On the topic of paying off your mortgage early

[Anachron]

What if I pay my mortgage off in 12-14 years compared to 30?

Example in OP pays it off in 19.

The sooner you pay the mortgage off, the further behind you will be, if all other parameters are kept the same.

I.e. if you decide to work overtime and toss an extra $500 towards the mortgage outside the original budget, you can't compare that against investing at the original budget - you have to compare against tossing an extra $500 towards investment funds.

[DuracellBunny]

What if I pay my mortgage off in 12-14 years compared to 30?

If somebody wants to pay it off early they should. But, they should do so in the knowledge that they are doing it for psychological reasons, not financial ones.

I personally paid cash for my house, because I wanted to. I also rarely involve myself in the market, as I prefer to reinvest in things that I directly control.

On paper, I would have been financially better off doing otherwise, but I don't need the extra money and did so in full knowledge that I was effectively paying a premium to do so.

[atgbrahsrs]

Age:44

Can i interest you in some collapse of the Soviet Union

Funny how you, the son of Soviet immigrants probably, keep going on about the Soviet army during WW2 which won on manpower alone against an enemy that managed to do so much so much in so little time - the efficiency compared to the bolsheviks is impeccable.

Your age, despite being raised by people who hopefully saw that bolshevism was the greater evil and came with nothing, combined with Australia (a country of ex cons better developed than Russia due to bolshevism) makes the story of acquiring real estate much easier.


You remind me of one Serbian idiot who was here 2 years ago and he was like Z this, Z that, all whilst being born in Germany and working there raising a family.

Political schizo.

That is why when I meet a Russian Tinderella in London I tell her exactly what I think about Russia -> better run by Germans.

[Anachron]

If somebody wants to pay it off early they should. But, they should do so in the knowledge that they are doing it for psychological reasons, not financial ones.

I personally paid cash for my house, because I wanted to. I also rarely involve myself in the market, as I prefer to reinvest in things that I directly control.

On paper, I would have been financially better off doing otherwise, but I don't need the extra money and did so in full knowledge that I was effectively paying a premium to do so.

Very nicely put.

[NextPound]

I have run it out myself a bunch of times. It honestly does not really make a difference either way once you take into cap gains taxes, but yes, you will come out marginally ahead if you invest over pay off, but it really depends on rate. My 2.75% rate makes it a no brainer.

The other thing about investing over pay off if you are disciplined is you are building safety by having a huge pile of cash. You could also invest until your non retirement accounts reach the point of being able to pay off the mortgage. Lots of ways to get there, but let’s be honest, most people will keep ordering Uber eats and do neither.

[SaviorSelfJT]

Dave Ramsey on suicide watch

[r32gojirra]

The other thing about investing over pay off if you are disciplined is you are building safety by having a huge pile of cash. You could also invest until your non retirement accounts reach the point of being able to pay off the mortgage. Lots of ways to get there, but let’s be honest, most people will keep ordering Uber eats and do neither.

Have you ever lived through a currency devaluation

[LateShow]

With a 7.25% interest rate on my mortgage I’d rather pay it down than invest the extra, but that’s just me.
I’d rather have the psychological peace of mind for the $100k I would have to give up over 30 years.

[Anachron]

With a 7.25% interest rate on my mortgage I’d rather pay it down than invest the extra, but that’s just me.
I’d rather have the psychological peace of mind for the $100k I would have to give up over 30 years.

Well put.

[AriesTH]

Good post. Why put so much effort in to educating these people though lol

I do think it might be unrealistic to keep expected investment returns that high over the following 30 years, in theory they should be lower and a more globally diversified portfolio is closer to 5.3%, but also most people don’t have 7% mortgages 🙂

I am firmly in the camp of invest over pay down mortgage though in 99% of cases, this included. This doesn’t even consider other things like what you said, or having liquidity available.

[LaCosaNostra90]

the big factor is piece of mind and a guaranteed return with paying off your mortgage


The market (SP500) has returned 10% a year but that doesn't mean it will in the future. You could also dump a bunch in and it could tank 20% no problem

[MikeLowrrrey]

What if person B loses their job? I'm gonna assume they have an emergency fund, but still

[AriesTH]

Then they have a big emergency fund and time to find a new one lol

[Formula0ne]

It's easy math. If your interest rate on your loan is 4%, but if you invest and earn 8%, you're better off using your extra money to invest than you are to pay off your loan faster.

