The Money Mustache Community
General Discussion => Share Your Badassity => Topic started by: minimalistgamer on January 28, 2017, 12:56:50 PM
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Greeting everyone,
As of Friday, January 27, 2017, 9:45 PM the mortgage is gone! I wired the funds to the bank and it got applied to my account on the same day!
It all feels weird...I don't feel any less secure because I spent $125,000 in one day. I was panicking about it a few days ago, but now, I feel like a huge burden is lifted off. I am going to work on a savings plan soon, but for now...I am just going to play some video games, and relax. I will also go out for a walk in the evening...and think about the future. I want to come up with new goals...
Either way, I detailed everything in this blog post, in case anyone feels like reading it -
https://minimalistgamer.blogspot.com/2017/01/paid-off-our-mortgage.html
Thanks everyone. I appreciate your insights.
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Awesome!
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Congratulations!
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Congratulations! It is just the best feeling ever so enjoy. 😀
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Congratulations. As long as you invest the monthly payment now you'll really start to see some future gains :)
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Thank you so much everyone. It was an awesome feeling. I was super nervous about this...I don't know why...but now it feels great.
Congratulations. As long as you invest the monthly payment now you'll really start to see some future gains :)
I definitely intend to do so. I am going to work on a proper savings plans for my paycheck. If we can get away by living on my wife's paycheck, then I intend to use 100% of my paycheck for saving, investing and property taxes. Considering that I have to pay for property taxes and home insurance from now on by myself, I need to budget for these things right.
The most amazing thing is, I have maximized my retirement accounts and I am going to have plenty left over! I can't believe my luck :)
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Congratulations.
I have chosen not to pay mine due to my interest rate being very low - 2.625%. We only have 56K left on our mortgage. Lets hope that investment returns will be more than 2.625% next few years. :-)
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Congrats! Awesome job!
I've looked into doing this but I save too much by funding tax advantaged accounts for it to make sense. An instant 25% return is just too good to pass up for us. If we get to the point where we have savings beyond pre-tax accounts it will definitely become an option to consider.
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Congratulations.
I have chosen not to pay mine due to my interest rate being very low - 2.625%. We only have 56K left on our mortgage. Lets hope that investment returns will be more than 2.625% next few years. :-)
Congratulations to you DGF! Smart move!
I am not going to follow OP's link, because I'm afraid he's going to show that he's paid off his mortgage at the expense of retirement saving and other investing.
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Congratulations.
I have chosen not to pay mine due to my interest rate being very low - 2.625%. We only have 56K left on our mortgage. Lets hope that investment returns will be more than 2.625% next few years. :-)
Congratulations to you DGF! Smart move!
I am not going to follow OP's link, because I'm afraid he's going to show that he's paid off his mortgage at the expense of retirement saving and other investing.
Let's hope that is not the case. :)
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I am going to work on a savings plan soon, but for now...I am just going to play some video games, and relax. I will also go out for a walk in the evening...and think about the future. I want to come up with new goals.
This part struck fear in my heart.
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I am going to work on a savings plan soon, but for now...I am just going to play some video games, and relax. I will also go out for a walk in the evening...and think about the future. I want to come up with new goals.
This part struck fear in my heart.
This was from his post: 95%?:
I intend to put a savings plan in place, and hopefully save close to 95% of my pay check, and I would imagine that it will grow over the course of the next few years.
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Thanks everyone.
I am not going to follow OP's link, because I'm afraid he's going to show that he's paid off his mortgage at the expense of retirement saving and other investing.
Diane, I did not pay off the house at the expense of retirement, but it did come at the expense of after tax investing. The money I used to pay off the house came out of a CD (which I withdrew early, and paid some penalty) and my savings account. I did not take any money of retirement or taxable investment accounts.
This is my current net worth after the mortgage is paid off -
(https://1.bp.blogspot.com/-MeLUnxaPVi0/WIzqWzStGgI/AAAAAAAAALA/-GWBWmKPwq4S6LIwJgPkRAMUxIozRzZPQCLcB/s640/net_worth.png)
I am going to work on a savings plan soon, but for now...I am just going to play some video games, and relax. I will also go out for a walk in the evening...and think about the future. I want to come up with new goals.
This part struck fear in my heart.
Would you mind telling me why? Did I make a mistake here...? I hope not!
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Because "I'm going to work on a savings plan" sounds like you aren't committed to saving and investing the mortgage payment. "I have a plan, starting with the February 1st payment, and the plan is X" is much more convincing.
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Nice 'stache! I'm pretty jealous - I would love to have an 'overseas' account.
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Thank you for your kind words. I appreciate it.
Because "I'm going to work on a savings plan" sounds like you aren't committed to saving and investing the mortgage payment. "I have a plan, starting with the February 1st payment, and the plan is X" is much more convincing.
You are right. I do not have a savings plan specifically laid out at the moment. I did up until the beginning of this month, that got thrown off because I decided to pay off the mortgage. Now, I don't have a solid plan for my income. I mean, I am certainly not going to go on a spending spree. That's just not me or my wife. We are very frugal people. If anything, we have a lack of spending problem, because all we have done over the last couple of years is to go to work, come home, play games and work out. That's pretty much.
I want to do more now. I am just not sure what that's going to be and how much I am going to allocate towards it. I need to think of a new goal, and then I want to automate the savings...I am spending far too much time managing money, and I want to quit doing that.
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This was from his post: 95%?:
I intend to put a savings plan in place, and hopefully save close to 95% of my pay check, and I would imagine that it will grow over the course of the next few years.
So, my wife earns around $1100 per month. If we can live within $1000, I can save 100% of my paycheck. I am not sure if that's possible. We are going to try in February. I am hoping there won't be emergencies!
I have been struggling to come up with a good savings plan though...I am not sure how to go about it...which is weird considering I am decent at creating a budget etc. I am not entirely sure what I want out of life at the moment.
