It will be like have someone else pay your mortgage payment, plus slip a couple benjies in your pocket each month.

Option 1: expenses of 2k/mo and get $5-600 cash flow from larger portfolio + you get the potential of capital gains + have a bunch of money liquid

Option 2: expenses of 1500/mo. No extra cash flow. No potential gains. No liquid money.

Show me the math at how $2-500 of investments per month will produce $5-6k cash flow per month over a period of 10 years, because the math I've done doesn't add up with that one. Remember also that at this level of investments it is likely to be tied up in a 401K.

Also, why does option 2 assume that we spend the entire nest egg on paying off the mortgage?

Uhhh... not sure you're following this thread at all. We're discussing paying off the mortgage versus investing, over a short time period to semi ER.

So it's not 5-6k/mo cash flow, it's 100,000 (the amount you could have paid to the mortgage) to produce $500-600 per month. Scenario one you still carry a mortgage of $500/mo, so your expenses are 500 higher. Scenario 2 you have no mortgage, so lower expenses. Either way the rest of your nest egg and what it kicks off is irrelevant to this comparison. So option 2 assumes you spend the whole amount necessary to pay off the mortgage.

Are you following now?

If someone can post me a link to somewhere that will earn 5.5% guaranteed with no risk, my mind is changed and I'm all over it. Go on, I'll wait. :)

Oh, except that in order for $80K to generate $7600 per year to cover my mortgage, I'll need closer to 10% when you factor in taxes and fees. Ok, go.

......

:) Okay, now I'm kind of trolling.

Well your mortgage could easily be refi'd to be the lower amount. In essence you can't compare what the payment is from a higher amount to now, when you have the refi possibility. You compare what the payment would be on a 100k (or 80k or whatever) mortgage versus investing that same money, what return you'd need. It's nowhere near 10%. Likely not even 5. And yes, I understand you want it on a shorter timeframe, but you seem to think total return is the only possible investment option, since you keep talking about worrying about it not being there. You may need to invest in something more stable, or go the dividend or real estate route, or whatever.

In fact, let's use that as an example.

Let's say you have expenses of 2000/mo (500 housing, 1500 other). You can pay off the house over the next 5 years with extra payments, which will take ~100k. Or you could, each time you get 25k, invest in a property at 25% down worth 100k each. Whatever portfolio you have outside this consideration is basically irrelevant to this comparison. We'll say it's $X and you just leave it alone to let it grow. You want to go part time in 5 years such that you'll only be earning $1500. If you have the mortgage and are spending $2k, you can't afford to go full time, unless you pay off that mortgage or invest such that you get > 500/mo.

Scenario 1: Pay down mortgage. End of year 5, you have 1500 in expenses, your $X portfolio, and a part time job earning 1500. All of the 100k equity is trapped in the house, and if an emergency comes up, hope that $X portfolio can be tapped (though it may have penalties)

Scenario 2: Buy a house each year (except year 1, when still saving, so years 2-5) to total 4 houses. Spent 100k, equity in them is 100k. Mortgage of 75k on each, 5% interest rate. Rent each for 1100. Gross monthly expenses ~550, monthly payment 400. Cash flow $150 each x 4 houses = $600. That pays your mortgage plus gives you an extra $100/month in your pocket plus gives you the potential for four houses appreciating, rents adjust upward with inflation, and they're paying off the mortgages for you (they pay ~1100/house per year towards the principal, so you're gaining ~4500 per year in equity).

Before someone starts with the "what if they aren't rented," I added in a large margin (50% rule, 550/mo) to cover vacancies. And that's paying someone else to manage them. You can gain an extra ~400/mo if you manage them. In a typical month where they are all rented and you manage them and there is no maintenance, you bring in a gross of 4400, have mortgages on those 4 for ~1600 and keep 2800/mo. That covers your mortgage payment of 500, puts 100 in your pocket, and saves $2200/month for the vacant time times/repairs/paying for management/etc! That $2200 surplus grows your $X portfolio until it needs to be tapped.

That's one scenario. It's not liquid, but you can tap the equity same as with your house. It's providing much more gains (5k/year, and growing each year.. in 30 years you'll own 4 extra houses, and how secure will your retirement seem then), versus the paid off home providing no gains.

Dividend investing is another scenario.

There are mathematical scenarios that are safer than a total return / high stock percentage that very well may put more money in your pocket and let you semi-RE sooner than you would paying off the mortgage.