Author Topic: DONT Payoff your Mortgage Club  (Read 357276 times)

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1600 on: July 05, 2019, 11:15:11 AM »
Hello everyone. I just wanted to thank you all for this information. I just bought my first house a couple of months ago and was definitely planning to make extra payments each month to pay it off quicker. Thanks to all of the wisdom and patient walkthroughs of the math in this thread I've learned the error of my ways and will happily join the DPOYM club. :)

Now, to see if I can share this knowledge with my Dave Ramsey following friends and family!

Good luck with that. My bro-in-law who is a Dave fan, had his own accountant ask him why he was making extra mortgage payments and told him he should stop. But, but, Dave says....
If I were to attempt this, I would advise myself to select just one person to prosthelytize to. I'd spend the rest of my time teaching pigs to sing.

Which do you think you can accomplish faster?

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1601 on: July 05, 2019, 06:55:44 PM »
Hello everyone. I just wanted to thank you all for this information. I just bought my first house a couple of months ago and was definitely planning to make extra payments each month to pay it off quicker. Thanks to all of the wisdom and patient walkthroughs of the math in this thread I've learned the error of my ways and will happily join the DPOYM club. :)

Now, to see if I can share this knowledge with my Dave Ramsey following friends and family!

Good luck with that. My bro-in-law who is a Dave fan, had his own accountant ask him why he was making extra mortgage payments and told him he should stop. But, but, Dave says....
If I were to attempt this, I would advise myself to select just one person to prosthelytize to. I'd spend the rest of my time teaching pigs to sing.

Which do you think you can accomplish faster?
Rhetorical question. Notice the first word, "If", lol!

ender

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Re: DONT Payoff your Mortgage Club
« Reply #1602 on: July 06, 2019, 06:52:43 AM »
For the average person, paying off your mortgage is still a pretty good decision.

Most folks on this forum can decide "$1k in investments or mortgage principle" but many people will take that instead to be "$1k in mortgage principle or random toys."

Brother Esau

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Re: DONT Payoff your Mortgage Club
« Reply #1603 on: July 06, 2019, 07:02:53 AM »
That's why I love these forums. Most folks here are way beyond "average". The optimal choice is clearly explained and then it's up to us to do what we decide with that information.

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1604 on: July 06, 2019, 07:46:59 AM »
For the average person, paying off your mortgage is still a pretty good decision.

Most folks on this forum can decide "$1k in investments or mortgage principle" but many people will take that instead to be "$1k in mortgage principle or random toys."
You are 100% right about the bolded part, ender. I think it's clear that mustachians do things differently. It's understood here that this only works if you're socking as much as possible into investments. In fact, it's also understood that we don't just "save" money, we invest it. A parallel is the rent vs. buy conundrum. The renters are supposed to invest the difference they're saving by not owning, but there's not a lot of that going on in the general population, either.

That's why I love these forums. Most folks here are way beyond "average". The optimal choice is clearly explained and then it's up to us to do what we decide with that information.
The optimal choice is clearly explained only on threads like this one. On this very forum, here is no provision for anything but backslapping on any thread that celebrates paying off the mortgage early. How will thise revelers ever kniw that there's an easier option that might well result in faster, fatter FIRE? Kind of odd, given the purpose of this forum.

SwordGuy

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Re: DONT Payoff your Mortgage Club
« Reply #1605 on: July 06, 2019, 08:02:15 AM »
The optimal choice is clearly explained only on threads like this one. On this very forum, here is no provision for anything but backslapping on any thread that celebrates paying off the mortgage early. How will thise revelers ever kniw that there's an easier option that might well result in faster, fatter FIRE? Kind of odd, given the purpose of this forum.
I don't agree that's true.   There is a "We're paying off our mortgage early!" thread whose members have asked not to be bothered by this info any more.  Any more being the operative word.  They clearly said, "We've heard both arguments, we've made our choice, don't rain on our parade any more."

Other than that, the entire forum is fair game for this message.  I routinely see others pointed to this thread when they write they are prioritizing paying off their mortgage early.

What's important to remember is that paying off the mortgage early isn't a bad decision, it's a sub-optimal one.   So a nudge might be more appropriate than a face-punch. :)

ender

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Re: DONT Payoff your Mortgage Club
« Reply #1606 on: July 06, 2019, 08:09:11 AM »
The optimal choice is clearly explained only on threads like this one. On this very forum, here is no provision for anything but backslapping on any thread that celebrates paying off the mortgage early. How will thise revelers ever kniw that there's an easier option that might well result in faster, fatter FIRE? Kind of odd, given the purpose of this forum.
I don't agree that's true.   There is a "We're paying off our mortgage early!" thread whose members have asked not to be bothered by this info any more.  Any more being the operative word.  They clearly said, "We've heard both arguments, we've made our choice, don't rain on our parade any more."

Other than that, the entire forum is fair game for this message.  I routinely see others pointed to this thread when they write they are prioritizing paying off their mortgage early.

What's important to remember is that paying off the mortgage early isn't a bad decision, it's a sub-optimal one.   So a nudge might be more appropriate than a face-punch. :)

On this, I have a friend who is wiling to go to ERE levels of cheapness (he's beyond any semblance of "frugal"). His wife is much more onboard with paying down a mortgage vs investing as a goal, so they put more down on their house than he would like. Even though he knows he'd rather invest.

Depending on the psychology paying down a mortgage can be a lot more motivating than adding to a $500k investment account, too.

SwordGuy

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Re: DONT Payoff your Mortgage Club
« Reply #1607 on: July 06, 2019, 08:30:30 AM »
Depending on the psychology paying down a mortgage can be a lot more motivating than adding to a $500k investment account, too.

You got that right!

I **know** the math.  I **like** the math.  But I **love** not owing money to anyone.

Our current mortgage is a 15 year fixed 2.75% rate.  We have 12 years to go.   

Before finding this thread, it was our plan to buy our current house, sell our old paid-off house, and then pay off our current house. 

I've sold 2 houses, each of which netted enough to pay off the mortgage.  I inherited enough to pay off the mortgage.  So far, I've managed to invest instead of pay it off.

I sold a 3rd house using owner financing and the buyer is expected to refinance to a cheaper rate this month.  (Good bye to the 6% interest I'm earning. :( )   That one will be enough to pay off our mortgage.

I really want to pay off the mortgage and not have it anymore.   But I know it's silly to do that from a financial point of view.  We'll see what we end up doing.


nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1608 on: July 06, 2019, 09:20:45 AM »
Depending on the psychology paying down a mortgage can be a lot more motivating than adding to a $500k investment account, too.

You got that right!

I **know** the math.  I **like** the math.  But I **love** not owing money to anyone.