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Nothing wrong with steady investment into the markets. In your shoes, I would use some of that mortgage payment to beef up that brokerage account. That assumes you are fully funding all your retirement accounts. I would fund those first.
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I did something similar a few years ago (circa 2013) but this was before I found this forum and was on the Dave Ramsey bandwagon. I made a lump sum of $80k or so and my mortgage rate was around 3% which isn't that high. If I would of invested the $80k in an index fund it would be worth over $100k today so an increase of around $20k in my net worth. Oh well hindsight is 20/20 and not having any debts is a good feeling to have.
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I did something similar a few years ago (circa 2013) but this was before I found this forum and was on the Dave Ramsey bandwagon. I made a lump sum of $80k or so and my mortgage rate was around 3% which isn't that high. If I would of invested the $80k in an index fund it would be worth over $100k today so an increase of around $20k in my net worth. Oh well hindsight is 20/20 and not having any debts is a good feeling to have.
While Another Reader is right, and makes a vital point, my primary concern was exactly what Going Concern just explained. As interest rates rise (and how can they not?) People who kept their low-interest mortgages and socked money into higher yielding investments are going to be the tortoises who win the race.
Racing to kill the mortgage at the expense of long term saving and investments means that you will lose out on years of compound interest. When you are as old as I am and your investments have grown to where they earn more than I ever did in my working years, I am infinitely glad I listened to the seemingly crazy idea not to pay off my mortgage early. When I start drawing down my investments, I'll be living on money that was basically free, i.e. the compound interest. All I had to do to get it was save early, invest well and wait. Amaze balls! Feels so much better than not having a mortgage. (I know. We paid cash for this clown house, after we reached FI. Now I worry about taxes and utilities. Well, not worry exactly, ' cause FI, maybe cringe-but-I-know-we-can-afford-it is a better way to say it. It is always something. It never goes away, no matter how much you hope it will. But having a shit-ton of money in investments really does help us sleep well at night.)
To Going Concern: Are you sure your returns weren't higher than that? Some quick google-fu shows that if you had invested in the S&P 500 Index in June* of 2013 and reinvested the dividends, your account would have grown by nearly half (49.816%). Your mortgage would still be at...3%. That's what I'm talking about!
*Didn't know your exact month GC, so chose June just because it's mid-year.
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(https://1.bp.blogspot.com/-MeLUnxaPVi0/WIzqWzStGgI/AAAAAAAAALA/-GWBWmKPwq4S6LIwJgPkRAMUxIozRzZPQCLcB/s640/net_worth.png)
I personally would not have dumped so much net into one hard to 'move' asset; Even with a net of 3x my home value I don't want to go that far in on one asset. Hopefully you have done your market research well. But, even though I disagree with it I'd say there are far worse things you could have done with that chunk of change =) Having no mortgage (or rent) would be fantastic, I can't deny that.
Just make sure your savings/investment plan is aims you in a direction of being better diversified. And make sure you understand what real diversification is. Right now you are what, 70%+ into real estate?
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Badass, congratulations
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This was from his post: 95%?:
I intend to put a savings plan in place, and hopefully save close to 95% of my pay check, and I would imagine that it will grow over the course of the next few years.
So, my wife earns around $1100 per month. If we can live within $1000, I can save 100% of my paycheck. I am not sure if that's possible. We are going to try in February. I am hoping there won't be emergencies!
I have been struggling to come up with a good savings plan though...I am not sure how to go about it...which is weird considering I am decent at creating a budget etc. I am not entirely sure what I want out of life at the moment.
Good luck with this! There's a lot of right answers to a savings plan. Sounds like you and your wife are on the roght track, and will do well no matter what you choose to do with your savings.
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I did something similar a few years ago (circa 2013) but this was before I found this forum and was on the Dave Ramsey bandwagon. I made a lump sum of $80k or so and my mortgage rate was around 3% which isn't that high. If I would of invested the $80k in an index fund it would be worth over $100k today so an increase of around $20k in my net worth. Oh well hindsight is 20/20 and not having any debts is a good feeling to have.
While Another Reader is right, and makes a vital point, my primary concern was exactly what Going Concern just explained. As interest rates rise (and how can they not?) People who kept their low-interest mortgages and socked money into higher yielding investments are going to be the tortoises who win the race.
Racing to kill the mortgage at the expense of long term saving and investments means that you will lose out on years of compound interest. When you are as old as I am and your investments have grown to where they earn more than I ever did in my working years, I am infinitely glad I listened to the seemingly crazy idea not to pay off my mortgage early. When I start drawing down my investments, I'll be living on money that was basically free, i.e. the compound interest. All I had to do to get it was save early, invest well and wait. Amaze balls! Feels so much better than not having a mortgage. (I know. We paid cash for this clown house, after we reached FI. Now I worry about taxes and utilities. Well, not worry exactly, ' cause FI, maybe cringe-but-I-know-we-can-afford-it is a better way to say it. It is always something. It never goes away, no matter how much you hope it will. But having a shit-ton of money in investments really does help us sleep well at night.)
To Going Concern: Are you sure your returns weren't higher than that? Some quick google-fu shows that if you had invested in the S&P 500 Index in June* of 2013 and reinvested the dividends, your account would have grown by nearly half (49.816%). Your mortgage would still be at...3%. That's what I'm talking about!
*Didn't know your exact month GC, so chose June just because it's mid-year.
I was using a quick calculation using VTSAX performance schedule so my calculations could be wrong and I could of potentially lost more. Today I have more of my assets held in both 401ks (mainly equities) and some investing on the side (again mainly equities) but I still find myself still acting conservatively and have trouble trusting the markets even though I understand the common sentiment is to not time the market.
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Congrats!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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Congratulations!!!!! Don't second guess yourself. Go forth and save, save, save!
