Paid off Mortgage- Should I share?

When that day arrives, I am going to get a big sign made that says:

Please forgive me, _______ Bank. I had intended to pay you 3 times what my house is worth in interest, but I hit my head and decided you didn't deserve it, so I paid it off very early. I won't do it again!

Sincerely,

Mr. and Mrs. Financedude
 
nvestysly said:
The idea of a mortgage burning party is appealing. We didn't do that but it sure sounds like fun.
Click to expand...

I might go into mourning. The end of a low interest, tax deductible loan! :( The loss of some liquidity! :(

Just a different viewpoint. -ERD50
 
FinanceDude said:
When that day arrives, I am going to get a big sign made that says:

Please forgive me, _______ Bank. I had intended to pay you 3 times what my house is worth in interest, but I hit my head and decided you didn't deserve it, so I paid it off very early. I won't do it again!

Sincerely,

Mr. and Mrs. Financedude
Click to expand...

:D
Love this and wish I sent them this in a letter last year. It was funny how unhappy the bank seemed when they sent me that pay-off confirmation letter.
 
Two Schools of Thought - We Did Both - Sort of

ERD50 said:
I might go into mourning. The end of a low interest, tax deductible loan! :( The loss of some liquidity! :(

Just a different viewpoint. -ERD50
Click to expand...

I am certainly not in favor of paying a mortgage early if it's at the expense of saving in a 401k, living a reasonable life, etc. In fact there was a time that we refinanced to a lower interest rate, 30 years, and much lower payment. At the time that was a safety net in the event of layoff we could still afford the mortgage. Liquidity was also a concern at the time.

At some point we were saving all we needed, living the life we wanted and we had some extra to pay off the mortgage. We have a number of other tax deductions so the mortgage interest was little help for us.

Now we have plenty of liquidity, plenty saved, the value of the house is a small fraction of our net worth. It's paid for and that's one less bill we have to worry about each month.

So we took both routes at various times during our lives depending on the conditions.
 
nvestysly said:
So we took both routes at various times during our lives depending on the conditions.
Click to expand...

I think you are very wise to do so. There are pluses and minuses, and conditions should be considered.

My comment was sort of a 'leg-pulling' answer to those who are so entrenched on one side or another.

-ERD50
 
ERD50 said:
I think you are very wise to do so. There are pluses and minuses, and conditions should be considered.

My comment was sort of a 'leg-pulling' answer to those who are so entrenched on one side or another.
Click to expand...

That seems to be true. Funny, it is such a simple calculation. Figure: can you find a solid investment that pays more than the amount you pay in interest each year minus the savings you make by taking the tax deduction. If yes, then put your extra money in that higher yielding investment. If no, then pay off your mortgage.

Am I the only one who just paid off my mortgage totally without emotion? I guess I have different things in life that excite me. :greetings10:
 
I paid extra on my mortgage for about eight years, but when Megaconglomocorp decided I should be [-]fired[/-] [-]furloughed[/-] [-]right-sized[/-] "early retired", I stopped. Figured I wanted liquidity, and not have to sell or remortgage my house to get money... Plus, back then, I had more "disposable income" than I do now, so no mas.
 
We were extremely open about paying down our house. We went so far as to post our 4 year paydown goal on our refrigerator to remind us of the goal everytime we got a glass of milk. When people came to our house, they asked about it. Some found it an interesting concept. We often had people ask us how the paydown was going, and if we kept to our anal schedule. Accountability kind of kept us on track. When we finally got it paid off (at age 38), the people that saw the goal on the fridge early on, congratulated us to be able to stay true to the goal.

It even opened some eyes that you could actually pay off a mortgage early. Some people dont even know that it is possible or how to go about it. My BIL saw what we were doing and decided to do it also. He paid his off 3 years ago. Other people around us are now thinking about it, and asking us questions how to go about prepaying.

If people get jelious, and think its bragging, so be it! Thats their problem. Be proud. You are doing something that takes discipline and hard work. BRAG. I do all the time. If you have shallow friends that dont support you in all aspects, let them be on their way.
 