[Formula0ne]

What if person B loses their job? I'm gonna assume they have an emergency fund, but still

If person B is the person who invested, they can sell some stocks to pay the bills for 5 months until they're getting good paychecks again. You should also always have maybe 2 months of income ready. Most professionals could find a job in 3 months or less.

[r32gojirra]

It's easy math. If your interest rate on your loan is 4%, but if you invest and earn 8%, you're better off using your extra money to invest than you are to pay off your loan faster.

buHt mAh pSyChOLoGiCaL bEnEfItS oF dEbT FrEe

ReeeeEeeeee1!1!!!1

[Anachron]

Bump for morning crew.

[Destor]

Not having a mortgage would be psychologically beneficial but it’s also psychologically beneficial to have a big chunk of money sitting elsewhere that you can tap into when needed/wanted

[donblaximus]

But muh peeece of mind bro??

[donblaximus]

What if person B loses their job? I'm gonna assume they have an emergency fund, but still

Uhhhhh you have investments you can sell to raise capital??

[AWSbruh]

Should I pay off my mortgage early at a 2.6 interest rate or put the extra cash in the market. Srs

[Anachron]

Should I pay off my mortgage early at a 2.6 interest rate or put the extra cash in the market. Srs

Short answer : Right in the market.

Long answer?

Give me the numbers and I'll run them.

I need :

Purchase price
Amortization period
Interest rate
How far you are into the mortgage currently
How much extra you are putting down.

Disclaimer : I am not, in any way shape or form, a financial advisor. Anything I post iTT is just personal opinion and should not be relied upon when making financial decisions.

[donblaximus]

Should I pay off my mortgage early at a 2.6 interest rate or put the extra cash in the market. Srs

2.6 interest rate answer almost always = do not pay off.

[John L]

If somebody wants to pay it off early they should. But, they should do so in the knowledge that they are doing it for psychological reasons, not financial ones.

I personally paid cash for my house, because I wanted to. I also rarely involve myself in the market, as I prefer to reinvest in things that I directly control.

On paper, I would have been financially better off doing otherwise, but I don't need the extra money and did so in full knowledge that I was effectively paying a premium to do so.

This, I am paying extra towards my mortgage every month just because I want the peace of mind getting the loan paid off asap. I know I could be doing just as well financially if not better by putting that into an investment account, but I'd rather have the burden of a mortgage off of me as fast as possible.

[Anachron]

2.6 interest rate answer almost always = do not pay off.

This.

Guaranteed return funds will beat that these days, I think ( I don't dink around with money market stuff ).

[Anachron]

Interesting how miscers shy away from a thread as soon as there are actual numbers posted.

[r32gojirra]

Interesting how miscers shy away from a thread as soon as there are actual numbers posted.

Idk what you’re waiting for tbh

Most of the responses here were agreeing with you

With a small amount qualifying their agreement by noting that they understand what they do is irrational, but they do it anyway for some undefined “psychological” benefit

I think everyone understands the fundamental point though

[Anachron]

Idk what you’re waiting for tbh

Most of the responses here were agreeing with you

With a small amount qualifying their agreement by noting that they understand what they do is irrational, but they do it anyway for some undefined “psychological” benefit

I think everyone understands the fundamental point though

There are a few low socioeconomic peasants who have been avoiding this thread like the plague...

One doesn't have to wonder why.

[r32gojirra]

There are a few low socioeconomic peasants who have been avoiding this thread like the plague...

One doesn't have to wonder why.

You have the causation backwards though

They don’t avoid challenges to their world view because they are peasants

They are peasants because they avoid challenges to their world view


If I had been so close-minded when I joined the forums 12 years ago I’d probably have broken my back and ruined my knees. However actually listening to the advice from actual lifters on here (ikr) helped me progress to bigger lifts more safely and stop spinning my wheels at best, risking serious injury at worst

[Anachron]

You have the causation backwards though

They don’t avoid challenges to their world view because they are peasants

They are peasants because they avoid challenges to their world view


If I had been so close-minded when I joined the forums 12 years ago I’d probably have broken my back and ruined my knees. However actually listening to the advice from actual lifters on here (ikr) helped me progress to bigger lifts more safely

Chicked or egg, matters not.

The feeling of discomfort they get upon seeing the numbers does.