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I did something similar a few years ago (circa 2013) but this was before I found this forum and was on the Dave Ramsey bandwagon. I made a lump sum of $80k or so and my mortgage rate was around 3% which isn't that high. If I would of invested the $80k in an index fund it would be worth over $100k today so an increase of around $20k in my net worth. Oh well hindsight is 20/20 and not having any debts is a good feeling to have.
While Another Reader is right, and makes a vital point, my primary concern was exactly what Going Concern just explained. As interest rates rise (and how can they not?) People who kept their low-interest mortgages and socked money into higher yielding investments are going to be the tortoises who win the race.
Racing to kill the mortgage at the expense of long term saving and investments means that you will lose out on years of compound interest. When you are as old as I am and your investments have grown to where they earn more than I ever did in my working years, I am infinitely glad I listened to the seemingly crazy idea not to pay off my mortgage early. When I start drawing down my investments, I'll be living on money that was basically free, i.e. the compound interest. All I had to do to get it was save early, invest well and wait. Amaze balls! Feels so much better than not having a mortgage. (I know. We paid cash for this clown house, after we reached FI. Now I worry about taxes and utilities. Well, not worry exactly, ' cause FI, maybe cringe-but-I-know-we-can-afford-it is a better way to say it. It is always something. It never goes away, no matter how much you hope it will. But having a shit-ton of money in investments really does help us sleep well at night.)
To Going Concern: Are you sure your returns weren't higher than that? Some quick google-fu shows that if you had invested in the S&P 500 Index in June* of 2013 and reinvested the dividends, your account would have grown by nearly half (49.816%). Your mortgage would still be at...3%. That's what I'm talking about!
*Didn't know your exact month GC, so chose June just because it's mid-year.
Optimization is not always about maximizing return. A lot depends on your personality. If you can't sleep at night then paying the mortgage off may have intangible benefits that out weigh the drag on returns.
In my case, being just down the road from Diane C, in the middle of earthquake and fire country, I took out the maximum conforming mortgage in 2012 at the bottom of the market (strictly coincidence). I will happily pay the 30 year, 3.125 percent mortgage that may outlive me. The excess funds were used to pay off higher rate rental properties and the interest is enough to write off as personal mortgage interest and an expense to the rentals.
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Nothing wrong with steady investment into the markets. In your shoes, I would use some of that mortgage payment to beef up that brokerage account. That assumes you are fully funding all your retirement accounts. I would fund those first.
Absolutely. Retirement accounts are fully funded. I maximized my Roth IRA in early January, and I am contributing 22% in my 401k. I am not sure if its fully funded, but I know its very close. I am just leaving myself some wiggle room.
I personally would not have dumped so much net into one hard to 'move' asset; Even with a net of 3x my home value I don't want to go that far in on one asset. Hopefully you have done your market research well. But, even though I disagree with it I'd say there are far worse things you could have done with that chunk of change =) Having no mortgage (or rent) would be fantastic, I can't deny that.
Just make sure your savings/investment plan is aims you in a direction of being better diversified. And make sure you understand what real diversification is. Right now you are what, 70%+ into real estate?
I understand what you and Diane C are saying. I don't disagree with it at all, but as I said in my blog, I did not have the courage to dump 100k into the stock market. It was a tough decision. I wrestled with it for weeks and I finally decided to go for it. I am still working on a savings plan for my paycheck. In February, we are going to attempt to live under $1000. If we can make it, then I know we can live on one paycheck. Of course, the first thing I am going to do is deposit $1200 into my taxable investment account. I will look towards bumping up the contributions in March.
If you all have any suggestions, please feel free to offer them. I would really appreciate it.
Thanks everyone for your kind words.
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Nothing wrong with steady investment into the markets. In your shoes, I would use some of that mortgage payment to beef up that brokerage account. That assumes you are fully funding all your retirement accounts. I would fund those first.
Absolutely. Retirement accounts are fully funded. I maximized my Roth IRA in early January, and I am contributing 22% in my 401k. I am not sure if its fully funded, but I know its very close. I am just leaving myself some wiggle room.
I personally would not have dumped so much net into one hard to 'move' asset; Even with a net of 3x my home value I don't want to go that far in on one asset. Hopefully you have done your market research well. But, even though I disagree with it I'd say there are far worse things you could have done with that chunk of change =) Having no mortgage (or rent) would be fantastic, I can't deny that.
Just make sure your savings/investment plan is aims you in a direction of being better diversified. And make sure you understand what real diversification is. Right now you are what, 70%+ into real estate?
I understand what you and Diane C are saying. I don't disagree with it at all, but as I said in my blog, I did not have the courage to dump 100k into the stock market. It was a tough decision. I wrestled with it for weeks and I finally decided to go for it. I am still working on a savings plan for my paycheck. In February, we are going to attempt to live under $1000. If we can make it, then I know we can live on one paycheck. Of course, the first thing I am going to do is deposit $1200 into my taxable investment account. I will look towards bumping up the contributions in March.
If you all have any suggestions, please feel free to offer them. I would really appreciate it.
Thanks everyone for your kind words.
Yep, I wouldn't have suggested putting all your money in the stock market either. Diversification is how to protect against uncertainty, and currently it is very uncertain times. Your diversification mix really is about your personal risk/reward tolerance. Right now I'd say you are extremely exposed due to how heavy you are into your home. However, I'm not a financial guru, so I have to leave you with the only decent advice I can give, which is to educate yourself about diversification and/or seek the advice of actual financial gurus on the subject =)
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(https://1.bp.blogspot.com/-MeLUnxaPVi0/WIzqWzStGgI/AAAAAAAAALA/-GWBWmKPwq4S6LIwJgPkRAMUxIozRzZPQCLcB/s640/net_worth.png)
So far, you have saved $49K in retirement accounts. Not sure how long you have been saving, every year you should be able to dump $47K into retirement accounts in order to max it (dual incomes with 2 401ks and 2 IRAs). If you do not max it any year, that tax advantaged space is gone.
