Paying off my mortgage

What's soon and what's the impact to you if the S&P goes to say 4400 next year instead?

Friday's close for the S&P was 4719.
4800 = around a 1.7% increase
4900 = around a 3.8% increase
5000 = around a 5.9% increase

FWIW, my payments are also sitting in an S&P index versus paying the mortgage but I have quite a few years to go to retirement.
 
FWIW, I've always had the mindset of no mortgage in retirement for me. Personally though I am not working to pay off my mortgage too much faster than the 15 years it is signed for. The interest rate is 2.75% and I can get 4 to 5% on my cash in CD's. I will be 47 in March and will likely work to 59-60 but have everything set up to go at 55 if needed.

I do not know your situation @Donald but a few things to think about... You don't need to answer just internalize and talk to your wife and financial planner.
  • how is your cash flow situation, can you withstand the payment in retirement?
  • does the mortgage payment inhibit you from doing things you want?
  • if you use this cash will you need this cash for something else?
  • can you set it up to pay the mortgage with the earnings off the principal?
  • with the short term investments what does your earnings situation look like? Capital gains on this money might hurt right now if you are still working.

Just my $0.02
 
We can all speculate here! but we really don't know the real life expenditures ! ( Cash flow in and out ).
To keep it simple if my investments were making more than my mortgage % i would stay invested.
Some people simply cannot stand being under the thumb of debt.
 
Donald said:
I am looking to pay off my mortgage soon. The money to pay it off came from the sale of my previous house. It's currently in an S&P Index Fund. And a few individual stocks. Things are looking good for the S&P to hit 5000 next year and inflation to drop to 2% and the Fed to cut the rate maybe in March. I wonder when to sell S&P Index Fund. While things look pretty certain. Possibly sell a portion of the index fund as the S&P moves to 4800 then more at 4900 then the rest at 5000
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I paid off my house this year (heloc ie first lien position home equity), and have not had a mortgage since 2013 (the above was a 120 mo loan). My friends have often asked should I keep my mortgage and invest the money instead?

I like to as they say keep ‘em separated. Don’t base decisions on the opportunity cost of the stock market.

I am of the generation who by timing started putting in 1994. So, the market has never gone down permanently. Imho this is why we believe we can in fact be leveraged to the hilt. Doing so would not be wrong since 1994.

But what if we wake up 60 yo and the market corrects 50% (I don’t want that), will we have enough time to recover? I say get rid of loans, and then see if there is cash to invest with. Don’t not pay off loans because the rate of return is higher in the market. Conventional wisdom ultimately has to prevail.

My .02 ymmv as always
 
John105 said:
I paid off my house this year (heloc ie first lien position home equity), and have not had a mortgage since 2013 (the above was a 120 mo loan). My friends have often asked should I keep my mortgage and invest the money instead?

I like to as they say keep ‘em separated. Don’t base decisions on the opportunity cost of the stock market.

I am of the generation who by timing started putting in 1994. So, the market has never gone down permanently. Imho this is why we believe we can in fact be leveraged to the hilt. Doing so would not be wrong since 1994.

But what if we wake up 60 yo and the market corrects 50% (I don’t want that), will we have enough time to recover? I say get rid of loans, and then see if there is cash to invest with. Don’t not pay off loans because the rate of return is higher in the market. Conventional wisdom ultimately has to prevail.

My .02 ymmv as always
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Thing is, the closer one gets to whatever that age is that they "need" the money, the riskier being invested in the market is. Historically at least, the earlier $1 is in the market (I'm talking a diverse index like the S&P, not individual stock) the more "normalized" the return is. The rolling historic 30 year return on the S&P should give some comfort that even if there is a 50% correction, average return was still pretty good assuming a long investment window.

Not saying paying off is wrong for everyone, but a good thought exercise for someone (opportunity cost of where the $1 goes).
 
Over the decsades I was told the taxes will be lower when you retire and I would be taxed at a lower rate when retired . This year I paid +$120,000. in state and fed taxes. I would imagine with the cost brought on to the taxpayers will be higher as time goes on.
 
Having a home free and clear is a great feeling, as many have posted.
Having a big fat portfolio is pretty nice too.
Paying $120K in income taxes is a GREAT problem to have.

Balance, weedhopper. You will get there... I wish you luck in your financial endeavors...
 
