If you have ever found yourself in a position to ask yourself, “Should I save more money or pay off the house?”, first I should congratulate you because you are gem in matters of personal finance. With the majority of people living paycheck to paycheck, having this problem is a pleasant one indeed.
Be sure to check out the other articles written by my fellow Money Mavens team listed at the bottom of this post. A little diversity on the subject can’t be bad. 😀
So…should you grow your investments or pay off your mortgage? Just as I tell anyone that asks me this question, I am not going to tell you what you should or shouldn’t do, but I will tell you what I would do if I were in this situation. Personally, the way I see it, this is a trick question. For me, being completely and totally debt free has a tremendous influence on what I would do.
Some people will try to argue that paying off your mortgage is stupid because you lose your “tax benefit“. This makes absolutely no sense to me since what you are doing is giving the bank more money to keep from giving Washington less.
Others will likely tell you to invest what you wold have used to pay off the mortgage and take full advantage of compounding interest. This argument at least makes sense to me. What they are suggesting is that you avoid paying off low interest debt, and instead invest the money in something that will give you a higher return. The bottom line for me is that you still have debt. This argument seems to encourage people to ride out a 30 year mortgage, and I personally believe that not having a mortgage is more beneficial than having one.
If you have absolutely NO DEBT, how fast can you build wealth? You can do it super fast!! I would much rather have a giant emergency fund, no debt, steady retirement savings, and the opportunity to build one heck of a diversified portfolio, than continuing to sludge along on a 30 year mortgage hoping that something doesn’t happen that will put me in a situation to lose my house.
When the economy plunges into the dark, cold abyss a paid off home is a blessing. A paid off home doesn’t drag behind you when times are hard, instead it gives you strength.It puts you in a position of strength rather than one of weakness. You are in control.
When I decided I didn’t want to be a slave to any lender ever again, I really meant it. It wasn’t reliant upon my disbelief in my own ability to live life without borrowing money to own a house. I’m not saying that anyone who takes out a mortgage is making a bad decision, because to them depending on their mindset, it could seem like the only way. It’s not the only way to own a home, it’s just the simple way to own a home. Simple is not always better.
How has society influenced your position on this matter? If more people were completely debt free and less people had mortgages, how would you feel about it then?
I am a firm believer in the saying “anything worth having, is worth waiting for”. If you live your whole life convincing yourself that you can never save up enough money to buy a house without a mortgage, you are selling yourself short.
Then there are those people that really do not want to make the sacrifices it takes to buy a home without a loan. They are completely content with having a mortgage until the risk catches up with them. Then they suddenly feel entitled because life just isn’t fair and everyone deserves to own a home.
Personal finance is personal. You have the ability to just cruise through life virtually any way you wish, handling your money as you please. To some having a mortgage might not be so bad, but to others, the ones who have experienced the pain of what having a mortgage can do to their family when life hits them hard, the risk is all too real.
For me it comes down to one simple belief. NOT HAVING DEBT IS ALWAYS BETTER THAN HAVING DEBT!
What would I do? I’m paying off the mortgage early baby!! Once the house is paid off there will be plenty of time to invest later on. I have also NEVER heard someone who had a paid for house complain about it!! I have however, heard plenty of people with a mortgage complain about the “what if’s” in life until my ears bleed. What if…you didn’t have a mortgage?
What would you do? Share your thoughts in the comment section. This is certainly an interesting and very thought provoking topic. Add to the discussion.
Save or pay off the mortgage?