While I agree that there is no point second guessing, try to maximize these accounts in the future. If you are young, there is a lot of time.
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Congrats, that must feel great!
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That is so awesome, congrats.
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Congrats! Awesome job!
I've looked into doing this but I save too much by funding tax advantaged accounts for it to make sense. An instant 25% return is just too good to pass up for us. If we get to the point where we have savings beyond pre-tax accounts it will definitely become an option to consider.
Unless you think you can get at all your pre-tax money without paying taxes, I really wouldn't mention that 25% number - it doesn't paint the complete picture. If you can stay in the 15% tax bracket when you retire, then sure it will probably equate to 10% savings. That of course also assumes that when you go to get the money, you will only have to pay 15%.
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The ability to pay off a mortgage is great, but the act of doing so isn't necessarily applause worthy. It really is a zero sum game for most here....on day 0 of the payoff anyway.
If someone is so nervous about having a debt on their primary residence, then its probably the right choice for them. Emotions aside though, its likely an unwise financial move for most.
'Paying the mortgage off' is a common goal that many strive for. Hopefully most here are putting serious thought into the opportunity costs of such a balloon payment.
The only scenarios that might provide me financial motivation to pay down a mortgage is:
- Bad/high mortgage rate and or PMI required.
- If one uses the standard deduction. (Can't itemize to apply interest deduction.)
- One is too heavily leveraged outside of Real Estate. (Intentionally want to boost RE portion to balance portfolio)
- Risk tolerance is approaching zero. Possibly already retired and confident of stable (ie non bubbling) local RE market.
- Already over target savings and just don't care? (All investment points are moot).
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Don't fret the naysayers. (reminds me of Don't fear the Reaper so Blue Oyster Cult is in my head for the rest of the day). I did exactly the same thing about 15 years ago when I came into vested stock options and sold them immediately. I paid off the mortgage, bought myself an HDTV (they were 275 pounds back then....weight, not UK money) and bought my wife a new car. I had plenty of savings in my emergency fund. The next month at mortgage payment time, guess what? I didn't have to send $1300 to the bank! It's guaranteed and you can't lose. If the market pulls a 2008 (which for me happened in.....well.....2008), the mortgage is still paid off.
Ahead of this payoff, I had many discussions with friends and colleagues. Many of them said "no, don't ever pay extra on the mortgage....invest". I always asked "in what? Needs to give me a guaranteed return after taxes better than my mortgage rate". Nobody ever had an answer because there are no guarantees in any investments beyond a CD, which won't beat the mortgage savings.
Good job.
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MilesTeg
Assuming you still have a mortgage, do you take that into consideration when thinking about Asset Allocation? In other words, do you only count "equity" as real estate, rather than the full value of property?
I only consider equity. While it's nice to be able to leverage the full value of the home for gains, only the equity is actually "mine".
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Congratulations!! That's awesome!
I so remember that feeling, when the mortgage was finally paid off!!
As others have said now you really can accelerate your savings!
What a great situation to be in !
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Congrats! Awesome job!
I've looked into doing this but I save too much by funding tax advantaged accounts for it to make sense. An instant 25% return is just too good to pass up for us. If we get to the point where we have savings beyond pre-tax accounts it will definitely become an option to consider.
Unless you think you can get at all your pre-tax money without paying taxes, I really wouldn't mention that 25% number - it doesn't paint the complete picture. If you can stay in the 15% tax bracket when you retire, then sure it will probably equate to 10% savings. That of course also assumes that when you go to get the money, you will only have to pay 15%.
There are several options for accessing retirement funds with little to no penalty or tax depending on your retirement spending.
Check out the article below if you haven't seen it yet.
http://www.madfientist.com/how-to-access-retirement-funds-early/
The math in every scenario for me favors maxing retirement accounts before paying any extra towards mortgage principal.
Not trying to take anything away from OP, I'm very impressed with what they accomplished.
Sent from my SM-G935F using Tapatalk
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Congrats!
We too debated for quite some time about our mortgage. We chose not to pay it off for some years because of what everyone said above. Then, a few years ago - we decided that numbers aside, we would feel MUCH better emotionally not to have the mortgage. Plus, if we ever faced any tough financial times...our cash flow would be really helped by not having a mortgage payment due every month. So it was a security thing for us.
We paid ours off last summer and it feels good! I LIKE not being in debt to anyone.
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Thank you all for your kind words. I appreciate it!
So far, you have saved $49K in retirement accounts. Not sure how long you have been saving, every year you should be able to dump $47K into retirement accounts in order to max it (dual incomes with 2 401ks and 2 IRAs). If you do not max it any year, that tax advantaged space is gone.
While I agree that there is no point second guessing, try to maximize these accounts in the future. If you are young, there is a lot of time.
I am 33 years old. Will turn 34 next month. We are not maximizing my wife's 401k. We are contributing the match - 6%. I will look into changing that. She does not have a Roth IRA account. Her retirement is a little bit more complicated. She wants us to move to Europe, and I am not sure if we should be opening a retirement account for her as well because we are going to need some cash if we are going to move out of the US. So not entirely sure what to do about this at the moment. I am going to make a decision soon.
The math in every scenario for me favors maxing retirement accounts before paying any extra towards mortgage principal.
I read quite a bit about making extra payments vs. paying the whole thing off. There is some very good arguments to be made for not making extra payments and investing it instead. I agree with that. However, it made absolutely no financial sense to have that money sit in a CD and earn less interest than my mortgage. Therefore my options were to either invest the money in a taxable account, or pay off the mortgage. I choose the later. As I said in my previous posts...I just did not have the course to dump all the money in the stock market.
Congratulations!! That's awesome!
I so remember that feeling, when the mortgage was finally paid off!!