I forgot to post the types of people that talked to us about our paydown accomplishment.

The supportive people--usually congratulate you and are truely happy for you
The self Defietest people--give you all sorts of reason why they could never achieve such a goal
The You could do better with your money people---give you all reasons why you should invest your money instead of paydown
The tax write off people--- can't believe you are giving up your ability to write off your interest.
And the jealous---hold it against you that you are doing well

I love talking to all these personalities. It is fun hearing the points of view. People know me well, and know I am blunt as hell. I tell them what I think, and they know exactly where i am coming from when the conversation is over.
 
ERD50 said:
I might go into mourning. The end of a low interest, tax deductible loan! :( The loss of some liquidity! :(

Just a different viewpoint. -ERD50
Click to expand...
Back when I had a house in the Megacity I paid off my 15 year note in year 12. I quit doing the Schedule A a few years before that because I just didn't have enough deductions.

On a side note - back in the days when this was doable - I had a friend whose husband refinanced their house every few years and maxed out the loan amount. She defended him by saying it was OK to have that kind of "good" debt because they got to deduct all of the interest on their income tax. <sigh> Their mortgage payment got significantly higher each time because the house appreciated nicely. But, by golly, they had fancy new cars every year, very [-]expensive[/-] nice vacations, lots of jewelry, and the young 'uns always had the latest whatever because they were [-]spending all of the [/-]getting the "equity" out of their house at each refi.

When I paid off my house they were enjoying higher mortgage payments and a 30 year note.
 
One point I don't think anyone made so far is the value of the tax deduction. We had come to the point where only a portion of the mortgage interest we paid annually was putting us over the standard deduction amount. So, much of the interest we were paying had no tax benefit.

So I paid it off last year before ER. It's good to have no debt!
 
Something to think about if you are self-employed - the interest tax deduction is even more valuable as it reduces your SE tax as well as your Federal and State taxes. We're self-employed, with 33% of our home dedicated to office/studio space. With the home office deduction, we can take 33% of our mortgage interest paid for that tax year and reduce our self-employment income. (As it is, our SE tax is horrendous. Even at 13.3% for 2011, it will be more than our Federal and State combined, and we're in the 25% bracket. That's because the SE tax is calculated on your net business profit, before retirement contributions and personal exemptions are taken into account.)

When we sold our house in CA we had enough to buy another house outright. Instead we invested the same amount of money and it's kicking off 7%, which pays both the mortgage and property taxes and then some. The mortgage is 4.65% (about 3.5% after the deduction). I'd love to pay off the mortgage and be completely debt free, but any time we run the numbers we can't think of a good reason to. Liquidity is even more valuable when you're self-employed too.
 
We weren't able to deduct interest for the whole time we had our home loan, unfortunately, so there was no "benefit" to paying the interest.

Daydreamer, I love your list! We used to keep our budget on our refrigerator, plus a graph showing our debt decline, for all the world to see. It takes a pretty bold friend to question my judgment on most things, but about money? Most don't want the 'schooling' that might result. :)
 
I tell people I'm still making mortgage payments (only they don't have to know that they are to myself, the Bank of Nui).

There's a French Canadian custom of putting 3 butterflies on the outside of your house once the mortgage is paid (to symbolise freedom). Whenever I see them, I smile :)
 
Nuiloa said:
I tell people I'm still making mortgage payments (only they don't have to know that they are to myself, the Bank of Nui).

There's a French Canadian custom of putting 3 butterflies on the outside of your house once the mortgage is paid (to symbolise freedom). Whenever I see them, I smile :)
Click to expand...


How cool! In the past when I've seen that I thought it was dorky and showed a, ahem, less than spectacular design sense. Now I'm tempted to get some for the down south house.
 
Thanks, everyone. Just updated the budget spreadsheet and both DH and I are grinning ear to ear. Everyone's situation is different but for us this made so much sense at this point in our lives.
 
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