ok from a different camp, this might change minds if it applies. Example: $100k balance mortgage @ 3.85-4.0% int. @ $1700. Per Month. Pay off the 100k if you have the money and every month you pocket $1700. Per month. I look at this $1700.00 as monthly income... if paid off. Am I fooling myself? Vs. $7-10K gain per yr in the market (taxable or not) ...possibly at risk?
$1700.00 per month = $20,400 per yr. pretty descent income for some. Reinventing an asset. Look forward to anyone's thoughts.
Take care
Seems like it. A $100K mortgage at 4% (your high end) is a $477 monthly payment, and even the first payment is $333.33 in interest, the principal is a payment to yourself. So roughly $3900 per year, not $20,400. -ERD50
Great job on the discipline and planning to put yourself in such an advantageous position. I grappled with this dilemma and currently sit with a paid off home, as I decided to pay it off rather than invest the money elsewhere.
Why does this have to be an "either or" choice. Bet on both horses and split the money between paying down the mortgage and investing.
Why does this have to be an "either or" choice. Bet on both horses and split the money between paying down the mortgage and investing.
The trouble with splitting the difference is that you have locked up your money, and you don't see any benefit until the future date when it is paid off.
If you save up and decide to pay it all off, then you get an immediate cash-flow benefit (well, assuming the payment was more than any investment cash flow).
-ERD50
I am 28 years old and my only debt is my mortgage (30yr at 4%. Have about 98k remaining). After maxing out all my tax advantaged vehicles for 2014, should my focus be to direct additional monies to principal on this mortgage?