As others have said now you really can accelerate your savings!
What a great situation to be in !
Thank you very much. I absolutely intend to do that. Still working on a savings plan. I have come up with a few questions regarding the best way to proceed. I will be posting about it soon.
The only scenarios that might provide me financial motivation to pay down a mortgage is:
- Risk tolerance is approaching zero. Possibly already retired and confident of stable (ie non bubbling) local RE market.
- Already over target savings and just don't care? (All investment points are moot).
I am not quite sure I understood that. I mean I get the part that the home is an investment in a way, but even if the housing market were to absolutely tank tomorrow, it would only make a difference if I were selling it, right? I mean as long as I have a job, and I am happy staying where I am, this wouldn't affect me, right?
Of course, my home dropping in value is not a good thing, but if I wasn't investing the money anyway, this was the next best thing to do in my situation. At least that's the way it seemed to me.
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Congratulations!! I would also ignore naysayers. Being debt free (or at least mortgage free) is a priority to you, if it is not for someone else, fine, they can spend their money how they choose.
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Congratulations!! I would also ignore naysayers. Being debt free (or at least mortgage free) is a priority to you, if it is not for someone else, fine, they can spend their money how they choose.
+1
I know it maybe doesn't make the most optimal financial sense but if I had a big windfall, I could see myself paying off my primary home's mortgage (probably not our 1 rental though) for the piece of mind factor.
Enjoy your mortgage free life!
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Congratulations!! I would also ignore naysayers. Being debt free (or at least mortgage free) is a priority to you, if it is not for someone else, fine, they can spend their money how they choose.
Thank you very much. Yes, this is a priority for me. As I said initially, the money sitting in the bank is not making me happy or rich.
I now really want to focus on doing more things in life. I have been struggling to come up with a savings plan for the last few days, but once I do, I will plan a vacation! :)
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First of all, Congratulations on paying off your mortgage. This is a huge step in securing your financial independence and it must give you great peace of mind.
I find all the debate on paying off the mortgage vs investing for higher returns very amusing. In my opinion, as long as you are making positive financial decisions with your money, I don't really think it matters a great deal, I think we should all agree with that. I chose to pay my mortgage off early, it was a very clear goal, and made it easier to make the necessary sacrifices. Now we have a fire hose of cash with which to invest. I doubt we would have made as many sacrifices if we had elected to invest instead, as it doesn't resonate emotionally as much.
However, for those of you who choose to invest instead, I understand the math, and as long as you are disciplined, it should work out great as well.
Both paths are very Mustachian... Just pick the one that works best for you.
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First of all, Congratulations on paying off your mortgage. This is a huge step in securing your financial independence and it must give you great peace of mind.
I find all the debate on paying off the mortgage vs investing for higher returns very amusing. In my opinion, as long as you are making positive financial decisions with your money, I don't really think it matters a great deal, I think we should all agree with that. I chose to pay my mortgage off early, it was a very clear goal, and made it easier to make the necessary sacrifices. Now we have a fire hose of cash with which to invest. I doubt we would have made as many sacrifices if we had elected to invest instead, as it doesn't resonate emotionally as much.
However, for those of you who choose to invest instead, I understand the math, and as long as you are disciplined, it should work out great as well.
Both paths are very Mustachian... Just pick the one that works best for you.
Thank you very much. It definitely gives me a lot of peace of mind knowing that I don't have to worry about my mortgage. Life is definitely more secure now than it was before.
Sometimes, it can be difficult to find motivation in just the math. I tried, but I couldn't. I know some people have an easier time doing this. I could not get any comfort in knowing that investing the money in stock market is more likely to give me better returns in the long run. So I decided to pay off the house. While it made my very nervous in the beginning, I am very happy about my decision now.
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WOW! Congratulations. I can't tell you how jealous I am! Good job.
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First of all, Congratulations on paying off your mortgage. This is a huge step in securing your financial independence and it must give you great peace of mind.
I find all the debate on paying off the mortgage vs investing for higher returns very amusing. In my opinion, as long as you are making positive financial decisions with your money, I don't really think it matters a great deal, I think we should all agree with that. I chose to pay my mortgage off early, it was a very clear goal, and made it easier to make the necessary sacrifices. Now we have a fire hose of cash with which to invest. I doubt we would have made as many sacrifices if we had elected to invest instead, as it doesn't resonate emotionally as much.
However, for those of you who choose to invest instead, I understand the math, and as long as you are disciplined, it should work out great as well.
Both paths are very Mustachian... Just pick the one that works best for you.
+1
Congrats Gamer! Awesome job!! Enjoy knowing you no longer (and never will?) have any bloodsuckers taking your hard earned cash.
I'm about 4 months from doing the same lump sum mortgage payoff. The one area that was most influenced in my payoff process was savings rate. I knew I would HATE to not be investing like a mad man (which I did for years) so I have cut and slashed monthly expenses these past 2 years and currently find family bliss at a 60% savings rate. When my mortgage is paid off that rate will be over 70% so as Princeradar put it we will have a "fire hose of cash" to invest every month. Can't wait!!
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Congratulations on paying off your mortgage! It is a great accomplishment to be that disciplined.
we paid off our house last april. It was a dream/goal of mine for 10 years. we started working on doing it 6 years and 8 months before it was finally paid off. I totally get you about having to come up with new goals and dreams. give yourself a month or so to figure out what your next goal is. It took me a while. So my dh's goals were all geared toward retirement. He knew to get me fully on board with putting so much money into retirement meant that house had to be paid off for me to feel secure about sending that much money off to our various retirement funds. That was his reason for paying off the house. Mine was to feel secure especially because we are a one income family. It has paid off for him. I am 100% on board with sending the money away to retirement funds. I finally told him my new goal is kind of weird but it is Free my dh from having to work. I am now willing to do whatever it takes to free him. I do have to say we are both frugal and not spenders. So that helps. Think about the freedom that will come when you have freed yourself and your dw from having to work.
