Mortgage Payoff Next Month...Now What??

[Beer man]

DW and I are very excited about our pending mortgage payoff next month! We felt that after 2008 market meltdown the best place for us to put any discretionary money was toward the house. Our thinking was that, being years away from retirement, doing away with the monthly payment would allow me to cut back at work. I am 47 and DW will turn 46 soon. I am not ready to stop working from either a financial or emotional standpoint, but I sure could stand to cut back on my hours. I am lucky enough to have some flexibility at work to do so. I have weighed continuing the grind full tilt vs. at try at cutting back hours. Status qou would allow me to save enough that an earlier semi-retirement would be possible. But I would like to celebrate the accomplishment of our mortgage payoff with an immediate lifestyle change such as shortening my workday by an hour or 90 minutes and getting home early to be with the family and spend some time exercising. However, this would pose a couple of problems. Full ER or semiER would be delayed, but maybe shorther hours would make this tolerable. Also the shorter hours might elicit some questions/envy that I would not really relish. I do not plan to have a mortgage burning party or anything to call attention. I am a pretty private person and only my closest friend knows of our pending payoff. I have great respect for the variety of opinions on this board and I am interested in knowing the thoughts of this community. Keep grinding? Cut back? How to deal with questions from others? Or should we be looking at this from a different angle? Other thoughts on how to deal with this windfall of reduced monthly cash flow needs?

[LandlordInvestor]

Congrats on the early payoff. Given your age and situation..its tempting to keep going full tilt and save a large portion of cash. I am a few years behind you, but the problem I see if you retire very early is your money is locked up in various retirement accounts, pensions, social security etc...

Not sure of your current situation, but I would build a large taxable account balance if you have not already started this...

[gerntz]

I say stop & smell the roses. Tell anyone who prys into your reduced hours where to go or what to do to theirself.

[Htown Harry]

Congrats Beer Man.

While improved cash flow does indeed provide flexibility, to some degree the psychology of it depends on how you do the math. Are you looking at the delta as a change from the monthly payment amount or from the amount you were putting toward the house since 2008?

Let's say you had a $600 monthly payment but were paying $1000 a month.

My own approach would be to consider only the $600 in the equation of reduced hours and income. The $400 difference remains discretionary income available for investment or savings. Do I want to "invest" the "new" $600 in reduced hours and stress or into some new investment vehicle now that paying down mortgage debt is no longer a requirement?

[scrinch]

Beer Man, good work getting rid of the mortgage. We did so about 10 years ago, and it felt great! It took several months for the reconveyance to come in the mail from the bank, however, and by then any party would have been anticlimactic.

I went to part-time consulting at 47....for a period of 5 years, before getting back in the full-time saddle for one last ride of 3-5 years a couple of years ago. I heartily recommend backing off a bit at work and taking care of your health and your family (life is short, and we don't know how short until it's too late). If you keep your concentration while you are at work, no one should resent you taking off an hour early...especially if you're not getting paid for that hour. And if they do, well, they're probably not people whose opinions you really care about. If you really have to explain yourself, tell them that your doctor strongly urged you to start getting more exercise. Can't argue with that!

[Throwdownmyaceinthehole]

Dream a bit, but hold on and let the immense joy of not having a mortgage settle over you for a while. Once the big debt is gone, your attitude towards work may change as you are now working for yourself rather than working to pay off the house. Just enjoy that bit of freedom and the security that you now have choices. Makes a huge difference.

[Beer man]

Quote:

Originally Posted by scrinch If you really have to explain yourself, tell them that your doctor strongly urged you to start getting more exercise. Can't argue with that!

Love that explanation!

[Independent]

We paid off our mortgage while we had kids at home. I didn't feel that I had the choice of slowing down at work (though I had never been a 50hr/wk person).

At the time, I was sure that I would have happily worked fewer hours for less pay. Maybe I would have tried it for a while and decided it wasn't that great, but I wanted to try it.

[pb4uski]

Just savor not having a mortgage for a few months and then decide what you want to do. I would divert some of the cash flow to splurges that make your life easier/better and some to savings.

[Beer man]

I do like the idea of not changing anything at work for a couple of months and seeing how my attitude adjusts to work life without any debt hanging over me. But I do feel the need to do SOMETHING to celebrate and would appreciate any ideas. I was thinking about a cholesterol laden meal at my favorite German restaurant, but it's not DW's favorite. I would like to do something or take some action to commemorate the event...something memorable to instill in the kids the rewards of hard work, savings, frugality, etc. And to reward myself and DW a bit.

