We go back and forth on the issue. But, we’re not most people. I got student loan repayment and $300k, and then spent it all like a drunken sailor financing everything. With my mortgage I paid about 10K of interest per year in hopes of getting 3K back. She has spent most of her retirement raising children and managing a household, and I think I might have gotten off easy gallivanting off to work every day. It doesn’t have to either / or. Nice problem to have, but just wanted to know what steps you took and how you handled any paperwork for the transition. Mathematically ( with perfect 20/20 hindsight), it was the wrong decision. It only took 12 years because I was listening to the common belief of not to pay off your mortgage. I was approved. An employee who transfers from full-time to part-time during the year is entitled to pay related to time worked (i.e. Our interest rate is low and like ERN we are in AMT territory, so we’re aren’t going to try to pay off our mortgage post-haste. The day we closed was one of the worst and best days of my life, financially speaking. There is nothing better than mowing your lawn when you know that every blade of grass you cut is yours and not the bank’s. You shouldn’t empty out your savings to pay off your mortgage. This decimation is of course the exact mirror image of the retirees’ devastated investments. At dinner this evening, we told our 1st and 2nd grade boys about someone who is buying a house, then went on to explain how a mortgage works. Paying down debt is a great financial decision. On paper, this is a smart way to go the majority of the time, unless you’re unlucky enough t… – INVEST NEWS, Paying Off the Mortgage Early is a Mistake I’ll Never Regret, The Doctor Loan: My Experiences Buying and Building with Physician Mortgage Loans, Christopher Guest Post: Ten Factorial Rocks, this recent podcast at Doctor Money Matters, What To Do With A Windfall - Physician on FIRE. Congrats! The first reason to pay off your mortgage is that debt is oppressive. Many a blog post and forum thread has been written addressing the question, and I could fill a page with links to the various discussions on the hot topic. I started by rounding up to the next full simple amount. We happened to need a garden shed, so I ordered the one my husband wanted and used the card. On a $200,000 home, that comes to $40,000. It’s such a low mortgage to begin with, and my $488 monthly payment is extremely reasonable for a 1,500 square foot, three bedroom two bath house in a small city. What are your thoughts on this topic? I wouldn’t wait for the current administration to make reforms. When I said debt-free, I didn’t mean having a zero or positive net worth with assets equal or greater than debts. Dream House check. Others would also mention why pay your mortgage down because it’s a tax deduction (I never figure how some people think paying someone a dollar in interest to get 40 cent back is justification to be in debt). I hope most of my readers are more disciplined that, but I absolutely agree that money put towards the mortgage principal cannot be spent once you’ve sent the check in. As they like to say on Bogleheads, when you’ve won the game, why play? Boom! You’re financial independent in your early 40s, so while (as you write) you would probably be mathematically better off to keep a mortgage, psychologically being debt-free is way better. Interest rates have dropped to record lows. My Financial Independence Journey: Monthly Update #5 (May 2017) | MoneyMow, The Sunday Best (6/10/2018) - Physician on FIRE, How Leverage Can Multiply Your Returns & Create Massive Wealth - Physician on FIRE, Chief Mom Officer: Overcoming Obstacles to Achieve Early Financial Independence - Physician on FIRE, Calculate Your Debt Slave Ratio - Physician on FIRE, 5 Reasons to Pay Off Debt (Instead of Investing) – Collecting FI/RE Wisdom, How a Taxable Brokerage Account Can Be as Good or Better Than a Roth IRA | White Coat Investor - Investment Ideas Blog | Invest Envy, How a Taxable Brokerage Account Can Be as Good or Better Than a Roth IRA | White Coat Investor | Current Times Online, How a Taxable Brokerage Account Can Be as Good or Better Than a Roth IRA | Investorinsider. Pay Off Debt Or Invest - What Should Doctors Do? Recently I noticed that my Munis were down ~$2500 . We are just regular people with a regular income and a regular payment doing some irregular, but totally attainable, things to become mortgage-free. You can also subscribe without commenting. 3. When should you aim to have it all paid off? Have made extra payments all along. Not on a huge pile of money (sounds uncomfortable, honestly), but not under a crushing pile of debt, either. Thank you for your thoughtful post and congratulations!! I know I wouldn’t be comfortable being 100% retired with the mortgage hanging over my head. Being debt free gave me guaranteed immediate happiness. But there was also a possibility I could have lost more depending on cycle of the market. If you’re investing in Real Estate to make money, leverage is a key part of success. Image of architecture, bank, property - 139061695 All that extra cash flow will then go towards building up an after tax brokerage account until i feel like I can retire. We want a life with less stress & … We have umbrella insurance, but this doesn’t cover malpractice risk. Also, my daughter will be heading off to school around that time and I’d love to take a few months off (or just quit my job) and travel around the world with her and my wife. It's now been ten years since we've had a mortgage. It all started when I was going through my mail and saw a credit card offer from Wells Fargo. By paying off the mortgage, you guaranteed a rate of return of 5% since you are not paying it to the bank. When business plummeted and we lost the house, well… you can see the reasons why I’m gun-shy about long-term debt. But, if you choose to pay off your mortgage early and wait 15 years, the same contribution plan would earn $50,333 in interest. For those who don’t mind debt or even think of it as leverage to use to their advantage, it’s a no-brainer to pay a low-rate mortgage on time and invest as much as possible instead. Notify me of followup comments via e-mail. So I asked: Was this feasible? We (my wife and I) have started to put money towards paying off our loans on our business and home