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Josiecat, Lochi21, jessicat - Thank you all for your kind words of encouragement.
Reaching up to this point has been difficult for me. I have never handled so much money in my life, therefore having to send it all to the bank was very mentally challenging. However, this has made me fully realize that money itself won't make happy, which is a good thing I suppose. Its really surprising how spending $100,000+ has had no real impact on my life. I am not doing anything differently now, the quality of my life has remained the same.
This is such a blessing for us.
I am currently working on a financial plan, and I intend to invest over $2000 per month in my brokerage account. I will post the detailed plan shortly.
If I had to attribute this "success" to anything, it would be our frugal lifestyle, and diligently tracking expenses. We intend to continue this going forward.
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Josiecat, Lochi21, jessicat - Thank you all for your kind words of encouragement.
Reaching up to this point has been difficult for me. I have never handled so much money in my life, therefore having to send it all to the bank was very mentally challenging. However, this has made me fully realize that money itself won't make happy, which is a good thing I suppose. Its really surprising how spending $100,000+ has had no real impact on my life. I am not doing anything differently now, the quality of my life has remained the same.
This is such a blessing for us.
I am currently working on a financial plan, and I intend to invest over $2000 per month in my brokerage account. I will post the detailed plan shortly.
If I had to attribute this "success" to anything, it would be our frugal lifestyle, and diligently tracking expenses. We intend to continue this going forward.
All that money was just 1's and 0's in a computer somewhere, that represented bondage to your mortgage company. You have now cast off the yoke of that bondage, and well done! You are much more free than you were before.
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All that money was just 1's and 0's in a computer somewhere, that represented bondage to your mortgage company. You have now cast off the yoke of that bondage, and well done! You are much more free than you were before.
You are indeed right. I can't ever go back to having a mortgage again! lol.
It reminds of the quote from the bible - The rich ruleth over the poor, and the borrower is servant to the lender.
I am not one of those people that believe rich people are evil or anything, but I did feel like a servant to the lender, now that I think about it!
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I definitely get it Gamer. Some people (including me) have debt-aversion hard wired into their DNA and removing the mortgage is the biggest debt most of us will have in our life. And the biblical quote does not fall on deaf ears with me.
I also get your fear. I'm very close to dropping a large lump sum (125K) to pay off my own mortgage and I'm starting to get cold feet. Not because I think it's wrong or foolish but because I know it won't be as grandiose as I've built it up to be these past 2 years. In the end, it's just a transfer of money as Headwind said and another step on our quest for FIRE.
I guess one of the things that gets me is that this large sum of money is huge to me but means very little to the bank. It's like something bigger should happen when that final payment occurs!!
It's probably because I've obsessed about this for so long and it took an enormous commitment to get to a 60% savings rate and this large sum of money. Plus, there is definitely an ego-factor. Like what I'm going to do should be shared with and celebrated by everyone that knows me - which of course we don't do because most people never speak about their personal finances. That's probably why we like sharing our anonymous stories on a forum like this with people who are so similar.
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Fantastic Gamer! Any move like this is a positive, and don't let anyone second guess your decision. This one statement of yours stuck out to me a little:
I am hoping there won't be emergencies!
That makes it sound like you don't have a big emergency account. My own advice is to use a Roth account. You can withdraw the principal without penalty or taxes in the event of an emergency. And if you don't need it, it all continues to compound.
If you are as risk averse about the stock market as you sound, you can even consider the new MyRA accounts: it's a Roth account that carries government backing and offers a guaranteed interest rate. You are limited to $15,000 total, but that should cover quite a few emergencies. www.MyRa.gov.
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That makes it sound like you don't have a big emergency account. My own advice is to use a Roth account. You can withdraw the principal without penalty or taxes in the event of an emergency. And if you don't need it, it all continues to compound.
Thank you very much!
I do have an emergency account. I have two actually.
In one account, I have $2000, which is readily accessible, and another account with $30,000 which is not so easily accessible.
I try not to ever have to touch my retirement accounts. I am maximizing my retirement accounts at the moment, so I think I am OK in that department.
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Lochi21
I so agree with you. There at the very least should be confetti dropping from the ceiling! And a crowd of people clapping for us when we do it. So glad we paid off ours.
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Lochi21
I so agree with you. There at the very least should be confetti dropping from the ceiling! And a crowd of people clapping for us when we do it. So glad we paid off ours.
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I always wonder if a person could throw a mortgage burning party these days. With the behavior discussed in the Comedy section of this forum - a MMM participant might discover themselves surrounded by a bunch of grumps and woe-is-me'rs.
That is our next big goal. Mortgage free.
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I doubt we would have made as many sacrifices if we had elected to invest instead, as it doesn't resonate emotionally as much.
I like how you framed this--I hadn't thought about it that way precisely, but it was absolutely true for us. We had a printout of a house on our freezer for 1+ years and every $5K principal allowed us to color in a new square. We started selling things, doing mini side-hustles, avoiding take-out, etc. just to make sure we could cross off a square each month. The 'stach is so important, but at the time it didn't have the same power over us. Now that the house is paid off, it's totally motivating to max the contributions but we're not quite as devoted to it as we were those silly squares.
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I like how you framed this--I hadn't thought about it that way precisely, but it was absolutely true for us. We had a printout of a house on our freezer for 1+ years and every $5K principal allowed us to color in a new square. We started selling things, doing mini side-hustles, avoiding take-out, etc. just to make sure we could cross off a square each month. The 'stach is so important, but at the time it didn't have the same power over us. Now that the house is paid off, it's totally motivating to max the contributions but we're not quite as devoted to it as we were those silly squares.
I too am a visually motivated person. I like your idea of putting it up on the fridge. I run spreadsheets which make graphs which I update every day, and I just love to see the little lines move up.