Pay that mortgage off Donald. Anyone that does reports a huge weight comes off their shoulders. Mine too - back in 2004.

Don't buy into any more huge debt. A financial reset (cashless OWG) is coming by 2030. If that's not bad enough, numerous wars in the Middle East develop, causing product prices to rise again big-time.

If that's not bad enough our country leaders needs to guard all our Nuclear facilities here ten-fold. A sneak attack (same hour / same day / All Facilities) could make our nation a wasteland in a matter of hours.... not days, weeks or months.
 
Investments do not make more money then paying off a mortgage. When you pay off a mortgage you are paying off a realized debt. When you have money in an investment it's an unrealized gain (or loss) the investment is nothing until it's out for turned into cash.

It's easy to look like a hero in a stock market moving sideways and up, until it goes down at an inopertune time.
 
alarmguy said:
Investments do not make more money then paying off a mortgage. When you pay off a mortgage you are paying off a realized debt. When you have money in an investment it's an unrealized gain (or loss) the investment is nothing until it's out for turned into cash.

It's easy to look like a hero in a stock market moving sideways and up, until it goes down at an inopertune time.
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Seems... overly definitive.
 
I think the tommy selleck crowd is more prevalent than ever. There is no need to leave anything to charity and heirs, so imma burn this mofo down

I personally know handfuls of folks 70-80 who are only 10 or less years into a 30 yr mortgage. Actuaries do not anticipate them paying them off. I don’t know anyone who listened to tommy selleck but has to be people charmed by his financial prowess 😆

He would not steer anyone wrong

IMG_4210.jpeg
 
I guess I just want to be debt free or one step closer to being debt free.

We are lucky in that between defined pensions and SS we spend less than we take in. Without a mortgage payment we will be doing even better. Our largest monthly expense will be food and that's only a few hundred.
 
Paid mine off in 2019 putting in large chunk of cash. It was good (felt no pressure in 2020 when oil and gas industry tanked and I got laid off) and bad (missed on all of the gains had I put the money in the market). On the other hand, paid virtually no interest on the mortgage and house now appreciated over 70%…all those unrealized gains haha. Just do what feels right. Good luck
 
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Paying off your mortgage may actually protect against an extremely unlikely event.

What if the government nationalizes savings accounts, bonds, equities, etc? How then will you make your mortgage payments. Other countries have nationalized banks and financial institutions at times of crises. It would be catastrophic if this happened in the USA. Could there be scenarios where a government choses nationalizing during a crisis?
 
Donald said:
I guess I just want to be debt free or one step closer to being debt free.

We are lucky in that between defined pensions and SS we spend less than we take in. Without a mortgage payment we will be doing even better. Our largest monthly expense will be food and that's only a few hundred.
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You are on a good path. A possible strategy might be to generate some cash, say half of your current mortgage balance + tax liability and pay down half your mortgage. That way your interest expense is less and make bigger monthly payments going forward.
This way you still have a nest egg. Try it for 6 months or a year; if it works for you do it again.

Conversely paying off your mortgage allows for increased building investment wealth.
Sounds like you have good choices; it's all upside!
 
JeffKeryk said:
You are on a good path. A possible strategy might be to generate some cash, say half of your current mortgage balance + tax liability and pay down half your mortgage. That way your interest expense is less and make bigger monthly payments going forward.
This way you still have a nest egg. Try it for 6 months or a year; if it works for you do it again.

Conversely paying off your mortgage allows for increased building investment wealth.
Sounds like you have good choices; it's all upside!
Click to expand...
There's someone who played rhythm guitar in my favorite band. I'm sure he used tons and tons of drugs throughout his career, as well as having all kinds of wild encounters with girls.

He says today, to young people, never use heroin or meth, they will wreck your life. As a matter of fact, you're better off without drugs.

Some may say, what's good for the goose, is good for the gander. Others may say ok old man, I'll learn from your experience.

Me, I have to touch the stove, but thank goodness I've never been burned too badly.

I think debt is the same thing. One is simply better off without. It doesn't mean that debt is shameful or anything like that. But generally speaking, it's very hard to make a case saying you are so much better off owing, having interest mount by the second :)
 
This is really an interesting bunch of posts and all are correct. . Gots to do the math and what ever makes happy !!
 
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