I get how throwing money into an already large investment account can feel like tossing buckets of water into a small lake.  But here's the thing about owing money - our society runs on debt, and you literally cannot escape it, nor should we want to. 
There's the obvious -- even after paying off your mortgage you still owe taxes in perpetuity. But that money in your investment account is shares owed to you, which (hopefully) are invested in companies who owe a debt to your investment fund tied to their future profits.  If you still work your company owes you money until ever pay period, and they owe money to teh bank, and the bank to their investors. Every transaction you make involves debt, often across multiple parties. Further, other people want you to owe money to them, and they also want to owe money to you.  All within reason, of course - too much or too high a rate and it can become parasitic, but on level it's what makes our system run

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1609 on: July 06, 2019, 09:26:22 AM »
The optimal choice is clearly explained only on threads like this one. On this very forum, here is no provision for anything but backslapping on any thread that celebrates paying off the mortgage early. How will thise revelers ever kniw that there's an easier option that might well result in faster, fatter FIRE? Kind of odd, given the purpose of this forum.
I don't agree that's true.   There is a "We're paying off our mortgage early!" thread whose members have asked not to be bothered by this info any more.  Any more being the operative word.  They clearly said, "We've heard both arguments, we've made our choice, don't rain on our parade any more."

Other than that, the entire forum is fair game for this message.  I routinely see others pointed to this thread when they write they are prioritizing paying off their mortgage early.

What's important to remember is that paying off the mortgage early isn't a bad decision, it's a sub-optimal one.   So a nudge might be more appropriate than a face-punch. :)
This thread was started in February of 2017. How many folks have joined the forum and that thread since then? It's one of a very few places where balanced discussion is forbidden. "Here we can only celebrate this potentially sub-optimal thing." Now hold on, I completely agree that for some, it's not a sub-optimal decision, but imagine a thread celebrating your low mpg ICE vehicle.

SwordGuy

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Re: DONT Payoff your Mortgage Club
« Reply #1610 on: July 06, 2019, 09:42:20 AM »
The optimal choice is clearly explained only on threads like this one. On this very forum, here is no provision for anything but backslapping on any thread that celebrates paying off the mortgage early. How will thise revelers ever kniw that there's an easier option that might well result in faster, fatter FIRE? Kind of odd, given the purpose of this forum.
I don't agree that's true.   There is a "We're paying off our mortgage early!" thread whose members have asked not to be bothered by this info any more.  Any more being the operative word.  They clearly said, "We've heard both arguments, we've made our choice, don't rain on our parade any more."

Other than that, the entire forum is fair game for this message.  I routinely see others pointed to this thread when they write they are prioritizing paying off their mortgage early.

What's important to remember is that paying off the mortgage early isn't a bad decision, it's a sub-optimal one.   So a nudge might be more appropriate than a face-punch. :)
This thread was started in February of 2017. How many folks have joined the forum and that thread since then? It's one of a very few places where balanced discussion is forbidden. "Here we can only celebrate this potentially sub-optimal thing." Now hold on, I completely agree that for some, it's not a sub-optimal decision, but imagine a thread celebrating your low mpg ICE vehicle.

That thread contains plenty of Don't Pay Off Your Mortgage messages in it.  The info is in that thread.  It's all over the rest of the thread.

Lots of people celebrate travel on this forum and many folks cheer them on because it makes them happy to travel.   Other people get happy by paying down their mortgage.  At least the folks paying down their mortgage are making a better financial choice than the travellers are... :)

SwordGuy

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Re: DONT Payoff your Mortgage Club
« Reply #1611 on: July 06, 2019, 09:51:32 AM »
Depending on the psychology paying down a mortgage can be a lot more motivating than adding to a $500k investment account, too.

You got that right!

I **know** the math.  I **like** the math.  But I **love** not owing money to anyone.

I get how throwing money into an already large investment account can feel like tossing buckets of water into a small lake.  But here's the thing about owing money - our society runs on debt, and you literally cannot escape it, nor should we want to. 
There's the obvious -- even after paying off your mortgage you still owe taxes in perpetuity. But that money in your investment account is shares owed to you, which (hopefully) are invested in companies who owe a debt to your investment fund tied to their future profits.  If you still work your company owes you money until ever pay period, and they owe money to teh bank, and the bank to their investors. Every transaction you make involves debt, often across multiple parties. Further, other people want you to owe money to them, and they also want to owe money to you.  All within reason, of course - too much or too high a rate and it can become parasitic, but on level it's what makes our system run

I think it's because for decades putting money in broker accounts is so abstract -- there are no stock certificates to hold in one's hands -- but writing a mortgage payment check is a visceral thing that seems more real.

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1612 on: July 06, 2019, 10:21:59 AM »
Depending on the psychology paying down a mortgage can be a lot more motivating than adding to a $500k investment account, too.

You got that right!

I **know** the math.  I **like** the math.  But I **love** not owing money to anyone.

Our current mortgage is a 15 year fixed 2.75% rate.  We have 12 years to go.   

Before finding this thread, it was our plan to buy our current house, sell our old paid-off house, and then pay off our current house. 

I've sold 2 houses, each of which netted enough to pay off the mortgage.  I inherited enough to pay off the mortgage.  So far, I've managed to invest instead of pay it off.

I sold a 3rd house using owner financing and the buyer is expected to refinance to a cheaper rate this month.  (Good bye to the 6% interest I'm earning. :( )   That one will be enough to pay off our mortgage.

I really want to pay off the mortgage and not have it anymore.   But I know it's silly to do that from a financial point of view.  We'll see what we end up doing.
SwordGuy, you remember we have no mortgage on our primary clown house, right? I differ a bit from B42's position in that I believe one doesn't have to keep rolling a mortgage into perpetuity. We did something along the lines of what you just described. In your case, I 100% agree that paying that sucker off is a very reasonable option, primarily because you followed the Order of Investment and did all the things right. Or enough of the things right to get you to where you are. You have hit your number first, then paid off (or could pay off) the mortgage. You're a textbook case of why the Order of Investment works. Congratulations on your success!

All I want is for people to understand the compound value of money and to know that if they choose to pay off the mortgage first so they can theoretically have more money to invest later, they are choosing a path that is going to require them to work longer. That's the opposite of what we're supposedly here for.

The usual disclaimers apply: this primarily applies to US based, deductible, low, fixed rate interest mortgages, affordably priced  homes, etc. In places where these things are not true, it's a different conversation.

ender

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Re: DONT Payoff your Mortgage Club
« Reply #1613 on: July 06, 2019, 11:24:33 AM »
Lots of people celebrate travel on this forum and many folks cheer them on because it makes them happy to travel.   Other people get happy by paying down their mortgage.  At least the folks paying down their mortgage are making a better financial choice than the travellers are... :)

Travel is the sacred cow of this forum though. Can't blaspheme it!

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1614 on: July 06, 2019, 02:56:17 PM »
Depending on the psychology paying down a mortgage can be a lot more motivating than adding to a $500k investment account, too.

You got that right!