Whatever motivates you to do the right thing, is a good plan! :)
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I always wonder if a person could throw a mortgage burning party these days. With the behavior discussed in the Comedy section of this forum - a MMM participant might discover themselves surrounded by a bunch of grumps and woe-is-me'rs.
That is our next big goal. Mortgage free.
I actually thought about it, but couldn't think of very many people who wouldn't feel like we were bragging (we're in our early 30s) or would then see us as people with money to lend (immediate family).
Paying off my mortgage was partially depressing when I came to that realization (can't share it with many people), but it was fantastic when I was unemployed/underemployed for 8 weeks last year. The only impact was my savings rate went down. Woe is me... ;)
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I always wonder if a person could throw a mortgage burning party these days. With the behavior discussed in the Comedy section of this forum - a MMM participant might discover themselves surrounded by a bunch of grumps and woe-is-me'rs.
That is our next big goal. Mortgage free.
I actually thought about it, but couldn't think of very many people who wouldn't feel like we were bragging (we're in our early 30s) or would then see us as people with money to lend (immediate family).
Paying off my mortgage was partially depressing when I came to that realization (can't share it with many people), but it was fantastic when I was unemployed/underemployed for 8 weeks last year. The only impact was my savings rate went down. Woe is me... ;)
I agree...when we paid the mortgage off, we didn't really tell anyone. It was an awesome feeling, but a bit anti-climactic.
To the author - just make sure to invest the $$$ that you were previously using to pay the mortgage off. That really worked out great for us.
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I actually thought about it, but couldn't think of very many people who wouldn't feel like we were bragging (we're in our early 30s) or would then see us as people with money to lend (immediate family).
Paying off my mortgage was partially depressing when I came to that realization (can't share it with many people)
This is exactly how I feel. Only my wife knows that we paid off the mortgage. No one in my family or even my closest friends know that we are debt free.
I wish I could share our "success" with other people but I don't even know how to begin. My family will think I am wealthy and make a lot of money. In reality, they make more than I do, but their lifestyle is just insanely expensive compared to mine.
It still sucks though. Part me wants to tell them, but I don't think anything good can come out of it.
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You should consider putting a mortgage button on your newel post.
A tradition from Nantucket that you may find in other New England homes; the mortgage button. When the mortgage was paid off, the papers were burned and the ashes placed in a prominent stairway's newel post, then the post topped with a piece of scrimshaw, often with the owner's initials etc but originally was plain. Now often made of ivory, not whale bone, and is common to be installed upon sale or construction and not stuck down until mortgage paid off.
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You should consider putting a mortgage button on your newel post.
A tradition from Nantucket that you may find in other New England homes; the mortgage button. When the mortgage was paid off, the papers were burned and the ashes placed in a prominent stairway's newel post, then the post topped with a piece of scrimshaw, often with the owner's initials etc but originally was plain. Now often made of ivory, not whale bone, and is common to be installed upon sale or construction and not stuck down until mortgage paid off.
You should consider putting a mortgage button on your newel post.
A tradition from Nantucket that you may find in other New England homes; the mortgage button. When the mortgage was paid off, the papers were burned and the ashes placed in a prominent stairway's newel post, then the post topped with a piece of scrimshaw, often with the owner's initials etc but originally was plain. Now often made of ivory, not whale bone, and is common to be installed upon sale or construction and not stuck down until mortgage paid off.
I will definitely look into it. I am not sure if I should advertise the fact that I paid off the mortgage...I mean I am very young compared to most of the households here...not sure if it will come across as bragging...
However, I would love to have an ornament signifying mortgage being paid off. Thanks a lot for the suggestion.
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You should consider putting a mortgage button on your newel post.
A tradition from Nantucket that you may find in other New England homes; the mortgage button. When the mortgage was paid off, the papers were burned and the ashes placed in a prominent stairway's newel post, then the post topped with a piece of scrimshaw, often with the owner's initials etc but originally was plain. Now often made of ivory, not whale bone, and is common to be installed upon sale or construction and not stuck down until mortgage paid off.
You should consider putting a mortgage button on your newel post.
A tradition from Nantucket that you may find in other New England homes; the mortgage button. When the mortgage was paid off, the papers were burned and the ashes placed in a prominent stairway's newel post, then the post topped with a piece of scrimshaw, often with the owner's initials etc but originally was plain. Now often made of ivory, not whale bone, and is common to be installed upon sale or construction and not stuck down until mortgage paid off.
I will definitely look into it. I am not sure if I should advertise the fact that I paid off the mortgage...I mean I am very young compared to most of the households here...not sure if it will come across as bragging...
However, I would love to have an ornament signifying mortgage being paid off. Thanks a lot for the suggestion.
Nothing wrong with a little bragging after such an awesome accomplishment!
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I'm curious, did you refinance first and then pay extra? Or just pay extra?
Looking at 10 yr fixed rates, they are significantly lower than the rate I'm paying now.
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I'm curious, did you refinance first and then pay extra? Or just pay extra?
Looking at 10 yr fixed rates, they are significantly lower than the rate I'm paying now.
No, I did not refinance. My loan was for 15 years at 3% and I just paid it off in full. I kept it simple :)
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Anyone else doing this mortgage payoff with kids in their formative years?
We have a 13 yr old son who has been fully on-board with our plan and making many sacrifices with us these past 2 years. I'm beginning to believe the educational benefits of this mortgage elimination/savings rate plan will be more rewarding to him than it was to us. I've floated the idea of him never having a loan in his life and he seems to understand why that would be "Awesome Dad". He's even brought up on his own how important it would be to find a wife "like Mom" who embraces many of the characteristics of a "Mustachian".
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Anyone else doing this mortgage payoff with kids in their formative years?
