Are there many of you in this camp that are paying a mortgage in FIRE?
I'm on board during accumulation phase, but can't wrap my head around trying to pay ~$20k/annual in mortgage payments from taxable while maintaining ACA subsidies, Roth conversions, etc.
Would it make sense to change course with 5-7 years to FIRE and send those extra investments towards prepayment- to get to FIRE without a mortgage. The only other way i could see is taking LTCG tax hit on Taxable account withdrawal to pay off at FIRE.
Thanks- we'll be signing on a non-mustachian mortgage soon and doing my homework. Planning to get 30yr fixed and invest everything in taxable after maximizing tax sheltered.
For us, ACA is a non-starter. It just wasn't possible for us to get our countable income low enough to get a subsidy (without giving away a lot of property and assets, which we sure as heck aren't going to do.)
I'll preface this by saying that for most folks, particularly younger folks, think LONG and HARD before you pay off a low interest, fixed rate, non-callable mortgage early instead of investing the difference. Don't let emotion get in the way of making the best decision.
At the moment, we have TWO mortgages in FIRE. (We bought a new house in mid-January.)
The original plan was to milk the mortgage for the rest of its lifespan, which was about 12 years when we FIRED. We now owe about $145K on it.
But I got tired of it, so we decided to pay it off over a 3-4 year time span.
Then we found a dream house at a good price and we bought it. New mortgage is $230K.
We're selling a non-profit flip-house in a few months that will hopefully take the new mortgage down by $62K if the buyer can get a bank loan. If not, we'll do owner financing and pump the payments into the new mortgage.
We'll now sell our old house ASAP, hopefully by summer, and roll over the recovered equity into our new mortgage. That will cut it by another $100K to $125K. (150K in my dreams!)
RMDs over the next two Januaries and some extra principal payments after our old house sells should get us paid off within 20 to 36 months. I'll be glad to be rid of them.
In principle, we would make more money by keeping the new mortgage.
In reality, we would have to watch our spending much more closely than we like to. I would rather be rich and feel rich than be rich and feel poor because I have to watch every single penny (like we did when we were actually poor). Paying off the mortgage gives us a bunch of discretionary spending for travel, tools, date nights, or whatever and it does it while we're still young enough to enjoy it.
My target is to be mortgage free in 25 months.
Now, some of you may be chuckling because I've just given an emotional reason for paying off our own mortgage early after advising others, particularly younger folks, to think hard before doing so.
The difference is (a) we're already rich, (b) we're already FIRED, (c) we and our kids won't need even more money than we have, and (d) we're not young, not by a long shot. Even the die-hard don't pay off your mortgage early folks agreed it was reasonable for us to pay off our old mortgage early (before we got a new one), and it had an interest rate that was a lot lower than our current one.