I **know** the math.  I **like** the math.  But I **love** not owing money to anyone.

I get how throwing money into an already large investment account can feel like tossing buckets of water into a small lake.  But here's the thing about owing money - our society runs on debt, and you literally cannot escape it, nor should we want to. 
There's the obvious -- even after paying off your mortgage you still owe taxes in perpetuity. But that money in your investment account is shares owed to you, which (hopefully) are invested in companies who owe a debt to your investment fund tied to their future profits.  If you still work your company owes you money until ever pay period, and they owe money to teh bank, and the bank to their investors. Every transaction you make involves debt, often across multiple parties. Further, other people want you to owe money to them, and they also want to owe money to you.  All within reason, of course - too much or too high a rate and it can become parasitic, but on level it's what makes our system run

I think it's because for decades putting money in broker accounts is so abstract -- there are no stock certificates to hold in one's hands -- but writing a mortgage payment check is a visceral thing that seems more real.

Interesting.  I suppose it is for many.  Only I've never written an actual mortgage payment check.  Not once. I don't even own any checks.  Basically everything is abstract for me.... my paycheck gets direct deposited into my account minus contributions to my 403(b) and HSA.   My mortgage, rent and monthly investments all get subtracted from my account on given days.  Ditto for credit cards.  I periodically check and see that my mortgage balance has gone down and my investment accounts have gone up (or at least the # of shares I own ;-).  But it's all just numbers shifting from column to column.  Maybe if the bank was physically knocking at my door (or at least calling me monthly) and I had to hand over cash or write a check it might feel differently.

It was set up this way when I took out my loan - I would have to do some research to figure out where I'd even mail a check to...

RWD

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Re: DONT Payoff your Mortgage Club
« Reply #1615 on: July 06, 2019, 03:30:58 PM »
I think it's because for decades putting money in broker accounts is so abstract -- there are no stock certificates to hold in one's hands -- but writing a mortgage payment check is a visceral thing that seems more real.

Interesting.  I suppose it is for many.  Only I've never written an actual mortgage payment check.  Not once.

I have never written a mortgage payment check either. It's always been an automated payment. The few times I've paid extra principal I also did it electronically.

desert_phoenix

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Re: DONT Payoff your Mortgage Club
« Reply #1616 on: July 06, 2019, 07:40:36 PM »
I will only pay the minimum owed each month on my mortgage until my investment accounts reach what FIRE would be for all my non-mortgage expenses.  Then I will only max tax-advantaged accounts and put all the extra cash towards paying off the mortgage more quickly.  The reason being that my goal is to FIRE sooner, not to die with the largest pile of money possible.

If you owe $800 a month for your mortgage, that means you need $240,000 to cover the mortgage post-FIRE (assuming you are working with the 4% SWR).  If that 240k is more than what is left to pay off your mortgage, you could very well come out ahead switching to focus on paying down the mortgage.  The math could be close in many places depending on what you think market returns will be.  But for me, the tipping point will be when I can comfortably cover my non-mortgage costs.

Maybe this is not a new idea and has been addressed in the thread already, haha.  But it only recently occurred to me!

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1617 on: July 07, 2019, 07:04:45 AM »

If you owe $800 a month for your mortgage, that means you need $240,000 to cover the mortgage post-FIRE (assuming you are working with the 4% SWR).  If that 240k is more than what is left to pay off your mortgage, you could very well come out ahead switching to focus on paying down the mortgage.  The math could be close in many places depending on what you think market returns will be.  But for me, the tipping point will be when I can comfortably cover my non-mortgage costs.

Maybe this is not a new idea and has been addressed in the thread already, haha.  But it only recently occurred to me!

This assumption is erroneous; even paying the minimum, your mortgage will disappear eventually, and absent refinancing it will be gone in less than 30 years.  The original trinity study examined withdraw rates over 30 year periods, with withdraws pegged to inflation (maintaining purchasing power).  To put it simply, if you have only 10 or 15 years you can use a much greater WR to cover the mortgage than 4%; sol did a meta-analysis earlier in this thread, but a quick run through FireCalc shows you could use a 11% WR to support 10 years remaining on your mortgage and have an even higher chance of success than 4% over 30 years.  To use your example if your mortgage was $800/mo you would need just $87k to support mortgage payments for the next decade, plus whatever you need for living expenses going forward.

There are two reasons why such a high WR will work - 1) the timeframe is much shorter (here 10 years instead of 30) and 2) your mortgage payment does not increase, so your WR for this portion of your expenses (the PI of your mortgage) will not increase with inflation.

Of course money is fungible, so this segregating of accounts is more for mental comprehension than anything. If you want $40k/year in living expenses plus enough to cover an $800 mortgage for another 10 years and are comfortable with the level of risk in a 'normal' 4% WR strategy you will need a total investment portfolio of $1.087MM, not $1.24MM.  Further, historically over 93% of periods would have had a sizeable amount left in this 'mortgage sinking fund' after the final payment, in roughly half the portfolio would have at least $50k remaining - hardly chump change. 



« Last Edit: July 07, 2019, 07:15:41 AM by nereo »

desert_phoenix

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Re: DONT Payoff your Mortgage Club
« Reply #1618 on: July 07, 2019, 03:28:46 PM »

If you owe $800 a month for your mortgage, that means you need $240,000 to cover the mortgage post-FIRE (assuming you are working with the 4% SWR).  If that 240k is more than what is left to pay off your mortgage, you could very well come out ahead switching to focus on paying down the mortgage.  The math could be close in many places depending on what you think market returns will be.  But for me, the tipping point will be when I can comfortably cover my non-mortgage costs.

Maybe this is not a new idea and has been addressed in the thread already, haha.  But it only recently occurred to me!

This assumption is erroneous; even paying the minimum, your mortgage will disappear eventually, and absent refinancing it will be gone in less than 30 years.  The original trinity study examined withdraw rates over 30 year periods, with withdraws pegged to inflation (maintaining purchasing power).  To put it simply, if you have only 10 or 15 years you can use a much greater WR to cover the mortgage than 4%; sol did a meta-analysis earlier in this thread, but a quick run through FireCalc shows you could use a 11% WR to support 10 years remaining on your mortgage and have an even higher chance of success than 4% over 30 years.  To use your example if your mortgage was $800/mo you would need just $87k to support mortgage payments for the next decade, plus whatever you need for living expenses going forward.

There are two reasons why such a high WR will work - 1) the timeframe is much shorter (here 10 years instead of 30) and 2) your mortgage payment does not increase, so your WR for this portion of your expenses (the PI of your mortgage) will not increase with inflation.

Of course money is fungible, so this segregating of accounts is more for mental comprehension than anything. If you want $40k/year in living expenses plus enough to cover an $800 mortgage for another 10 years and are comfortable with the level of risk in a 'normal' 4% WR strategy you will need a total investment portfolio of $1.087MM, not $1.24MM.  Further, historically over 93% of periods would have had a sizeable amount left in this 'mortgage sinking fund' after the final payment, in roughly half the portfolio would have at least $50k remaining - hardly chump change.

