Ok, I feel like an idiot but I've been trying to figure out what the right way to look at this is.
Here's the short version.
Current liquid assets (approx. 3.6M)
Current Mortgage: 686k
Monthly Expanses: 8k/mo (average over 2 years of tracking)
-I have the details in a "Hi I am..." post so I won't respam that here.
SWR 3% (assuming 10% tax rate) Monthly: 8100$
That cuts it a bit close, but about 4200$ is mortgage/tax.
If I pay off my house, it looks like this
Liquid assets: 2.9M
Mortgage 0
Monthly Expenses: 4800$ (about 1k of the mortgage is property tax)
SWR 3% Monthly: 6525$
That second scenario seems much safer? But this makes no sense to me.
My mortgage is 3.75% and I should be able to fairly confidently match that with a bogle-like index strategy over the next 28 years (time left on mortgage)
If I use FIRECalc to turn the remaining mortgage into my "portfolio" and put 4250 as my fixed, non-inflating costs, my success rate is around 58%. Of course, the liquid assets should be able to easily cover any volatility in the short-mid term.
I feel like I'm doing something stupid. The % math (7% market return > 3.75% mortgage, therefore don't pay off loan) seems to be violating the 3% SWR.
Psychologically speaking, I don't really have a huge positive thrill about being mortgage free because I have no trouble "segmenting off" the mortgage amount mentally. But when the 3% SWR gets so close to my monthly expenses... THAT makes me nervous.
PS. Not RE'd yet... but trying to build a specific plan for the next year or two.
Here's the short version.
Current liquid assets (approx. 3.6M)
Current Mortgage: 686k
Monthly Expanses: 8k/mo (average over 2 years of tracking)
-I have the details in a "Hi I am..." post so I won't respam that here.
SWR 3% (assuming 10% tax rate) Monthly: 8100$
That cuts it a bit close, but about 4200$ is mortgage/tax.
If I pay off my house, it looks like this
Liquid assets: 2.9M
Mortgage 0
Monthly Expenses: 4800$ (about 1k of the mortgage is property tax)
SWR 3% Monthly: 6525$
That second scenario seems much safer? But this makes no sense to me.
My mortgage is 3.75% and I should be able to fairly confidently match that with a bogle-like index strategy over the next 28 years (time left on mortgage)
If I use FIRECalc to turn the remaining mortgage into my "portfolio" and put 4250 as my fixed, non-inflating costs, my success rate is around 58%. Of course, the liquid assets should be able to easily cover any volatility in the short-mid term.
I feel like I'm doing something stupid. The % math (7% market return > 3.75% mortgage, therefore don't pay off loan) seems to be violating the 3% SWR.
Psychologically speaking, I don't really have a huge positive thrill about being mortgage free because I have no trouble "segmenting off" the mortgage amount mentally. But when the 3% SWR gets so close to my monthly expenses... THAT makes me nervous.
PS. Not RE'd yet... but trying to build a specific plan for the next year or two.