We have a 13 yr old son who has been fully on-board with our plan and making many sacrifices with us these past 2 years. I'm beginning to believe the educational benefits of this mortgage elimination/savings rate plan will be more rewarding to him than it was to us. I've floated the idea of him never having a loan in his life and he seems to understand why that would be "Awesome Dad". He's even brought up on his own how important it would be to find a wife "like Mom" who embraces many of the characteristics of a "Mustachian".
Good on you for teaching these values to your son. I am sure he will benefit greatly from this.
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Congratulations!! Great job.
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It's funny you said 'brag'. The mortgage buttons are actually nick named 'brag buttons'.
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Congratulations!! Great job.
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We have six kids. All six were home when we paid it off. A few months later my oldest left home. It has made it so my kids have been taught much better about money. We also took the kids on a cruise to celebrate paying our house off. And yes we paid cash for the cruise. The kids helped color in our chart on a big piece of poster board. We paid ours off last April. I love being completely debt free. We had stuff we needed to do on our house once it was paid off. Now it is done and we funded our roths last year and this year already. I am trying to get my dh to make a chart for retirement because I am also visually oriented. Best thing we did for our kids because they are seeing an example of how to be wise with money in a very stupid world.
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Congrats Gamer! Awesome job!! Enjoy knowing you no longer (and never will?) have any bloodsuckers taking your hard earned cash.
Ha! You want to see bloodsucking, just watch what happens if you can't pay your taxes. A paid-off mortgage does not mean the end of payments. Utilities and property taxes never go away. Better to have a bunch of money available for things that wear out or break, plus property taxes, which are guaranteed to increase steadily over the long haul.
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Congrats Gamer! Awesome job!! Enjoy knowing you no longer (and never will?) have any bloodsuckers taking your hard earned cash.
Ha! You want to see bloodsucking, just watch what happens if you can't pay your taxes. A paid-off mortgage does not mean the end of payments. Utilities and property taxes never go away. Better to have a bunch of money available for things that wear out or break, plus property taxes, which are guaranteed to increase steadily over the long haul.
Yes...I'm astonished to see what we pay in Property taxes...and we live in a 'cheaper' area of the country! I have heard horror stories about how much some folks on the east coast pay. Truly outrageous.
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Nothing wrong with a little bragging after such an awesome accomplishment!
To be honest our society could probably benefit from more people bragging a little and proving that things like this can happen with some planning and follow through.
I guess everyone would have to be really firm with the family that might suddenly appear with loan requests. Yes, the mortgage is paid off but we have to fund our retirement. And then ask them how they have planned their retirement funding - which of course they probably haven't done.
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We have six kids. All six were home when we paid it off. A few months later my oldest left home. It has made it so my kids have been taught much better about money. We also took the kids on a cruise to celebrate paying our house off. And yes we paid cash for the cruise. The kids helped color in our chart on a big piece of poster board. We paid ours off last April. I love being completely debt free. We had stuff we needed to do on our house once it was paid off. Now it is done and we funded our roths last year and this year already. I am trying to get my dh to make a chart for retirement because I am also visually oriented. Best thing we did for our kids because they are seeing an example of how to be wise with money in a very stupid world.
Thanks for sharing this Jessicat! I was wondering if anyone else had seen this nice ancillary benefit.
I also really liked your idea of creative visuals for everyone in the house to see. I wish we would have done something similar these past 2 years. I'm definitely planning on doing this with our next financial goal.
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Thanks everyone for your kind words. I appreciate it.
We have six kids. All six were home when we paid it off. A few months later my oldest left home. It has made it so my kids have been taught much better about money. We also took the kids on a cruise to celebrate paying our house off. And yes we paid cash for the cruise.
What you did is awesome! I might copy your method of putting up a chart to stay focused on our future goals. Good on you for celebrating paying off your house! We haven't done anything big to celebrate our mortgage payoff yet. I want to wait for next paycheck before we celebrate.
Ha! You want to see bloodsucking, just watch what happens if you can't pay your taxes. A paid-off mortgage does not mean the end of payments. Utilities and property taxes never go away. Better to have a bunch of money available for things that wear out or break, plus property taxes, which are guaranteed to increase steadily over the long haul.
You are absolutely right. This is not the end of payments. However, I had enough of a cushion to be able to pay off the house. I just didn't feel like needlessly paying interest to the bank when I am not going to drop $100k which I have sitting in a CD, into the stock market. It did not make any financial sense.
Now, I still think the logical thing to do would be to invest in the market, which is very likely to do better than 3%, but I just couldn't do it. I wanted to be debt free. This is not something I can explain with logic. :)
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Tsk, tsk... you're not supposed to time the market :)
Congratulations! The perfect is the enemy of the good. You made a good choice.
Absolutely. I don't intend to time the market at all. I am just going to contribute at the beginning of the year to my RothIRA, and then every month, in addition to 401k contributions, I am going to contribute to my taxable investment account.
Prefect is indeed the enemy of good. I never would have done anything if I was waiting for the perfect time.
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Well done! :) Great to hear. We did ours 2 years ago and it was such a great feeling! I appreciate it (and my husband who's idea it was!) even more as time goes by and our outgoings are lower meaning we can save much more!
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I always wonder if a person could throw a mortgage burning party these days. With the behavior discussed in the Comedy section of this forum - a MMM participant might discover themselves surrounded by a bunch of grumps and woe-is-me'rs.
That is our next big goal. Mortgage free.
We threw a mortgage -burning party. We had a big party, and burned an effigy of our mortgage in the chiminea. It was fun, and it did feel good to celebrate the accomplishment. So have the party!
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Sadly, no one knows about us paying off the mortgage. I want to tell my family about it, but I don't think anything good can come out of it. I am not telling my friends because I don't feel its the right to let my friends in on this secret and not my family.
I will go out and celebrate with my wife though. We will be doing a lot of quiet celebrating! :)