Pu239 wrote: ↑Sun Oct 17, 2021 6:05 pm
EnjoyIt wrote: ↑Sat Oct 16, 2021 10:01 pm
Pu239 wrote: ↑Sat Oct 16, 2021 9:49 pm
I'll only add that the feeling of being debt free - whether in or before retirement - is priceless. We paid off our mortgage (4%) about 7 years early several years ago and have no regrets. Could we have rolled the dice and invested the money for a better return? Sure, but it felt good simplifying our life and taking some risk off the table. Now that liability is a fading memory. Someone once said (Tobias?) that not-having-to-try so hard is one of the luxuries that being a millionaire should bring. Because windfalls seldom happen and you already have a solid retirement foundation, I vote pay it off.
It is not priceless. The choice has a cost and that cost can be calculated if you instead invested that cash elsewhere.
Here at Bogleheads we strive to take emotion out of investing. We create an IPS (Investment Policy Statement.) We invest in index funds. We keep a certain percentage of our portfolio in lower risk investments such as bonds. We create rebalancing bands and we don't time the market based on how we feel. Paying off a mortgage should be done by doing your own math and deciding what fits best in conjunction with one's risk tolerance. Some people based on their situation should pay it off ASAP while other people's situation would dictate holding on to the mortgage until a more opportune time. Feeling good as you and so many others like to point out does not belong in this discussion. Especially not here on bogleheads (yet it does way too often,) unless of course you are so wealthy that you can afford to make financial miscalculations to feel good and there is nothing wrong with that.
Busted. You’re right, of course. Emotions have no place when making financial calculations however, in our case, we were elated to pay off the mortgage and still are. That piece of mind may not be an entry into a spreadsheet or fiscal model, or output as a numerical value, but it has significance nonetheless. I imagine folks who have paid long-term and gone through enough market turmoil, job loss, and the like are the ones who will feel most relieved with a paid off mortgage. Guess that bit of emotional weakness combined with a small amount of precious metals qualifies me only as a 90 to 95% BH. I can live with that which is good since the caliber and quantity of advice from regular members usually far exceeds any compulsion I may have to try and contribute a few words.
You guys rock!
OP asked for thoughts about a payoff and I assumed they were looking for a diversity of opinion. The priceless feeling we have is real and, I believe, worthwhile. Of course, the OP may or may not agree after running the numbers and exploring their priorities. Should the OP base their decision primarily on feeling good (aka sleep at night) about paying it off? Certainly not and neither did we but it is an intangible related to risk tolerance that deserves consideration. We have accumulated “enough” income and assets to begin coasting a bit toward the ultimate finish line which is – you guessed it - yet another priceless feeling.
I completely agree with you, Pu239
I wanted to have my financial affairs in order by the time I was roughly 50, by which I meant basically FI (or close to it) and debt-free. Why? My Dad faced early retirement in his 50's decades ago, so I always assumed that the wheels might come off my career in my 50's, too. It was the same reason why I had my children early in comparison to my peers -- to wit, I didn't want to be 61 years old with a child in high school or college. I wanted the kids to basically be launched by the time I was 50 -- and I accomplished that, too.
How did we pay off our mortgage? From current income, via accelerated payment of principal. And we kept saving at roughly the same rate, at least that is my recollection. We merely reduced expenditures even further. It wasn't a choice between "savings" and "paying off the mortgage." We've always saved aggressively, even when we were paying down our mortgage early.
Debt-free is a risk management tool to me. Now that I'm in the SORR window, it is glorious being debt free. I still remember the day when the bank's release of mortgage arrived in the mail. That document represented freedom.
And I understood what you meant by "priceless," too. I feel the same, too, being debt free. "Priceless" means "joy", "relief" or "happiness" -- or "glorious" -- in this context. It doesn't mean, in contrast, the output of an economic model. I'm pretty certain MasterCard meant the same thing when it was running those ads decades ago.
As to "emotion," I don't think it is possible to truly take emotion out of most decisions, even financial ones. We're homo sapiens after all, and we have other relationships that are impacted by our choices. I suspect "emotions" are behind social media, including financial forums -- maybe even this one. I don't think being a BH is about just running a spreadsheet with no consideration of emotions. I may be wrong.
And now we are roughly 47x. Our two properties (residence and a rental) combined represent about 7.5% or our NW. And yes, we are debt free.
Anyway, I'm a fellow traveler with you on this topic, and just wanted to weigh in to express that.