Originally Posted by samclem
Agreed, and the housing costs had really outstripped the housing payments before this was addressed. It was the right thing to do. OTOH, if that money had been put into pay raises instead, retirement checks would be bigger.
When we bought our first Hawaii home the mortgage was $1894/month on two O-3 housing allowances. Remember the basic allowance (BAQ) plus a variable use-it-or-lose-it supplement (VHA)?
When we both promoted to the O-4 big bucks, that use-it-or-lose-it provision encouraged risky behavior. Faced with losing all of our extra housing allowance at our new paygrade, we refinanced from a 30-year mortgage to a 10-year mortgage with a $2631.97 monthly payment. We'd keep the extra allowance money and pay off the house faster. How could we lose? After all we expected to spend the rest of our careers in Hawaii and it was the only way to keep getting the higher allowance.
I remember those numbers so well because a year later we were transferred to San Diego as the Hawaii real estate market was crashing. Our "better" choice was renting out the house, and we never got more than $2000/month. I wrote three years of checks while contemplating those numbers (and the needs of the Navy's assignment officers) but we eventually clawed our way back to Hawaii.
Sometime during that period the BAQ & VHA system was replaced by BAH and there was no more use-or-lose. We lived under our allowances and banked the difference to lay a pretty solid foundation for ER.
So instead of a bigger retirement check we ended up with a bigger ER portfolio.
Having paid off that first house made all the difference when spouse discovered our current "dream house". I'm 47 years old, and the 7+ years that we've been in this home is my longest at the same address...