Here in Canada, there is no tax deduction for mortgage interest.
This changes the math a bit for the early-payoff approach.
We paid ours, just under $200k, in 14 years, which is no great hurry. But we figured the Variable Rate deals we were getting--at one point less than 2%, and mostly in the 2-4% range--were a once in a lifetime opportunity to get the principal down. So we did that, while all the time investing as well, just slowly. Turned out it WAS a once in a lifetime deal, as rates have since gone back up.
For fairly weak-ass frugal people, we ended up mortgage free sort of fast, with no cash flow squeeze, ongoing savings and annual travel . . . on roughly the local median income.
I just don't know how so many people up here manage to spend all of their $100k plus salaries, and still require working to 65 or older. (Oh, yes I do: cars and trucks. Big TVs. Big data plans. Golf and ski fees.)
I hope this isn't too far off topic, but personally I find that the touted tax advantages for most Americans is overstated. Let's say you have, in a given year, $10,000 of mortgage interest, and you are in a 30% tax bracket, so you are paying $10,000 in order to save $3000 on your taxes. You have a net loss of $7000. I am left scratching my head how people think this is a good idea.
Ok, I know i have defended paying off the mortgage, but a head scratching comment about why investing instead might be a good idea is an odd thing to say. Perhaps because over time you have uses for the money which earn more than $7000 on average.
Seems pretty obvious both why paying off debt is attractive to some and why holding debt to invest more is attractive to some. Why this there this need to be so critical of one option or another? ..Seems odd to me. The tax benefits are what they are. Include them in you own personal analysis assumptions and decide if paying off the mortgage is for you.
Some prefer a guaranteed return, some taking a risk that can pay off better long term.
Not sure why you seem to take such personal offense to a comment that was not even replying to you, personally, but sincerest apologies for touching a nerve. Not my intention. As you said, there are risks and benefits either way, and we can definitely agree to disagree. Cheers, mate!
My only point was that tax benefits are part of the calculation for the cost of your debt, and accordingly part of the calculation one should make in deciding if paying down debt is a good idea. Not sure where you got the idea that I took any personal offense.
Why that should leave one scratching ones head puzzled me. It was as if you were saying possible tax benefits should not be considered. If you meant something different, I am sorry if I missunderstood.
My goal is for people to get good, analytical frameworks for assessing their life decisions.
Ok, we are on the same page then. I am here to learn and share my experiences and opinions. I never mind disagreeing with anyone; in fact, I welcome all thoughts, as it just allows me to learn more. From the tone of your post, I was under the impression you took offense to my comment about scratching my head. I stand corrected.
I completely agree with you that it's a matter of personal preference, after all is said and done in terms of the numbers, which admittedly could be different for you than for me. My personal preference is to be 100% debt-free, but I do understand why others are comfortable carrying some level of debt in the form of a home mortgage. To each, his own. I only wanted to make the point that the tax "savings" have a cost, which in my personal experience people do not adequately account for. If you know and understand those costs, then you can make the best informed decision for your personal situation.
