In tech, I have seen many get layed off at the same time the market tanks. Income fire hose is gone, market has been sliced in half, you are biting your nails sending out 1000s of resumes to get another job that will probably pay half or less then you were making. Things are looking dire. If only that mortgage was gone. If your income requirements were lower, you could qualify for a lot of subsidies, but no, you went 100% stocks and leveraged the house up. You thought you were smart, math is math. Wife leaves you, ooops that was not in the plan, 50% haircut on everything. This is just not working out, why did I listen to all these yolo investors. I should have listened to Dave Ramsey. Dammit!
I can’t tell if this is satire or not.
1) Don’t live a lifestyle that requires two working spouses. If you can’t get by on the income of the lowest earning spouse, you are in the two-income trap.
2) This is what emergency funds are for. Or you can go the route of Big ERN and use credit cards/HELOC/selling stocks to fund emergencies (obviously paying off cards before interest hits).
Plus if your wife leaves you, a paid off house is probably the last thing you want...
I get that there are scenarios where paying off the mortgage makes sense, but most people I know who prioritize paying off their mortgage don't actually understand the risks that they are increasing.
I don't think it's that the *don't* pay off your mortgage people are necessarily dogmatic (b42 is gone, he's the only one I ever saw being dogmatic), it's that we see SOOOOOO many people using nonsense logic to justify paying extra on their mortgage to feel "safer" when it is often actually putting them in a more precarious position.
Hilariously, being ultra conservative AND being ultra aggressive both favor NOT paying off the mortgage.
If you want to be as safe and flexible as possible in all lifestyle risk scenarios, then cash is king and having it tied up in a house is suboptimal. This is incidentally my personal scenario at the moment.
It starts getting a little hanky if you are over leveraged on a very expensive home relative to your income, but those of us ultra focused on flexibility wouldn't choose that option.
If you want to maximize potential returns, then not paying off the mortgage is still the best bet and we have enough mathy people here to show that.
Where paying off the mortgage works out is in a dynamic range of lifestyles that are in between maximum flexibility and maximum potential returns. Which is where most people actually live.
It's why the debate gets so nonsensical because NOT paying off the mortgage bookends all middle ground, which is why it all comes down to really looking at individual details.
It's not conservative vs aggressive, it's actually understanding how moderate you are individually and why.
Most importantly, it's understanding exactly how this decision impacts your particular life.
NOT paying off the mortgage will almost always be the best answer if you are only focusing on risk or gains, but very few of us live in such extreme ends of the spectrum, and if we do, usually only temporarily.
I am so grateful to b42 for helping me see what role my mortgage actually played in my life.
Personally, I may choose paying down my mortgage over investing in a taxable account because I don't really care about maxing returns, but I won't touch it with a ten foot pole for the next several years because I need to minimize risk until then.