How many of you have paid off your home?

Not sure what your current situation is, but not owing any money is not a bad thing... With interest rates going down it's a lot different then we had our mortgage.

Good luck on your decision and wish you luck...

 

If this is an either / or choice, then you are not financially ready for retirement.

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I answered the poll based on age on the final payment, just barely under the indicated breakpoint. A fast payoff was possible due to two incomes, buying a house only as big as we needed (significantly smaller than we qualified for), the booming 1990s stock market (now long gone), and extra principal payments. The interest rates of that era, nearly 10%, also meant that a small extra payment knocked many more months off the term than a similar payment today. And we always payed extra.

After the mortgage was finished, that payment stream was diverted into additional savings and investments, beyond the employer programs that were already maxed out. (Annual limits were smaller back then.) That is why we don't have to work full time anymore.

 

Mom made sure all of us read this.

My short summary of TMND: Most of those who have it, don't show it. Most of those who show it, don't have it, and never will.

The net worth vs. age guidelines were quite useful, though may be tougher to achieve in this century.

 

Trying to decide if I should or not.

Do have a small car payment, but interest is zero. I'm okay with that.

 

If you can manage your own bills Sis, why not...

Property taxes, insurance and assessments many times are rolled up into a note... making the tracking and paying of them something you don't have to pay attention to.

If you can do that, you can save what you'll pay in the difference, and maybe even invest it into something you want.

 

Not to mention, mortgage is 4.75% fixed/30 years, and I don't know where the money would earn that percentage with zero risk.

 

I've never borrowed money. What I cannot buy with cash, I do without. For many years I lived on very little. No movies or restaurants, but I lived where the air was clean and the landscape was beautiful and I could have a BIG vegetable garden. And houses were CHEAP! At least, the sort of hundred-year-old farmhouse I lived in. I bought an old farmhouse for cash when I was in my 30's, and sold it about 15 years later. I bought my present home for cash about 5 years ago when I moved here. I've never had a mortgage. I bought a house that was less expensive than I could have afforded to do, so that I would not be tied to it if I wanted to move when property values were low, and so that I'd have more money to do the things I enjoy doing, such as hiking at upscale wilderness lodges in Canada, swimming with dolphins, freediving, and scuba diving.

 

That would be nice to be able to buy a house with cash but for many it's just not feasible depending on where they live, at least not unless they want to wait until they're 40-50 to buy a house. Debt isn't always bad; saving up to pay for college with cash if it takes you until you're 30 for example is a poor use of time.

I'm sure you've however found that the more you live on cash the less stress you have.

Relying on double incomes, having credit card debt and then one person losing their job must be an excellent way to have household stress levels skyrocket immediately.

 

I do similar accounting tricks. It's not magic, but it sure as hell does help out a lot

Dang if I hadn't been away the last week on business, I would have whipped it out

The book that is

Some things, like an education, may be a good reason to assume debt. As long as you can land a job to make it worthwhile

But for other things, debt is best avoided. If you can't afford to pay for it outright, you don't need it

I also cannot depend on some government to send me a check every month once I turn 65. The debt crisis in the EU will almost certainly affect things here, and NOT in a good way

 

News Headlines

Retirees Should Think Twice About Paying Off the Mortgage

 

Yep!!
Mom (88yo) has her house paid off, but needs help from us kids to keep her medications, food and utilities paid.

It is a mobile home on rental lot. therefore, not available for rev mortgage.

 

Great book. Read it a decade ago and it was seminal in my view of finances, paid for itself many hundreds of times over I am sure.

The one main thing that's changed in my view of finances over time is my view on leasing. I used to think it was like making a pact with the devil but despite a history of only buying used cars my last two cars have been new, and leases at that. When I looked at all the numbers objectively it made sense and one thing people often don't consider is the cost of time and hassle with repairs, something that a used car brings vaguely into the mix but is obviated with new. Typically it still doesn't make sense to lease, but in the last year or two there have been some phenomenal lease deals on a few cars for a person willing to jump when they become available. I'm paying now about $200/month for brand new vehicles both MSRPing over $20k, the only maintenance issues being oil and tire changes and no money down beyond tax, title, etc.

As I've told my wife, when the lease is up on the Prius if I can get another one out the door for $180/month after the $1500 for tax, title, etc. I'd be a fool not to. Already lease rates on these have gone up over $300 for the same thing, though. I expected then and still expect now my recent lease purchases may have been once in a life time-type deals.

 

Just because you pay off your house doesn't mean it's free from there on out. Property taxes, maintenance and insurance won't go away with the mortgage.

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The article talks about keeping one's money in the market and using the earnings to pay the mortgage? That doesn't sound too plausible in today's economic conditions.

 

Exactly. In fact, this is partially what I was pointing out earlier in the thread. Home values are frequently manipulated from top to bottom, with the homeowner having little or no control over the degree to which they are.

And a book that I believe should go hand-in-hand with The Millionaire Next Door is The Creature From Jekyll Island.

 

I will lease vehicles, but I also have a consulting business

In that situation the lease is entirely appropriate

 

I agree

 

Classic mistake here:

While correct in a previous paragraph, they blew it here. Interest income must be discounted the same as the mortgage interest rate, i.e. 4% interest before tax (if you can find it) is just 2.8% after tax. This is less than the illustrated after-tax mortgage rate, not more as they implied.

Short term capital gain investment income suffers the same problem, while other investment income is more complicated.

Combined with a fairly high standard deduction, which effectively leaves a big block of itemized deductions wasted for some of us in some states, I find the mortgage interest deduction much less valuable than it is normally portrayed. I don't miss it at all.

 

it was actually my mother's so I didn't have to pay at all