Hmm, interesting reply.  I wish I was more savvy with firecalc. 

Once my mortgage is paid off, I’d only need around $22,000 a year to support my lifestyle comfortably.  That means $550,000 at a 4% SWR.

But my mortgage is $993.  I only recently bought property once it occurred to me that I need a place to live post-FIRE as the perpetual travel thing doesn’t appeal to me as a forever solution, haha.  For simplicity’s sake, lets assume I get no more raises or changes to my savings rate, etc...in the coming years and we just have a steady 7% return and no changes to my income or savings rate.

I would hit FI on my non-mortgage needs in just a bit over four years (4 years 2 months based on the Mad Fientist’s calculator).  But I’d still have about 25.5 years left on my mortgage, haha.  To include the $993 mortgage payment, I’d be at 7 years countdown to FIRE. 34 months difference (4 years 2 months versus 7 years) is not a huge difference if I am liking my job alright, but how do I figure the splitting of the difference like you are talking about since that mortgage expense would only be for 25 years and not forever and maybe trim some time off to hit full FIRE?

edit: typos
« Last Edit: July 07, 2019, 03:33:53 PM by desert_phoenix »

SwordGuy

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Re: DONT Payoff your Mortgage Club
« Reply #1619 on: July 07, 2019, 04:34:19 PM »

If you owe $800 a month for your mortgage, that means you need $240,000 to cover the mortgage post-FIRE (assuming you are working with the 4% SWR).  If that 240k is more than what is left to pay off your mortgage, you could very well come out ahead switching to focus on paying down the mortgage.  The math could be close in many places depending on what you think market returns will be.  But for me, the tipping point will be when I can comfortably cover my non-mortgage costs.

Maybe this is not a new idea and has been addressed in the thread already, haha.  But it only recently occurred to me!

This assumption is erroneous; even paying the minimum, your mortgage will disappear eventually, and absent refinancing it will be gone in less than 30 years.  The original trinity study examined withdraw rates over 30 year periods, with withdraws pegged to inflation (maintaining purchasing power).  To put it simply, if you have only 10 or 15 years you can use a much greater WR to cover the mortgage than 4%; sol did a meta-analysis earlier in this thread, but a quick run through FireCalc shows you could use a 11% WR to support 10 years remaining on your mortgage and have an even higher chance of success than 4% over 30 years.  To use your example if your mortgage was $800/mo you would need just $87k to support mortgage payments for the next decade, plus whatever you need for living expenses going forward.

There are two reasons why such a high WR will work - 1) the timeframe is much shorter (here 10 years instead of 30) and 2) your mortgage payment does not increase, so your WR for this portion of your expenses (the PI of your mortgage) will not increase with inflation.

Of course money is fungible, so this segregating of accounts is more for mental comprehension than anything. If you want $40k/year in living expenses plus enough to cover an $800 mortgage for another 10 years and are comfortable with the level of risk in a 'normal' 4% WR strategy you will need a total investment portfolio of $1.087MM, not $1.24MM.  Further, historically over 93% of periods would have had a sizeable amount left in this 'mortgage sinking fund' after the final payment, in roughly half the portfolio would have at least $50k remaining - hardly chump change.

Hmm, interesting reply.  I wish I was more savvy with firecalc. 

Once my mortgage is paid off, I’d only need around $22,000 a year to support my lifestyle comfortably.  That means $550,000 at a 4% SWR.

But my mortgage is $993.  I only recently bought property once it occurred to me that I need a place to live post-FIRE as the perpetual travel thing doesn’t appeal to me as a forever solution, haha.  For simplicity’s sake, lets assume I get no more raises or changes to my savings rate, etc...in the coming years and we just have a steady 7% return and no changes to my income or savings rate.

I would hit FI on my non-mortgage needs in just a bit over four years (4 years 2 months based on the Mad Fientist’s calculator).  But I’d still have about 25.5 years left on my mortgage, haha.  To include the $993 mortgage payment, I’d be at 7 years countdown to FIRE. 34 months difference (4 years 2 months versus 7 years) is not a huge difference if I am liking my job alright, but how do I figure the splitting of the difference like you are talking about since that mortgage expense would only be for 25 years and not forever and maybe trim some time off to hit full FIRE?

edit: typos

Check out cFireSim.com   It has the features you need.   (The save function wasn't working last time I checked, but other than that it works fine.)   It's very easy to add income or expenses with start and end dates.

desert_phoenix

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Re: DONT Payoff your Mortgage Club
« Reply #1620 on: July 07, 2019, 05:16:45 PM »

If you owe $800 a month for your mortgage, that means you need $240,000 to cover the mortgage post-FIRE (assuming you are working with the 4% SWR).  If that 240k is more than what is left to pay off your mortgage, you could very well come out ahead switching to focus on paying down the mortgage.  The math could be close in many places depending on what you think market returns will be.  But for me, the tipping point will be when I can comfortably cover my non-mortgage costs.

Maybe this is not a new idea and has been addressed in the thread already, haha.  But it only recently occurred to me!

This assumption is erroneous; even paying the minimum, your mortgage will disappear eventually, and absent refinancing it will be gone in less than 30 years.  The original trinity study examined withdraw rates over 30 year periods, with withdraws pegged to inflation (maintaining purchasing power).  To put it simply, if you have only 10 or 15 years you can use a much greater WR to cover the mortgage than 4%; sol did a meta-analysis earlier in this thread, but a quick run through FireCalc shows you could use a 11% WR to support 10 years remaining on your mortgage and have an even higher chance of success than 4% over 30 years.  To use your example if your mortgage was $800/mo you would need just $87k to support mortgage payments for the next decade, plus whatever you need for living expenses going forward.

There are two reasons why such a high WR will work - 1) the timeframe is much shorter (here 10 years instead of 30) and 2) your mortgage payment does not increase, so your WR for this portion of your expenses (the PI of your mortgage) will not increase with inflation.

Of course money is fungible, so this segregating of accounts is more for mental comprehension than anything. If you want $40k/year in living expenses plus enough to cover an $800 mortgage for another 10 years and are comfortable with the level of risk in a 'normal' 4% WR strategy you will need a total investment portfolio of $1.087MM, not $1.24MM.  Further, historically over 93% of periods would have had a sizeable amount left in this 'mortgage sinking fund' after the final payment, in roughly half the portfolio would have at least $50k remaining - hardly chump change.

Hmm, interesting reply.  I wish I was more savvy with firecalc. 

Once my mortgage is paid off, I’d only need around $22,000 a year to support my lifestyle comfortably.  That means $550,000 at a 4% SWR.

