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I completely agree that it wasn't the right financial decision, but I don't regret it at all. I grew up working poor and watched multiple people lose their hous

I completely agree that it wasn't the right financial decision, but I don't regret it at all. I grew up working poor and watched multiple people lose their houses (some crash related, others not). This gave me a fairly conservative risk tolerance regarding debt. I feel "lighter" without debt hanging over me. The question that ultimately convinced me to just pay off my mortgage was "If someone gave you a house, free and clear, would you mortgage it to buy investments?". My gut reaction was "no, I would really like to have a free and clear house." I have considered buying a second home to rent, but I have some moral qualms about exacerbating the housing crisis where I live. Furthermore, the stress of tenants isn't something I really want to deal with. Everyone here has great points about maximizing returns, and I know I will have less money in the long run because of my decision. With that in mind, I am investing about half of my old mortgage payment, and the rest goes to the family vacation fund.

foobarian 5y ago
Just wanted to thank you for the comment and clarify I didn't mean to criticize your choices - my background is very similar and it's just a realization I've had after stepping back and trying to think without those constraints/influences. I also know many people who lost houses or struggled, some which actually did cash-out refinances but then unwisely spent the money on unnecessary luxuries. Those seem easy to avoid. Some may be harder to avoid, like when someone has unforeseen costs such as medical related bills. But in cases such as ours, it seems we are well enough off to have cash on hand to eliminate the mortgage; the question just becomes whether that is the best use for the money. It certainly seems a bad idea to just keep the cash on hand. The index fund returns have been very good for long periods of time now, so seem like a good low-risk option, given that they are liquid and can be redirected to a mortgage payoff at any time. Edit: having said that the difference is not that large (3-4% for the 30 year note, vs. 5-10% for the market return). Also, while I didn't pay off my mortgage, I probably won't put even more money where my mouth is and refinance in order to invest the cash-out into a fund.
- bikingbismuth 5y ago
  No criticism or offense taken at all! I think these discussions are incredibly valuable for the participants and observers to help them decide what they want to do if/when they have a pile of money in front of them.
staticautomatic 5y ago
A place to live which cannot readily be taken away from you carries tremendous practical value and existential comfort.

foobarian 5y ago

Just wanted to thank you for the comment and clarify I didn't mean to criticize your choices - my background is very similar and it's just a realization I've had after stepping back and trying to think without those constraints/influences. I also know many people who lost houses or struggled, some which actually did cash-out refinances but then unwisely spent the money on unnecessary luxuries. Those seem easy to avoid. Some may be harder to avoid, like when someone has unforeseen costs such as medical related bills. But in cases such as ours, it seems we are well enough off to have cash on hand to eliminate the mortgage; the question just becomes whether that is the best use for the money. It certainly seems a bad idea to just keep the cash on hand. The index fund returns have been very good for long periods of time now, so seem like a good low-risk option, given that they are liquid and can be redirected to a mortgage payoff at any time. Edit: having said that the difference is not that large (3-4% for the 30 year note, vs. 5-10% for the market return). Also, while I didn't pay off my mortgage, I probably won't put even more money where my mouth is and refinance in order to invest the cash-out into a fund.

bikingbismuth 5y ago
No criticism or offense taken at all! I think these discussions are incredibly valuable for the participants and observers to help them decide what they want to do if/when they have a pile of money in front of them.

staticautomatic 5y ago

A place to live which cannot readily be taken away from you carries tremendous practical value and existential comfort.