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Old 07-28-2014, 11:04 AM   #21
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The paid off peace of mind works for me. However, I can see the other side of the coin too. At these historically low rates, there is opportunity. I can see why some people will carry a mortgage. Perhaps the positive calculations of opportunity cost of money give people a certain peace of mind too. That's fine. Just doesn't work for me.
Rates are expensive compared to CD rates that one can get.

Unless you plan to stay in house for 30 years (length of loan), which while wise thing to do...most people will not do.

I vote for pay of house ASAP.
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Old 07-28-2014, 11:06 AM   #22
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I'm dumb and happy. My goal was to pay off my mortgage early first -- before I even thought of ER. Did so, and that's when my retirement savings went into hyperdrive.

It wasn't all numbers. It was also peace of mind.
Same here. I paid down my mortgage in 1997 and 1998, taking some of the stock market's gains off the table as the interest rate on my 1-year ARM was rising.

This was a key step in greatly reducing my expenses so when I reduced my weekly hours worked in 2001 by nearly 50% it was not a big deal to cover those smaller expenses. That led to starting up my plans to ER.

My personal savings rate from 1998 to 2001 was huge, as my wage income was at its peak while my expenses were nice and low.
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Old 07-28-2014, 11:13 AM   #23
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I paid off the mortgage awhile back. For me, it's the peace of mind knowing I own the roof over my head without any payments.

There is this Sunday morning radio program with the host saying to not pay off the mortgage as the freedom isn't really that free. For example, even with a paid off mortgage, there'd still be other home ownership expenses anyhow (taxes, repairs), so it's better to invest that money.

Still for me, I like knowing a mortgage payment is just one thing I don't have to worry about.
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Old 07-28-2014, 11:23 AM   #24
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Assuming Moss structured his research questions correctly, I see no reason to argue with his results - in general. But we know it's all about the individual. Anyone reading his book is free to pick "one from column A and 2 from column B." No surprise that "most" of his respondents felt best about paying off the mortgage and having lots of hobbies and three sources of income. But as individuals, we don't all fit into his averages on every point. No surprise since YMMV.
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Old 07-28-2014, 11:57 AM   #25
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We just run the numbers on everything. I have no emotional attachment to having a mortgage or not. We just key off maximizing net worth and after tax income with considerations for asset protection. In some states personal residences have a high degree of asset protection and in some states they do not.
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Old 07-28-2014, 12:10 PM   #26
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WE paid off our home before we retired. Also we can Homestead and protect the house from creditors, being sued, etc. I don't think many states have that anymore. Our property taxes are low and we certainly could not rent for what it costs us to live here. I think everyone has to look at their own situation to make the right choice. There is never one choice fits all.
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Old 07-28-2014, 05:34 PM   #27
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I view the pay off the mortgage discussion much the same I way I view the Dave Ramsey approach of paying of small debts first regardless of interest rate.

They are both focused on the psychology of the situation. If it were simply a matter of focusing on the cold hard numbers, almost everyone would be out of debt - and retiring early. But most people just don't work that way.
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Old 07-28-2014, 06:13 PM   #28
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Originally Posted by JoeWras View Post
I'm dumb and happy. My goal was to pay off my mortgage early first -- before I even thought of ER. Did so, and that's when my retirement savings went into hyperdrive.

It wasn't all numbers. It was also peace of mind.

When it comes to the primary residence, another factor is "frequency of moving." Moving is not only costly, it tends to reset everything, including the mortgage treadmill. But I digress.

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+1. There are some things even more important than crunching the #s and saving some quid. No bank able to foreclose, and killing off that seemingly endless monthly payment, greatly outweighed the modest savings. It was, well, priceless.
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Old 07-28-2014, 06:26 PM   #29
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I'm happy just putzing around in retirement
Since I have been called a putz, does that mean I'm successful?
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Old 07-28-2014, 06:32 PM   #30
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I do kinda take issue with that as I'm happy just putzing around in retirement
I'm doing well at that too. Framed up a couple of pictures that will make some people smile. That's worth doing and works for me.

Putzing is good.
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Old 07-28-2014, 09:44 PM   #31
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From the article:

That's his top advice? Dumb. This is another book I won't need to read.
+1 I refinanced at 3.375% in early 2012 just before I retired (but after I stopped working - I was "on vacation"). Since then my portfolio has averaged a 14.7% annual return so I'm ahead 11.3% a year. Since I retired my portfolio has increased more than my entire mortgage and that is after withdrawals for living expenses.