But my mortgage is $993.  I only recently bought property once it occurred to me that I need a place to live post-FIRE as the perpetual travel thing doesn’t appeal to me as a forever solution, haha.  For simplicity’s sake, lets assume I get no more raises or changes to my savings rate, etc...in the coming years and we just have a steady 7% return and no changes to my income or savings rate.

I would hit FI on my non-mortgage needs in just a bit over four years (4 years 2 months based on the Mad Fientist’s calculator).  But I’d still have about 25.5 years left on my mortgage, haha.  To include the $993 mortgage payment, I’d be at 7 years countdown to FIRE. 34 months difference (4 years 2 months versus 7 years) is not a huge difference if I am liking my job alright, but how do I figure the splitting of the difference like you are talking about since that mortgage expense would only be for 25 years and not forever and maybe trim some time off to hit full FIRE?

edit: typos

Check out cFireSim.com   It has the features you need.   (The save function wasn't working last time I checked, but other than that it works fine.)   It's very easy to add income or expenses with start and end dates.

Thanks for the link!  Being able to have the mortage as its own standalone expense that disappears is really awesome!  Maybe FIRE is a real thing and not just something people on the internet talk about, haha.  My odds cross the 50% threshold of my money lasting until I am 84 in less than two years.  This is exciting!  I need to get that raise, fatten up my brokerage quicker, and continue not paying down my mortgage early :)

Mr Mark

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Re: DONT Payoff your Mortgage Club
« Reply #1621 on: July 07, 2019, 05:31:39 PM »

If you owe $800 a month for your mortgage, that means you need $240,000 to cover the mortgage post-FIRE (assuming you are working with the 4% SWR).  If that 240k is more than what is left to pay off your mortgage, you could very well come out ahead switching to focus on paying down the mortgage.  The math could be close in many places depending on what you think market returns will be.  But for me, the tipping point will be when I can comfortably cover my non-mortgage costs.

Maybe this is not a new idea and has been addressed in the thread already, haha.  But it only recently occurred to me!

This assumption is erroneous; even paying the minimum, your mortgage will disappear eventually, and absent refinancing it will be gone in less than 30 years.  The original trinity study examined withdraw rates over 30 year periods, with withdraws pegged to inflation (maintaining purchasing power).  To put it simply, if you have only 10 or 15 years you can use a much greater WR to cover the mortgage than 4%; sol did a meta-analysis earlier in this thread, but a quick run through FireCalc shows you could use a 11% WR to support 10 years remaining on your mortgage and have an even higher chance of success than 4% over 30 years.  To use your example if your mortgage was $800/mo you would need just $87k to support mortgage payments for the next decade, plus whatever you need for living expenses going forward.

There are two reasons why such a high WR will work - 1) the timeframe is much shorter (here 10 years instead of 30) and 2) your mortgage payment does not increase, so your WR for this portion of your expenses (the PI of your mortgage) will not increase with inflation.

Of course money is fungible, so this segregating of accounts is more for mental comprehension than anything. If you want $40k/year in living expenses plus enough to cover an $800 mortgage for another 10 years and are comfortable with the level of risk in a 'normal' 4% WR strategy you will need a total investment portfolio of $1.087MM, not $1.24MM.  Further, historically over 93% of periods would have had a sizeable amount left in this 'mortgage sinking fund' after the final payment, in roughly half the portfolio would have at least $50k remaining - hardly chump change.

Awesome. I do like such nice 'counter intuitive/dogma' analyses. Well done.

EngagedToFIRE

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Re: DONT Payoff your Mortgage Club
« Reply #1622 on: July 07, 2019, 06:19:00 PM »
The optimal choice is clearly explained only on threads like this one. On this very forum, here is no provision for anything but backslapping on any thread that celebrates paying off the mortgage early. How will thise revelers ever kniw that there's an easier option that might well result in faster, fatter FIRE? Kind of odd, given the purpose of this forum.
I don't agree that's true.   There is a "We're paying off our mortgage early!" thread whose members have asked not to be bothered by this info any more.  Any more being the operative word.  They clearly said, "We've heard both arguments, we've made our choice, don't rain on our parade any more."

Other than that, the entire forum is fair game for this message.  I routinely see others pointed to this thread when they write they are prioritizing paying off their mortgage early.

What's important to remember is that paying off the mortgage early isn't a bad decision, it's a sub-optimal one.   So a nudge might be more appropriate than a face-punch. :)

I'd say it's even questionable if it's sub-optimal.  That just implies the wrong thing in my opinion.  It may very well be optimal for many people.  Who knows what their credit is like, what their interest rates are, etc.  There is also the benefits of asset protection with homesteads in some States.  The market isn't without risk.  But a mortgage is essentially a sure thing.  So what is that risk worth to some people?  If I had a 2.5% mortgage, I'd say probably well worth the risk of investing in the market.  If I had a 5.75% mortgage and unable to refi, I might not think so.  Just saying, everyone is in very different scenarios, so the implication that one is better than the other is unfair.  I'd almost like to see a "help me decide if I should or shouldn't pay off" type approach.  But whatever.

Say What?

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Re: DONT Payoff your Mortgage Club
« Reply #1623 on: July 08, 2019, 06:55:27 AM »
Hello everyone. I just wanted to thank you all for this information. I just bought my first house a couple of months ago and was definitely planning to make extra payments each month to pay it off quicker. Thanks to all of the wisdom and patient walkthroughs of the math in this thread I've learned the error of my ways and will happily join the DPOYM club. :)

Now, to see if I can share this knowledge with my Dave Ramsey following friends and family!

Good luck with that. My bro-in-law who is a Dave fan, had his own accountant ask him why he was making extra mortgage payments and told him he should stop. But, but, Dave says....
Haha, yeah. I made a few mentions of the idea this weekend. The responses were that they just feel better paying extra. :)

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Re: DONT Payoff your Mortgage Club
« Reply #1624 on: July 08, 2019, 10:08:40 AM »
Once my mortgage is paid off, I’d only need around $22,000 a year to support my lifestyle comfortably.  That means $550,000 at a 4% SWR.

But my mortgage is $993.  I only recently bought property once it occurred to me that I need a place to live post-FIRE as the perpetual travel thing doesn’t appeal to me as a forever solution, haha.  For simplicity’s sake, lets assume I get no more raises or changes to my savings rate, etc...in the coming years and we just have a steady 7% return and no changes to my income or savings rate.

I would hit FI on my non-mortgage needs in just a bit over four years (4 years 2 months based on the Mad Fientist’s calculator).  But I’d still have about 25.5 years left on my mortgage, haha.  To include the $993 mortgage payment, I’d be at 7 years countdown to FIRE. 34 months difference (4 years 2 months versus 7 years) is not a huge difference if I am liking my job alright, but how do I figure the splitting of the difference like you are talking about since that mortgage expense would only be for 25 years and not forever and maybe trim some time off to hit full FIRE?

edit: typos
So in 4 years 2 months (give or take whatever volatility contributes) you will be FI except for your mortgage. At that point you could just keep saving the same way you have been until you reach $550,000 + your current mortgage balance. Assuming your current mortgage is at 4% interest (lower rates would mean slightly higher balance) that balance should be about $190,300 with 25.5 years to go - far less that the $297,900 needed to pay $993/mo at a 4% SWR.

