I had a conversation recently with a friend who earns her living as an Enrolled Agent. I don’t remember how, but the subject of whether or not you should pay off your mortgage came up during the course of our conversation. She was adamantly against the idea. Her thinking is that funds used to pay off a low interest mortgage would be put to better use by investing them and earning more in return than the interest paid on the note. She’s not wrong in her thinking but where she and I differ in opinion is, “what is right for the individual?”
As I dug further into the issue, I posed this question to a number of financial coaches in a Facebook group I belong to. I asked them, “Should you pay off your mortgage? Why or Why Not?” As you might expect, their answers were as varied as their personalities. Here are some examples:
- “As with most financial decisions, it depends. I personally wouldn’t choose to pay off my mortgage anytime early unless I had so much money I didn’t know what to do with it, because with the low rate on a mortgage, my money is probably going to be a lot more valuable in an investment vehicle like a retirement fund.”
- “If you have the money, go for it! It was one of the best decisions we made.”
- “I don’t recommend it as a rule. Your money should be able to work harder than the percentage you’re paying off on your mortgage. There are exceptions, of course.”
- “We…made that decision after we had a significant emergency fund! It is the best to live debt free and to not have a mortgage payment!!…The security and peace is wonderful. We love it!”
See what I mean? The conversation was a lively one and some of the participants were very passionate in their arguments. I must admit, though-the contribution that resonated the most with me was this one:
“I think it comes down to ‘does that goal excite you?'”
I’ve always been a firm believer in doing what is best for YOU. There is no right or wrong answer here except for the right or wrong approach for the individual. That said, being well informed in your decision making is of the utmost importance. Yes, you could be investing your money for a good bit more of a return instead of paying down your mortgage principal, but are you comfortable with that strategy? Would you feel better about your situation knowing you own your home free and clear? If you are aware of the consequences of your strategy and can live with the end result, the decision is yours to make.
I’d love to hear from you now-have you paid off your mortgage? How has the decision worked for you? Please share your experience in the comments.
Be well and God Bless-until we meet again…
Note-Any and all items contained in the Older Wiser Money Miser Debt Free Challenge are intended as a resource for informational purposes only and should not be construed as professional tax or investing advice.