I realize that living in retirement with a mortgage is not for everyone and that's fine, but so far it has worked out great for me. My comfort is I could write a check and lay off my mortgage at any time I chose to.
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Old 07-29-2014, 10:48 PM   #32
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Wes (the books author) has a radio show here in Atlanta and is a fee only FA. I was curious about the book and his research so I bought it. I read about a third of it and grew quite bored. I give it an overwhelming 'meh'

Sent from my mobile device so please excuse grammatical errors.
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Old 07-30-2014, 04:32 AM   #33
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We moved 2+ years ago and instead of buying our house with cash (previous home paid off) we took out a $400k 15 year loan at 3%. I used that to purchase 5 rental properties that are now earning over 9% cash flow. We get the advantage of being able to write off the mortgage interest as well and when we retire in 2+ years we will use the rental income as our primary income source.

I do play with the numbers to see if it makes sense to pay off the mortgage when we retire but every calculator says we are better off with the rental properties.
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Old 07-30-2014, 05:47 AM   #34
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+1 I refinanced at 3.375% in early 2012 just before I retired (but after I stopped working - I was "on vacation"). Since then my portfolio has averaged a 14.7% annual return so I'm ahead 11.3% a year. Since I retired my portfolio has increased more than my entire mortgage and that is after withdrawals for living expenses.

I realize that living in retirement with a mortgage is not for everyone and that's fine, but so far it has worked out great for me. My comfort is I could write a check and lay off my mortgage at any time I chose to.
But you are comparing apples with oranges. How much would you earn if you put your money into CDs which CAN be compared to mortgage. You would loose money

Hindsight 20/20.....
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Old 07-30-2014, 06:15 AM   #35
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But you are comparing apples with oranges. How much would you earn if you put your money into CDs which CAN be compared to mortgage. You would loose money

Hindsight 20/20.....
I'll agree to disagree with you on this one. Nothing says that I have to compare what I earn to CDs. In fact, if that was my only investment alternative with the proceeds I would not have refinanced.

I'm simply utilizing my good credit rating and home equity collateral that would otherwise just be sitting there earning nothing and using leverage to earn a spread. I'm accepting some duration mismatch risk for potential rewards, which have been quite positive so far and is a historically good bet. Since my mortgage was only about 10% of my portfolio at the time, I wasn't betting the farm, but making a simple side bet.
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Old 07-30-2014, 06:35 AM   #36
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But you are comparing apples with oranges. How much would you earn if you put your money into CDs which CAN be compared to mortgage. You would loose money

Hindsight 20/20.....
I agree, you need to compare investments with the same risk.
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Old 07-30-2014, 06:54 AM   #37
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I spend most of my day putzing. When DW worked, she claimed I was a slacker that got nothing done. Now she's retired and sees just how time consuming putzing is.
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Old 07-30-2014, 07:33 AM   #38
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I'll agree to disagree with you on this one. Nothing says that I have to compare what I earn to CDs. In fact, if that was my only investment alternative with the proceeds I would not have refinanced.

I'm simply utilizing my good credit rating and home equity collateral that would otherwise just be sitting there earning nothing and using leverage to earn a spread. I'm accepting some duration mismatch risk for potential rewards, which have been quite positive so far and is a historically good bet. Since my mortgage was only about 10% of my portfolio at the time, I wasn't betting the farm, but making a simple side bet.
So for those of us who have paid off houses and good credit (many people here) you recommend us to mortgage out our houses and invest money into equities?
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Old 07-30-2014, 08:43 AM   #39
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So for those of us who have paid off houses and good credit (many people here) you recommend us to mortgage out our houses and invest money into equities?

Your posting question exposes my conflicting attitudes and thoughts. When I refinanced several years ago, I did not have the assets to pay off my house. Now that I can, I will not do so. But if it were paid off, I would never consider taking equity out of my house to invest in equities. You could make the case it is the same scenario, minus any transaction costs.


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Old 07-30-2014, 08:52 AM   #40
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We're renting right now but looking to buy. If/when we do buy it will be a cash deal. I've run the numbers both ways; rent vs own free-and-clear. For us, owning, even tho it reduces our portfolio balance, reduces our living expenses substantially which in turn reduces our withdrawal rate which in turn increases the survivability of our portfolio. YMMV
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