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- Thread starter SoapyCy
- Start date
Are't you the one who wants to move to Des Moines but can't find a job? I'd think about that before paying off a house that you don't plan to be in.
Do exactly what @isufbcurt suggests except on the first round fly out to Vegas bet it half of it on black on the roulette wheel. Spend the other half on your bottle girl and blow, then bring home your winnings from betting on black.
By the way cocaine mkt should be getting tight with that big bust out in Philly. Damn that was a lot of blow.
By the way cocaine mkt should be getting tight with that big bust out in Philly. Damn that was a lot of blow.
I paid my last house off early and my interest was 4.25%, but I simply used extra cash from my paycheck. If it’s a non 401K account guess am fine with the idea if you don’t like the idea of debt(I didn’t). It will free up some cash that you can start dollar cost averaging back into the stock market and sooner or later when the next correction occurs you will be buying stock cheaper than you can now.
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If I had this chance it would be tempting. I get sick of seeing that $2500 fly out of the bank account every 1st of the month.
Unfortunately I have had to tell more than one taxpayer that they lost out on all kinds of credits and deductions because they "had a plan". Most of the time it is from liquidating retirement accounts, which can be a real disaster, but some of the same factors apply.
This is exactly what my thought process would be. Even if you can afford the payment and its a low interest rate that is throwing away that money IF you can pay if off. Depending on age and being able to be disciplined about putting that money back as an asset then you'd be on the right track to get further ahead.
Why not? If you can make a better return than the interest rate you are paying. Yes I know that it may be risky but different people have different risk thresholds.
I’ve wrestled with the same thoughts and situation and have opted to leave the money borrowed on the house to make investments (for me, into the farm).
I hate sending $900/mo out on my payment when I could have paid it off but it has allowed me to make investments I wouldn’t have otherwise made and it has allowed me more liquidity to handle risk on the farm.
Be disciplined if you leave the debt out there - leaving the mortgage in place then spending big money on a personal vehicle would be dumb.
I hate sending $900/mo out on my payment when I could have paid it off but it has allowed me to make investments I wouldn’t have otherwise made and it has allowed me more liquidity to handle risk on the farm.
Be disciplined if you leave the debt out there - leaving the mortgage in place then spending big money on a personal vehicle would be dumb.
There is no single right answer to this question. Although I suppose if there was, it would be a real short thread. In theory, borrowing at 4% to make 6%+ is the right answer.
You're paying something like $4,000 in interest per year. In exchange for that cost, you are keeping a bunch of money semi-liquid and making a decent return, probably more than the $4,000. Is that $4,000 cost worth it to keep your powder dry and make a return?
To the peace of mind argument: if you keep the stocks, you can ALWAYS pull the trigger and payoff the house at any time in the future. Assuming you don't lose ALL your stock investments in the market, which would be quite a feat of stupidity. So the stocks are a security blanket, imho.
The only reason I can see to sell the stocks and payoff the mortgage is if you think the market is going to take a major dump. But that's timing the market, and tricky at best. If you truly think that, then I'd hedge it, and go halfway. Then you keep some stocks, still payoff a lot of principal, reduce the interest cost, and bring forward the day when it IS paid off by several years. If the market goes up, well, OK, you were half-right.
I looked at doing exact same thing more than once on my place. But I am paying 3.25% on a 15 year, and didn't make sense to me.
You're paying something like $4,000 in interest per year. In exchange for that cost, you are keeping a bunch of money semi-liquid and making a decent return, probably more than the $4,000. Is that $4,000 cost worth it to keep your powder dry and make a return?
To the peace of mind argument: if you keep the stocks, you can ALWAYS pull the trigger and payoff the house at any time in the future. Assuming you don't lose ALL your stock investments in the market, which would be quite a feat of stupidity. So the stocks are a security blanket, imho.
The only reason I can see to sell the stocks and payoff the mortgage is if you think the market is going to take a major dump. But that's timing the market, and tricky at best. If you truly think that, then I'd hedge it, and go halfway. Then you keep some stocks, still payoff a lot of principal, reduce the interest cost, and bring forward the day when it IS paid off by several years. If the market goes up, well, OK, you were half-right.
I looked at doing exact same thing more than once on my place. But I am paying 3.25% on a 15 year, and didn't make sense to me.