AnxietyFly

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Re: DONT Payoff your Mortgage Club
« Reply #1625 on: July 09, 2019, 11:28:11 AM »
My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.

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Re: DONT Payoff your Mortgage Club
« Reply #1626 on: July 09, 2019, 11:32:15 AM »
My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.
May be in the wrong thread - what you should do is cash-out refinance to the max you can get on a 30 year term at the still low rates . . . and invest the 90K or so you'll then have available to you.

FIreDrill

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Re: DONT Payoff your Mortgage Club
« Reply #1627 on: July 09, 2019, 11:55:17 AM »


My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.

God I hope you are joking.....

Having no plans to leave is even more reason to ride the mortgage as long as possible.  The optimal strategy would be to cash out refi to a 30 year at 80% Ltv and invest the 77k (approx).  Your payment would barely go up so cash flow shouldn't be an issue.

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RWD

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Re: DONT Payoff your Mortgage Club
« Reply #1628 on: July 09, 2019, 12:26:29 PM »
My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.

God I hope you are joking.....

He's "a big follower" of Dave Ramsey, sadly I doubt it's a joke.

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1629 on: July 09, 2019, 06:10:42 PM »
My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.

Why would you post this in a thread titles "DONT Payoff your Mortgage Club"?  You apparently  have no intention of being part of the club.

FIreDrill

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Re: DONT Payoff your Mortgage Club
« Reply #1630 on: July 09, 2019, 06:54:35 PM »
My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.

God I hope you are joking.....

He's "a big follower" of Dave Ramsey, sadly I doubt it's a joke.
Don't get me wrong, I think Dave is great for getting people out of total financial illiteracy.  But you can't take his advice blindly.  A lot of it is sub-optimal when comparing to the FI related paths.  Dave focuses on embracing the emotion behind financial decisions and making a path based off those emotions while I think you should overcome the emotion in order to make the most optimal path.  I think a huge part of this thread is overcoming emotion based financial decisions for mathimatical based decisions.  It's a place where we can encourage overcoming emotions while the other thread leans into the emotions.
The main thing that bothers me is when people blindly follow his advice without questioning anything.  I don't know if AnxietyFly does follow him blindly but regardless, it should never be done in any situation regarding finance or life.

Still not sure why AnxietyFly felt the need to drop that post in this thread. Unless they really just want to pick a fight.

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EngagedToFIRE

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Re: DONT Payoff your Mortgage Club
« Reply #1631 on: July 09, 2019, 07:49:44 PM »
My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.

God I hope you are joking.....

He's "a big follower" of Dave Ramsey, sadly I doubt it's a joke.
Don't get me wrong, I think Dave is great for getting people out of total financial illiteracy.  But you can't take his advice blindly.  A lot of it is sub-optimal when comparing to the FI related paths.  Dave focuses on embracing the emotion behind financial decisions and making a path based off those emotions while I think you should overcome the emotion in order to make the most optimal path.  I think a huge part of this thread is overcoming emotion based financial decisions for mathimatical based decisions.  It's a place where we can encourage overcoming emotions while the other thread leans into the emotions.
The main thing that bothers me is when people blindly follow his advice without questioning anything.  I don't know if AnxietyFly does follow him blindly but regardless, it should never be done in any situation regarding finance or life.

Still not sure why AnxietyFly felt the need to drop that post in this thread. Unless they really just want to pick a fight.

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I sometimes think Dave may be more "correct" in focusing on the emotional aspect.  People are emotional beings.  The more I talk to others about MMM type strategies, the more I realize that so many people really need the emotional version more than the mathematical version.  Some people "get it" like those here, but dang, so many are straight up emotional.  I can think of several friends off the top of my head.  They tell me they want to save and be FI, etc.  We'll talk about very specific things they are doing wrong, nothing crazy - going out to lunch every day, for example.  They'll totally get it, they'll read MMM.... and then every single day they still go out to eat and they continue to have this "well, it's just $5" attitude about it. The math doesn't sink in no matter what you say.  At the same time, I'll hear about paying off credit cards and being more mindful of that.  So they seem capable of the Ramsey approach (they've never even heard of Ramsey, funny enough) but totally incapable of following the MMM approach, which to us, is incredibly common sense.  It's weird.

Ramsey may be on to something with his approach.  We all know people who just never seem to "get it" the MMM way.

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Re: DONT Payoff your Mortgage Club
« Reply #1632 on: July 09, 2019, 08:11:25 PM »
My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.

God I hope you are joking.....

He's "a big follower" of Dave Ramsey, sadly I doubt it's a joke.
Don't get me wrong, I think Dave is great for getting people out of total financial illiteracy.  But you can't take his advice blindly.  A lot of it is sub-optimal when comparing to the FI related paths.  Dave focuses on embracing the emotion behind financial decisions and making a path based off those emotions while I think you should overcome the emotion in order to make the most optimal path.  I think a huge part of this thread is overcoming emotion based financial decisions for mathimatical based decisions.  It's a place where we can encourage overcoming emotions while the other thread leans into the emotions.
The main thing that bothers me is when people blindly follow his advice without questioning anything.  I don't know if AnxietyFly does follow him blindly but regardless, it should never be done in any situation regarding finance or life.

Still not sure why AnxietyFly felt the need to drop that post in this thread. Unless they really just want to pick a fight.

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I sometimes think Dave may be more "correct" in focusing on the emotional aspect.  People are emotional beings.  The more I talk to others about MMM type strategies, the more I realize that so many people really need the emotional version more than the mathematical version.  Some people "get it" like those here, but dang, so many are straight up emotional.  I can think of several friends off the top of my head.  They tell me they want to save and be FI, etc.  We'll talk about very specific things they are doing wrong, nothing crazy - going out to lunch every day, for example.  They'll totally get it, they'll read MMM.... and then every single day they still go out to eat and they continue to have this "well, it's just $5" attitude about it. The math doesn't sink in no matter what you say.  At the same time, I'll hear about paying off credit cards and being more mindful of that.  So they seem capable of the Ramsey approach (they've never even heard of Ramsey, funny enough) but totally incapable of following the MMM approach, which to us, is incredibly common sense.  It's weird.

Ramsey may be on to something with his approach.  We all know people who just never seem to "get it" the MMM way.

When I was young I thought Woody Allen films were really funny.  They had all these crazy, neurotic, over-emotional people in them.  Crazy funny!

Then I grew up and went out into the world of work and discovered that people like that are not only a real thing, there are gobs of them out there. 

