulation phase.  I plan to retire in 3 years.

nereo

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Re: Do you regret paying off your mortgage early?
« Reply #648 on: December 07, 2017, 11:32:14 AM »
Quote
there's real danger in prioritizing home payoff at the expense of all other savings

I haven't seen people advocate that.
Here's the one of the previous threads https://forum.mrmoneymustache.com/investor-alley/paying-off-mortgage-early-how-bad-is-it-for-your-fi-date/.  It was discussed at length there.  It also came up on another thread here (page 2), here, and here
It was also discussed several times in this thread.  Brooklynguy's post (page 1) is probably the first.  It's been reiterated several times in different 'flavors' throughout these 12+ pages.

Quote
haven't we established that allowing our emotions to guide financial transactions is a really bad idea?

No. We want to have a lot of money and retire early because that will make us "happy" (or content, or fulfilled, or less stressed), right? Those are emotions; they are guiding our financial decisions. They are the goal -- and pure maximization of dollars is not, or shouldn't be. If it was, you should just work forever and keep making money.

There's a big difference between investing to provide future happiness/less stress/more security and using emotions to guide our decisions.  Blocking out that emotional part of our brain that does irrational things which can ultimately harm us (anything from panicking during an economic downturn to stuffing ourselves with junk food) is important for long-term stability and, ultimately, happiness. I'm also not talking about working forever to keep making money; approaching investing with logic gives us the opportunity to work less and avoid potential pitfalls.

(edited to fix links)
« Last Edit: December 07, 2017, 11:37:46 AM by nereo »

boarder42

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Re: Do you regret paying off your mortgage early?
« Reply #649 on: December 07, 2017, 11:35:51 AM »
Quote
The fact that this forum hasn't existed long enough to go through a prolonged economic downturn is a common topic around here.

This forum exists at a particular point in history, in a certain context, and that is not a coincidence. To understand the forum, the opinions expressed within, and the early-retirement movement itself, it's absolutely crucial to consider that.

Quote
haven't we established that allowing our emotions to guide financial transactions is a really bad idea?

No. We want to have a lot of money and retire early because that will make us "happy" (or content, or fulfilled, or less stressed), right? Those are emotions; they are guiding our financial decisions. They are the goal -- and pure maximization of dollars is not, or shouldn't be. If it was, you should just work forever and keep making money.

Quote
there's real danger in prioritizing home payoff at the expense of all other savings

I haven't seen people advocate that.

So every time someone joins the mortgage payoff thread do you just congratulate them and welcome them and cheer them on or do you help them understand if they should actually be making that decision. I've seen many a poster in there going balls to the wall on mortgage paydown with no regard for any other savings.  I've been banished from posting in there so would be good if those people that run a thread that could be devastingly detrimental to someones financial welfare actually assist in making sure it is the right choice for that person.  And would probably be received better coming from someone in that thread not a Dont pay off your mortgage person. 

also setting an objective of FI for whatever the case may be you can link it to emotions.  And then using math to acheive that objective and putting emotion aside to set your path as optimally as possible makes much more sense.

i stand by what Nereo's take is - the people who are most likely to pull their money out in a down turn are not those that understand and dont pay off their mortgages it is those acting on primarily emotion to paydown their mortgage over investing. 

Just because many havent lived through a downturn doesnt mean we dont understand how to go thru one and when the market is falling i damn sure wont be putting money at my mortgage i'll be buying stocks all the way to the bottom and all the way back to the top b/c thats what you do thats how its worked historically the math simply works - if the math fails as has been stated many times and the future is not like the past then paying or not paying down a mortgage will be of little concern to anyone b/c capitalism will have failed.