mortgage. And since the mortgage is our biggest expense, it needs to go. I may start throwing an extra bit of money at it every month just to see it disappear a bit sooner than planned. Do you think you can get a better return elsewhere? I like the idea of keeping all the rent money each month, rather then sending most of it on to the mortgage company. I was able to start paying my monthly $25 rewards to my mortgage right away, and I got a kick out of seeing that tiny amount make a little dent towards the principal. Get a 1% yield bump on your first investment in commercial real estate, Earn easy 1099 income with quick surveys for healthcare professionals with InCrowd. Also, if you own any bonds, why carry a mortgage? So we made some hard sacrifices to make it happen, but we just didn’t feel right knowing that the mortgage company truly owned our home – and therefore had a stake in our future. But the yield to worst is not featured so prominently in my online account and not something my advisor ever discussed with me (he only talked about current yield). Some are simple math. I can’t remember when I last owed anything to anyone, but it was probably in my mid thirties. It’s about—well, you know that old saying “it’s not how much money you make, but how much you keep”? Is the interest tax deductible and are you in a high tax bracket? The intangible benefit of moving towards being debt free is hard to quantify, but it’s powerful. So do I regret my decision? Are you kidding? Home Equity Lines of Credit. Bill C‑45, An Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts (short title: Cannabis Act), 1 was introduced in the House of Commons by the Minister of Justice on 13 April 2017. As I wind down my clinical work and regular paychecks over the next several years, I do plan to pay off my debt. Not me. The Bogleheads thread was full of people who did not regret for one minute the fact that they paid their mortgages in full. Our very first big comment postwas a lively debate on paying off the house vs. investing that money instead. If you take the standard deduction, which will be much more common with the increased standard deduction resulting from the Tax Cut and Jobs Act, you are paying the full mortgage interest rate, getting no deduction on the interest you pay. For those that still have a mortgage, how do you feel about this question? We'll finally pay it off when we're 80 and 88, LOL. Great food for thought! In total, we scored $100 on that transaction alone. Home values in my area have dropped steadily for several years, and continue to languish, so I feel like paying off the mortgage is pouring money into a slowly sinking ship. Get a bridge loan: A bridge loan is a short-term loan that can be used to help you pay off your old mortgage and make your down payment on your … Putting the 750 K into triple tax free Munis, paying 3%, effective yield 5+% ( 45% NYC tax bracket). We just cranked it out this past 1.5 years – we have been fortunate to have a very big shovel to dig out of the hole (its a newer 5,500 ft executive home) while keeping our overall annual investing at a 6 figure clip. In the lower tax brackets, student loan interest is tax deductible. I have also paid off my mortgage at age 30, going on 32 now. I personally want to pay one of my mortgages entirely, but I am quite tolerant to debt (actually thinking about creating more of it :P). Interesting article and comments. Eliminating the mortgage payment gives you the ability to put a lot of money towards something else. I finally found Dave Ramsey and a few years ago started reading MMM. I have no kids. My refi dropped me from 4.25 to 2.75 – hard to pass up even if it’s only for 7 years. However, on the other hand, I am cautious about going after the house aggressively now and losing the interest deduction in our most heavily taxed years. After all, once taxes were deducted, nearly everything I earned at work during that time went to repaying debts with no money left to pay for living expenses. $200.00 found right there. I don’t blame you. If it was not for an awful divorce (which I commented on a post of yours about divorce) I could have easily hung up the cleats right now. Life Goal: To Lose a Million Dollars | Passive Income M.D. In January, we sold our town home for a nice profit and rolled most of that into our single family home. Photo about Money to pay off the loan. And it’s ok. Like learning medicine financial knowledge comes at a cost. This is a challenge we’ve set for ourselves. For example, for a borrower with a CLTV of 45% and a credit score of 800 who is eligible for and chooses to pay a 4.99% origination fee in exchange for a reduced APR, a five-year Figure Home Equity Line with an initial draw amount of $50,000 would have a fixed annual percentage rate (APR) of 2.49%. That would make me debt free by 41 (so not too bad). This is something I think about regularly. Over the past 4-5 years I’ve been investing with an asset allocation of US 55%- Int. I’ve also read somewhere that having one of the nicer homes in the neighborhood is a recipe for happiness, even if it’s not the most financially sound “investment.”. Housing will be decimated. Debt is a powerful tool! I’m constantly looking for ways to pay more without sinking the rest of my finances. Although now financially independent, I have more debt now than ever before. Going rates could be double or triple in 7 years. Your son’s education is a good place to put it, particularly if he chooses to be a Golden Gopher (or attend any public school in-state or with reciprocity). The entire argument is far more complex than saving the interest and peace of mind. I know on paper this is a very low risk event, but emotionally gives me pause about paying off my mortgage completely. Age 45, O'Leary says. Another fun activity was after I paid off the house and received the title I actually printed out the original planned amortization schedule and figured by paying off the loan 20 yrs early I saved around $350k in interest. In fact, our first house was very modest. But in the end you hit it right on the head about the psychological benefit of paying off the loan. That’s the age I’m hoping for. I've been in the "but the math shows" debate many times. However, one issue that hasn’t been discussed much is risk of malpractice. 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