Good advice, Ramsey always talks about cash but he always wants you to basically cash strap yourself. How many times do you have hiccups over a few months that would burn up a grand (what he wants you to build up)? If you would need to take out a loan later on for a major house repair; you will have large fees to reinstall a note. Leave things in place or pay off a chunk to shorten up the loan here and there. It will give you some satisfaction with putting you in a bind.
The smart financial decision would be to keep the mortgage due to low-interest rates and continue to invest in stocks due to the S&P having a historical 7% rate of return. The difference between the mortgage interest rate and the market return would be your gain in wealth.
Having said that, how much further can the market continue to go up? How much upside is there left? I think that is the question you need to answer, and unfortunately, you may not be able to get a definitive one. There are some signs that the market is slowing down, so better to sell high than low.
Having said that, how much further can the market continue to go up? How much upside is there left? I think that is the question you need to answer, and unfortunately, you may not be able to get a definitive one. There are some signs that the market is slowing down, so better to sell high than low.
Time be fair the 1000 is only while you pay of other debt. You should have a 3-6 month emergency fund before thinking about paying off the house.
I think it comes down to this. Paying off the house is the best safe advice and works for most people most of the time. For those willing to learn and be disciplined this is like graduating to Econ 401.
I think we will move up in house and get a fixed 20 or 30 year loan. These are 5000 year lows in interest rates. But we will be careful to look for the most stable local tax district, not buy too big of a house, and buy less risky investments.
I think we will move up in house and get a fixed 20 or 30 year loan. These are 5000 year lows in interest rates. But we will be careful to look for the most stable local tax district, not buy too big of a house, and buy less risky investments.
My wife and I just started paying an additional $1,500/month to our Mortgage Loan principal balance and putting $1,500/month into a Schwab One account with the goal of paying off our mortgage in 5 years. At the end of 5 years, we would withdraw our funds from the Schwab account to pay off the mortgage balance assuming that it has returns greater than our 3.95% mortgage interest rate.
How much more could you be investing without a mortgage payment? Also, if you lost your job in a downturn. Can you make a mortgage payment?
Unless you've got many thousands invested. I also would say pay off the mortgage. Your ability to cashflow investments post mortgage will easily make up for the initial hit. If we are looking 10+ years out
Unless you've got many thousands invested. I also would say pay off the mortgage. Your ability to cashflow investments post mortgage will easily make up for the initial hit. If we are looking 10+ years out
One more day of Iranian war escalation and I will 100% be in the “sell the stocks pay off the mortgage” camp. Lock in those gains and do something meaningful.
Can you expand on this a little bit? I can't wrap my head around why getting a mortgage on a house that is going to hypothetically be worth 10% of its current value is better than waiting for a house's price to crash and then buying it with cash.
I went the route of paying off the mortgage over 10 years ago and have never regretted it. The point made previously about being disciplined in managing the extra cash each month is very true. There are always new temptations out there that you'll need to avoid. Good luck with your decision!
My family was in a similar situation to the OP about two years ago. We decided to pay off the mortgage and haven't owed anyone anything since. I've always had the perception that money in my brokerage account isn't "real" until it is put to use acquiring a tangible asset. Perhaps it is due to it being discretionary income that goes in to acquire stocks - 'fun money' if you will. We have 401Ks, IRAs, and 529's for the kids, so the brokerage is another basket.
I have noticed a small shift in attitude towards work - want to vs need to balance is shifting. I've got plenty of reasons to still head to the ol' salt mine, but if SHTF I have bought myself time to sort things out before things get personally desperate. Enjoy seeing the balance of our 'new car' fund rocketing up, and this last trip to San Antonio the Cyclones sent us on was better and much easier to enjoy (despite the outcome of the game). Planning better vacations doesn't stink. It's the little things the extra peace of mind brings.
I have noticed a small shift in attitude towards work - want to vs need to balance is shifting. I've got plenty of reasons to still head to the ol' salt mine, but if SHTF I have bought myself time to sort things out before things get personally desperate. Enjoy seeing the balance of our 'new car' fund rocketing up, and this last trip to San Antonio the Cyclones sent us on was better and much easier to enjoy (despite the outcome of the game). Planning better vacations doesn't stink. It's the little things the extra peace of mind brings.
