Foundations
Wealth Foundation Keys
Paying off your mortgage early
Learn how to make millions with not only the money that you save, but how you can create a cash machine so that you never have to work for someone else again!
Sponsored
Advertisement
Click on this bar to return to
Foundations
Having a mortgage is one of those culturally expected things, along with car payments and credit cards. Most financial gurus fall backwards out of their chair when you mention paying off your mortgage early, instead of plowing more dough into their carefully selected portfolio of investments – most of which are not properly aligned with your risk tolerance, nor your overall investing strategy.
The market downturn, which apparently is still turning, seems to have more and more people reevaluating the question, “Should I Pay Off My Mortgage Early?” Up until now conventional wisdom said no. Invest that money in the market, and keep paying interest to the bank to get the tax deduction. Now I’m not so sure. Seems to me like we would have been better off to be sitting here with a paid-for house than a handful of worthless investments.
One of the more profound statements was that “money in the market isn’t saved – it’s invested, and investment carries a risk that it won’t be there when you need it.” So true; as many of us have had the recent misfortune of discovering.
But paying off debt, including your mortgage, is a sure thing. Assuming you are not borrowing any new money, paying off $50,000 in debt means that $50,000 debt can never come back. It doesn’t matter what the market does. It doesn’t matter if we are at war or in peace time. It doesn’t matter how strong or weak the U.S. dollar is – that debt is never returning to your personal balance sheet. To me, that is a powerful incentive to use the $50,000 to pay off my
mortgage early.
Sure, I could invest that same money in the down market and watch it go to $60,000 by next year. But that is far from a sure thing. Besides, without a mortgage I could easily start dropping $1,000 a month into investments. It wouldn’t take very long at that pace to hit $60,000 in investments. And if you really liked having a house payment, you could always
refinance your mortgage.
What this question really gets to is your tolerance for risk, and your dreams for the future. I hope to “retire” from working for money earlier than most people, and I cannot do that with a mortgage payment. So ask yourself, "is thirty years of payments an option I am willing to take" ? With a paid-for house, and very few expenses, retiring would be a much more viable option because it would not take much in the way of earnings to sustain a frugal living.
 | ||||||
| ||||||
Welcome to Nextage Prestige Realty. We are revolutionizing the real estate industry by offering a "new vision for real estate". We specialize in turning our customer’s dreams into reality. Whether you’re looking for a cottage or a mansion, or if you are buying, selling, moving across town or across the country, we provide outstanding results. Even if you have blemished credit, our team of real estate professionals have been equipped with the latest cutting edge tools, strategies and education to help you buy or sell your home quickly and easily. We know the market and the trends therefore,
you can trust our experience.
(Click link below)
Article courtesy of Frugaldad.com