Emotional decision making appears to be the norm, not an aberration.

EngagedToFIRE

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Re: DONT Payoff your Mortgage Club
« Reply #1633 on: July 10, 2019, 07:20:55 AM »
My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.

God I hope you are joking.....

He's "a big follower" of Dave Ramsey, sadly I doubt it's a joke.
Don't get me wrong, I think Dave is great for getting people out of total financial illiteracy.  But you can't take his advice blindly.  A lot of it is sub-optimal when comparing to the FI related paths.  Dave focuses on embracing the emotion behind financial decisions and making a path based off those emotions while I think you should overcome the emotion in order to make the most optimal path.  I think a huge part of this thread is overcoming emotion based financial decisions for mathimatical based decisions.  It's a place where we can encourage overcoming emotions while the other thread leans into the emotions.
The main thing that bothers me is when people blindly follow his advice without questioning anything.  I don't know if AnxietyFly does follow him blindly but regardless, it should never be done in any situation regarding finance or life.

Still not sure why AnxietyFly felt the need to drop that post in this thread. Unless they really just want to pick a fight.

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I sometimes think Dave may be more "correct" in focusing on the emotional aspect.  People are emotional beings.  The more I talk to others about MMM type strategies, the more I realize that so many people really need the emotional version more than the mathematical version.  Some people "get it" like those here, but dang, so many are straight up emotional.  I can think of several friends off the top of my head.  They tell me they want to save and be FI, etc.  We'll talk about very specific things they are doing wrong, nothing crazy - going out to lunch every day, for example.  They'll totally get it, they'll read MMM.... and then every single day they still go out to eat and they continue to have this "well, it's just $5" attitude about it. The math doesn't sink in no matter what you say.  At the same time, I'll hear about paying off credit cards and being more mindful of that.  So they seem capable of the Ramsey approach (they've never even heard of Ramsey, funny enough) but totally incapable of following the MMM approach, which to us, is incredibly common sense.  It's weird.

Ramsey may be on to something with his approach.  We all know people who just never seem to "get it" the MMM way.

When I was young I thought Woody Allen films were really funny.  They had all these crazy, neurotic, over-emotional people in them.  Crazy funny!

Then I grew up and went out into the world of work and discovered that people like that are not only a real thing, there are gobs of them out there. 

Emotional decision making appears to be the norm, not an aberration.

Correct.  Think about advertising, marketing, political campaigns, etc.  I have a feeling most of the people here are not the target audience for their messaging.  Because we see it and think "are people really this stupid?" - but in reality, yes, yes they are - and it's a majority of them.

AnxietyFly

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Re: DONT Payoff your Mortgage Club
« Reply #1634 on: July 10, 2019, 04:59:55 PM »
My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.

Why would you post this in a thread titles "DONT Payoff your Mortgage Club"?  You apparently  have no intention of being part of the club.

It was a bad decision to reply in this thread. 

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1635 on: July 10, 2019, 06:16:13 PM »
My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.

Why would you post this in a thread titles "DONT Payoff your Mortgage Club"?  You apparently  have no intention of being part of the club.

It was a bad decision to reply in this thread.
Dunno, it could turn out to be quite a fortuitous accident. Feel free to hang out here, read through the thread and ask questions. It just might change your financial future for the better.

FIreDrill

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Re: DONT Payoff your Mortgage Club
« Reply #1636 on: July 10, 2019, 06:40:05 PM »
My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.

Why would you post this in a thread titles "DONT Payoff your Mortgage Club"?  You apparently  have no intention of being part of the club.

It was a bad decision to reply in this thread.
Hahaha.

Just cash out refinance, invest, and everything will be ok. ;)

Run some numbers and mess around with cfiresim to project different scenarios.  I am curious though... Do you have much in investments and have you been investing for any significant length of time?  Are you confident in the market and the 4% rule for long term withdrawals?  I could totally see how someone that is not familiar with index investing would not feel comfortable doing a strategy like this. At that point its more about getting into the market and building confidence in your investment plan.  Then come to the dark side and invest your home equity... Buahaha :)

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AnxietyFly

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Re: DONT Payoff your Mortgage Club
« Reply #1637 on: July 10, 2019, 07:39:44 PM »
My house is worth $190,000 which I owe $75,000 on a 15 year fixed. There are 12 years remaining on the 2.99% rate. I'm trying to pay it off within the next two years or before my 42nd birthday. I really enjoy my home and location with no plans to move.

Why would you post this in a thread titles "DONT Payoff your Mortgage Club"?  You apparently  have no intention of being part of the club.

It was a bad decision to reply in this thread.
Hahaha.

Just cash out refinance, invest, and everything will be ok. ;)

Run some numbers and mess around with cfiresim to project different scenarios.  I am curious though... Do you have much in investments and have you been investing for any significant length of time?  Are you confident in the market and the 4% rule for long term withdrawals?  I could totally see how someone that is not familiar with index investing would not feel comfortable doing a strategy like this. At that point its more about getting into the market and building confidence in your investment plan.  Then come to the dark side and invest your home equity... Buahaha :)

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I should be fine considering my net worth hitting one million  as early as next year. I've only averaged about 65k per year in earnings.

FIreDrill

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Re: DONT Payoff your Mortgage Club
« Reply #1638 on: July 10, 2019, 07:58:29 PM »
Sure. As long as your net worth isn't in Bitcoin and blow.

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AnxietyFly

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Re: DONT Payoff your Mortgage Club
« Reply #1639 on: July 10, 2019, 08:58:07 PM »
Sure. As long as your net worth isn't in Bitcoin and blow.

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Three fund strategy. 20% bonds, 20% intl, and 60% s&p. I use index funds mostly through my 401k.

DadJokes

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Re: DONT Payoff your Mortgage Club
« Reply #1640 on: July 11, 2019, 05:53:13 AM »
Sure. As long as your net worth isn't in Bitcoin and blow.

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Three fund strategy. 20% bonds, 20% intl, and 60% s&p. I use index funds mostly through my 401k.

Don't listen to FIreDrill. The appropriate investment allocation is 40% Bitcoin, 40% blow, and 20% beanie babies.

Car Jack

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Re: DONT Payoff your Mortgage Club
« Reply #1641 on: July 11, 2019, 07:03:12 AM »
Sure. As long as your net worth isn't in Bitcoin and blow.

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We can't neglect the shopping club investment grade coins.  With 15 micro grams of real 24K gold!  (I worked out the value to be about a nickle, I think).  But hey!  It's real gold!
Three fund strategy. 20% bonds, 20% intl, and 60% s&p. I use index funds mostly through my 401k.

Don't listen to FIreDrill. The appropriate investment allocation is 40% Bitcoin, 40% blow, and 20% beanie babies.

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #1642 on: July 11, 2019, 07:53:40 AM »
@AnxietyFly , I have to admit, posting about a 2.99% rate is what we like around here.

