One of my favorite PF blogger articles of all time is “Should I pay extra on my mortgage or invest?” Even though I’ve read about 100 of them and they all have similar arguments, I’m just drawn to read it anyway. It’s like those stories of vampires having to pick up all the sunflower seeds after a spill. Mortgage payoff stories are my sunflower seeds because I gobble them up waiting for that one new bit of advice that will change my mind.
For the record, I’m in the “pay off early” camp and I thought I’d list my reasons why our family chose to pay a little extra every month.
- Because I have a crazy extreme frugal role model who bought her first and only house with cash
- Because debt reduction is completely brainless. I love that I don’t have to think about ranking the best ways to pay off my debt. There is really only one way to do it. You pay your bills, see what’s leftover at the end of every month and decide how much of it will be going to your favorite mortgage company.
- Because I want one less bill to pay. When I was paying my school loans off, I even paid off a 0% interest loan just so that I didn’t have to expend energy on paying that bill anymore.
- Because feeling poor motivates me to spend less money. There is no better way to do that than to empty my checking account to the bare bones at the end of every month.
- Because I like to live in my investment. Online brokerage accounts aren’t cozy.
- Because traditional savings rates stink right now and there’s no where else safe to put it.
- Because I probably should refinance to a lower interest rate but the payback time is too long.
- Because I can still itemize my taxes without a mortgage interest deduction (due to charitable contributions+property taxes)
- Because I like the idea of reducing my fixed monthly expenses. Variable expenses are way cooler because you can slash them at will. I have this crazy goal of eventually being in a position where I could live off a minimum wage job if I needed to. It’s definitely possible, but not with a lot of mortgage debt.
- If you have kids, your primary residence and equity does not count as an asset on your FAFSA federal financial aid application.
On paper, I’m sure there are calculations where the invest in the market approach wins, but for me it’s more about simplifying life than it is about earning that extra few bucks in the market.
Which camp are you in?
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