[pb4uski]

How about an afternoon with the kids/family at some sort of entertainment venue (indoor waterpark, bowling alley, movie theater or whatever you like) - a splurge of something that you wouldn't normally do but maybe have always wanted to do someday if you were flush.

[Stanley]

Congratulations on paying off the mortgage! Further congratulations for not falling for the refi nonsense about pulling money out of your house for other things. I would not be ER'd if had to still pay my mortgage.

The exercise reason is very valid. I exercise four to five days a week using a Pilates class at my local community center. Also, since I ER'd, I eat much better because I cook most of my meals at home. I eat much more real food and less processed, sugary junk.

Exercise and nutrition are VERY valid reasons for working less, even if you still had a mortgage.

[citrine]

Congrats!!! Have a mortgage burning party with your family and go do something special Also, in a month or two, sit down and talk about what you would like to accomplish with that money.

[jclarksnakes]

We finished paying off a 15 year mortgage in 2002. We were faced with the same question you are now asking. I considered options such as working less, saving more, buying a larger and nicer house, etc. One option that I even considered was to get another mortgage on our house so I would have more money to invest. That idea seemed way outside my comfort level but if we had done that we would have come out ahead financially. Before I started visiting this forum I thought ALL debt was bad. Reading here over several years I have come to realize that a mortgage can be an EXCELLENT tool in building wealth. There are lots of threads here about whether to pay off the mortgage or not. The discussions sometimes get a bit heated. Mostly one side does not seem to influence the other very much. I have learned from some very smart people here that the things I think I know about money, including my earlier belief that all debt is bad may be wrong.

[Beer man]

Quote:

Originally Posted by jclarksnakes We finished paying off a 15 year mortgage in 2002. We were faced with the same question you are now asking. I considered options such as working less, saving more, buying a larger and nicer house, etc. One option that I even considered was to get another mortgage on our house so I would have more money to invest. That idea seemed way outside my comfort level but if we had done that we would have come out ahead financially.

So what did you do?

[Closet_Gamer]

Quote:

Originally Posted by pb4uski Just savor not having a mortgage for a few months and then decide what you want to do. I would divert some of the cash flow to splurges that make your life easier/better and some to savings.

+1

Congrats on paying it off. We paid ours off last year. Its amazing how much money goes each month into a mortgage. Once its gone you really step back an consider how freaking crazy the whole 30 year mortgage is...and how its driven house prices through the roof. Its your own personal debtors prison...and bonus: you get to pay for the up-keep!

Anyways, we took a couple of the first months to enjoy ourselves. I bought a new road bike, my better half wanted a few things around the house, etc. Then we dropped the hammer and started investing the extra $1700/mo we had on hand...and killed off the goal of saving for college early too.

One note: make sure you adjust your tax withholdings to account for the loss of interest deduction....

Way to go!

[heeyy_joe]

Build you taxable savings as this will be important to ER before 59.5 years. Take a little bit of the monthly excess savings and put it toward something fun like travel or whatever you might not otherwise treat yourself to. Get a HELOC for emergencies only.

[Independent]

Quote:

Originally Posted by Beer man I do like the idea of not changing anything at work for a couple of months and seeing how my attitude adjusts to work life without any debt hanging over me. But I do feel the need to do SOMETHING to celebrate and would appreciate any ideas. I was thinking about a cholesterol laden meal at my favorite German restaurant, but it's not DW's favorite. I would like to do something or take some action to commemorate the event...something memorable to instill in the kids the rewards of hard work, savings, frugality, etc. And to reward myself and DW a bit.

If the bold is the goal, physically burn the mortgage (even if it's just a copy). A fire is always impressive. Then, go do something that they think is special and point out that you can afford it because you don't have a mortgage payment.

(Though you will need some story on why you're not going to do it every month.)

[jclarksnakes]

Quote:

Originally Posted by Beer man So what did you do?

I should have included that. We decided to just put more into savings. I am pretty good at thinking outside the box. Doing something outside the box? Not so much.

[Covbro]

Quote:

Originally Posted by Throwdownmyaceinthehole Dream a bit, but hold on and let the immense joy of not having a mortgage settle over you for a while. Once the big debt is gone, your attitude towards work may change as you are now working for yourself rather than working to pay off the house. Just enjoy that bit of freedom and the security that you now have choices. Makes a huge difference.

Ditto!! We paid our mortgage off in 2011. It is an unexplainable liberating feeling. You have much freedom to make whatever decision you want. Congratulation.