We wish you success in pursuing your financial goals. If you are open to arguments about putting more money toward investments, and decelerating your mortgage pay-off, please give us a chance.

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Re: DONT Payoff your Mortgage Club
« Reply #1643 on: July 11, 2019, 08:35:00 AM »
@AnxietyFly , I have to admit, posting about a 2.99% rate is what we like around here.

We wish you success in pursuing your financial goals. If you are open to arguments about putting more money toward investments, and decelerating your mortgage pay-off, please give us a chance.

Talltexan - thank you for the feedback. Right now, I am going gazelle speed on paying down the house. I doubt right now I'll change my mind. 

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1644 on: July 11, 2019, 08:45:27 AM »
@AnxietyFly , I have to admit, posting about a 2.99% rate is what we like around here.

We wish you success in pursuing your financial goals. If you are open to arguments about putting more money toward investments, and decelerating your mortgage pay-off, please give us a chance.

Talltexan - thank you for the feedback. Right now, I am going gazelle speed on paying down the house. I doubt right now I'll change my mind.
Maybe that's because you haven't read through this thread.

solon

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Re: DONT Payoff your Mortgage Club
« Reply #1645 on: July 11, 2019, 09:41:36 AM »
I guess what people on this thread are trying to say, AnxietyFly, is that if you want to be gazelle intense, you should not pay off the mortgage. You should drag the mortgage out as long as possible, and aggressively invest every spare penny.

Do the math for yourself and see how it works out. If you have any questions about how to do the math, I know people here will be happy to help you.

SwordGuy

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Re: DONT Payoff your Mortgage Club
« Reply #1646 on: July 11, 2019, 09:47:54 AM »
@AnxietyFly , I have to admit, posting about a 2.99% rate is what we like around here.

We wish you success in pursuing your financial goals. If you are open to arguments about putting more money toward investments, and decelerating your mortgage pay-off, please give us a chance.

Talltexan - thank you for the feedback. Right now, I am going gazelle speed on paying down the house. I doubt right now I'll change my mind.

I get that.  We did the same with out last house.  Got a 15yr mortgage and paid it off in less than 10.  Towards the end we were making 3 payments a month.   Felt great!  Very liberating!

Our current house is on a 15 yr, 2.75% rate.   I still remember those feelings.  I want to pay it off.

But I've already passed up 4 opportunities to just pay it off in full.   

1) We chose to keep our taxable investment account instead of cashing it out to pay off the mortgage.  Glad we did, the balance increase over the last 4 years has been about 1/3 of what the mortgage was.

2) Inherited some money from my mom when she passed.   We invested that money instead.   Glad we did. :)

3) Sold my mom's house.   Invested that money instead.   One is a rental property whose profit is about 1/3 of the P&I payment on our home each month.  One is to help a friend start up their own renovation business.   I'll start getting that money back this fall.   I'm currently looking for more deals.   Put in 3 bids this week.  Got outbid on two, one's still active.   Looking at a 4th that would do the same.   Basically, for the same amount of money I could own my own house in full, or have a mortgage on my house and own 3 rental houses in full, which will pay my mortgage.   Used that money to make a charitable house purchase.

4) Sold my old house.  Invested that money instead.

And opportunity #5 is coming up this month:

5) We did a charitable house purchase and sold it with owner financing.  They're in the process of refinancing this month.   Recycling that money into another charitable house and 2 rentals.  Looks like I'll have made about $8,000 on my charitable house due to the owner financing.  Only 5.33% return on a good deed, which isn't bad. I wasn't even trying to make money on that one. :)

I'm so much better off having invested instead of paying that mortgage off.

I still **want** to do it.  I've just learned, thru this thread, that I'm better off not doing it when I have a really cheap fixed rate mortgage.

AnxietyFly

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Re: DONT Payoff your Mortgage Club
« Reply #1647 on: July 11, 2019, 10:12:31 AM »
I guess what people on this thread are trying to say, AnxietyFly, is that if you want to be gazelle intense, you should not pay off the mortgage. You should drag the mortgage out as long as possible, and aggressively invest every spare penny.

Do the math for yourself and see how it works out. If you have any questions about how to do the math, I know people here will be happy to help you.

Solon, I have been gazelle intense on investing the last 22 years. For example, my net worth has increased about 120k per year the last few years. I'm still investing but also paying off the house now. I really don't need to spare every penny because I have compound interest doing the heavy lifting.  Would it be better mathematically invest instead of payoff the house, maybe but my goal is to pay off the house.

AnxietyFly

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Re: DONT Payoff your Mortgage Club
« Reply #1648 on: July 11, 2019, 10:16:05 AM »
@AnxietyFly , I have to admit, posting about a 2.99% rate is what we like around here.

We wish you success in pursuing your financial goals. If you are open to arguments about putting more money toward investments, and decelerating your mortgage pay-off, please give us a chance.

Talltexan - thank you for the feedback. Right now, I am going gazelle speed on paying down the house. I doubt right now I'll change my mind.
Maybe that's because you haven't read through this thread.

I've read through the first page and understand the concept. Sounds like a good strategy for people willing to accept debt. 
« Last Edit: July 11, 2019, 10:21:14 AM by AnxietyFly »

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1649 on: July 11, 2019, 10:32:42 AM »
I guess what people on this thread are trying to say, AnxietyFly, is that if you want to be gazelle intense, you should not pay off the mortgage. You should drag the mortgage out as long as possible, and aggressively invest every spare penny.

Do the math for yourself and see how it works out. If you have any questions about how to do the math, I know people here will be happy to help you.

Solon, I have been gazelle intense on investing the last 22 years. For example, my net worth has increased about 120k per year the last few years. I'm still investing but also paying off the house now. I really don't need to spare every penny because I have compound interest doing the heavy lifting.  Would it be better mathematically invest instead of payoff the house, maybe but my goal is to pay off the house.
I get it that you invested first and now you want to pay off the house. I'm cool with that, now that you have shared this additional information. What you may not realize is that the thread that celebrates mortgage payoff focuses mainly on that goal, to the exclusion of all others, in many cases. Further, they will tolerate no discussion of other points of view, hence the formation of this thread. If we can't go there, why are you here? We've been pretty tolerant of your comments in this thread, but I'm very curious why you remain, if your mind is made up. It's fine if your goal is to pay off your house, but you have come to the place that is least likely to celebrate and support your decision. Why is that?

Oh, and we have a cross-post:

I've read through the first page and understand the concept. Sounds like a good strategy for people willing to accept debt. 
If that's not you, again, why are you here? Surely you are not trolling us? Some of us are willing to "accept debt" in order to shorten the number of days until FIRE. If you want to have to work longer and use more of your own dollars instead of compound interest, you are free to do so. But coming here with snide remarks will not produce the result you desire. It could result in you being identified as a troll. Typically, trolls are not kindly regarded on this site.