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Chris Cody 10-14-2006 02:24 PM

Hi and one question
 
I have been following these boards for a few years and they were helpful to confirm my plans. I'm 52, partner is 50. She works quarter-time (as of her 50th BD) with full retirement planned in May, 2008. I will be fully retired in Jan, 2007. We have FI as defined elsewhere on the board.

When she retires, we will still have about $33,000 left on the mortgage at a 5.35% rate. For emotional reasons, I want to just pay it off at that point. I understand the financial logic in not doing that, but the financial rewards for holding off don't seem worth the emotional rewards of burning the mortgage at her retirement. My brother, in particular, thinks it is stupid to pay it off early (but, then again, he is 3 years older and years from retirement...). Is there a thread that talks about this - to pay off or not pay off? If not, anyone care to comment? It is, basically, the only decision that I have yet to make.

Nords 10-14-2006 02:40 PM

Re: Hi and one question
 
Welcome to the board, Chris.

Quote:

Originally Posted by Chris Cody
Is there a thread that talks about this - to pay off or not pay off? If not, anyone care to comment?

Many-- click on the "Search" button at the top of your screen, then put the words "mortgage", "pay", and "off" in the text box. You can cruise through those 25 pages of threads or add more keywords to narrow the selection.

And you could try these older threads:
https://www.early-retirement.org/forums/i...hp?topic=785.0
https://www.early-retirement.org/forums/i...p?topic=1390.0
https://www.early-retirement.org/forums/i...p?topic=1542.0

Quote:

Originally Posted by Chris Cody
If not, anyone care to comment?

It's "only" $33K. If it makes you sleep better at night then you should pay it off. If it bothers your brother, then he can give you $33K to invest for him and he can sleep better at night, too.

But that $33K could be invested in a CD paying at least that much from PenFed. And if you hold on for a few more months then you might start seeing them north of 6% again.

Chris Cody 10-14-2006 03:45 PM

Re: Hi and one question
 
Thanks for the links and how to find threads.


mickeyd 10-14-2006 06:45 PM

Re: Hi and one question
 

Quote:

but the financial rewards for holding off don't seem worth the emotional rewards of burning the mortgage at her retirement.
I think you've answered your question Chris. You will immediately decrease your cash outflow for the rest of your life.

BTW, welcome here.

education 10-14-2006 08:46 PM

Re: Hi and one question
 
Hi Chris--

Professor here. You will find a varied bunch and some very pro for paying it off and an equally large group against. It boils down to what you feel comfortable in doing. As for us, DW and I paid off our house because the market was tanking and we felt at least we'd have bricks and mortar to show for our $$$$. Besides, the savings on interest was huge--and it far offset our tax liability for the early cash-out of some very lousy funds.
I recall the mortgage lender asked why I would do such a silly thing & I replied that it was two-fold: I wanted to and I could. And we've never regretted that glorious feeling of being free and clear (at least until the property tax statement arrives :'(

I say: go for it.

Professor



sgeeeee 10-15-2006 12:22 AM

Re: Hi and one question
 
Quote:

Originally Posted by Chris Cody
. . . When she retires, we will still have about $33,000 left on the mortgage at a 5.35% rate.. . If not, anyone care to comment? It is, basically, the only decision that I have yet to make.

For that amount, it really doesn't matter. You can probably benefit by investing the money rather than paying off the mortgage, but not by enough to matter. Do what feels easier and right to you. :)

You can run FIRECalc under both scenarios (keep the mortgage and payoff). Some of the links Nords provided will explain how to compute the historical probability of coming out ahead by keeping your mortgage. But in your case it probably won't make very much difference.

Chris Cody 10-15-2006 12:38 AM

Re: Hi and one question
 
My problem is that I am used to saving for every little thing (drive a mile for a cheaper gas, etc.). And, though I know it won't make much difference in that the $33,000 is quite small relatively- I wanted to check and see if anyone wanted to talk me out of my gut instinct which is - just get rid of the thing and celebrate.

So, after reading the old posts and the feedback here - I am not going to worry about it and go with my gut. Thanks

sgeeeee 10-15-2006 12:59 AM

Re: Hi and one question
 
Quote:

Originally Posted by Chris Cody
. . . I wanted to check and see if anyone wanted to talk me out of my gut instinct which is - just get rid of the thing and celebrate. . .

If getting rid of your mortgage will give you cause to celebrate, then that is probably what you should do. . .

Cheers. :D :D :D

Mr._johngalt 10-15-2006 01:28 AM

Re: Hi and one question
 
Quote:

Originally Posted by Chris Cody
I am not going to worry about it and go with my gut. Thanks

My experience is that this works almost all of the time, but often
requires some deep thinkin' before your "gut" takes over.

JG

Outtahere 10-15-2006 05:59 AM

Re: Hi and one question
 
Chris, the best thing I ever did was pay off the mortage, feels good to own it , the tax deduction was almost down to nothing so we went for it. It made our gut feel good :)

honobob 10-15-2006 11:08 AM

Re: Hi and one question
 
Chris One thing I would consider if I was in transition to retire soon is that you are probably going to pay to lose liquidity during a time that you may not know your true cash needs. Although the $33K is small compared to your portfolio it is probably large compared to your yearly expenses. Unless you have alot of liquid assets I would wait until at least a year after both of you are retired to pay off the mortgage. Money in the house is good but it will cost you to use it if you have unexpected expenses. Plus you have another event in the future to celebrate. Instant gratification didn't get you where you are today!

yakers 10-15-2006 12:49 PM

Re: Hi and one question
 
I am congenitally bothered by debt and paid off my house as soon as I could. My mortgage story is buried somewhere in the archives and mists of this web board. I recognize this is a personal decision. If there is a cash flow question you could just double up payments and accelerate the process while keeping some cash on hand for other purposes.


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