Retiring early March 1 of 2019 .Pay off house or continue house payments?

ray188 said:
That is the most intelligent post I have ever seen. That is all that matters.
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while i agree , feeling good and financial well being don't always coincide .

people end up having retirements that are less than all the time because they plan around what feels good rather then what makes financial sense .

then those choices hurt them .

so you really need to give things good "logical thought" ..

our friends put a load of money in to their house accelerating payments so they could feel good . well that left their income producing ability from investments way to light and their hopes of playing catch up were shattered when they hit the lost decade .

feeling good went and boxed their investing into being dependent on a much shorter time frame , which is never good .

so when it came time to pull the plug and retire expenses , especially real estate taxes went up so much they had no choice but to leave their family and friends and move to a a much lower cost area .

as i try to convey over and over , cutting costs is only the same as growing income until there is nothing left to cut . then the importance of growing income gets highlighted front and center . so you need both cost cutting and the ability to grow income. going to heavy one way or another is not good . so it is usually best to balance things out and don't accelerate feeling good about the house until the investment side of things is in place too
 

This is a very imortant issue because of your ages. I would seek the help if a certified financial planner. Enjoying your retirement is the most important issue. You don't want to add any burdens in your life now.
 
fmdog44 said:
This is a very imortant issue because of your ages. I would seek the help if a certified financial planner. Enjoying your retirement is the most important issue. You don't want to add any burdens in your life now.
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i agree on letting a good planner review the whole situation and see what is the best way . like i said above doing what feels good vs what is best for you financially or makes the most financial sense usually do not coincide .
 
We kept our mortgage when strating retirement because it was a 2.75% interest rate. Still continue to pay extra each month and if we get "extra" cash I send it in as additonal principal. We would not withdraw from our retirement accounts unless the interest rate was at 5% or more. Were on target to pay off our mortgage sometime in 2021 which will be 5 years into retirement.
 
I'd lean more to the paying off the house rather than investments in todays unpredictable markets.
I remember in 2008 my friend lost a big chunk of her 401 and her boyfriend lost $70,000 in one swipe. Wall Street can be tricky and precious metals pricey and also unpredictable.
 
MeAgain said:
I'd lean more to the paying off the house rather than investments in todays unpredictable markets.
I remember in 2008 my friend lost a big chunk of her 401 and her boyfriend lost $70,000 in one swipe. Wall Street can be tricky and precious metals pricey and also unpredictable.
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markets never lost their money since the markets recovered and tripled . bad investor behavior lost their money ....

i have been an investor for more than 30 years . i don't ever remember any moment it was a good time to invest .. we were always waiting for some disaster or black swan to strike ..
 
mathjak107 said:
markets never lost their money since the markets recovered and tripled . bad investor behavior lost their money ....

i have been an investor for more than 30 years . i don't ever remember any moment it was a good time to invest .. we were always waiting for some disaster or black swan to strike ..
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When I was looking forward to retirement, I made the decision to just continue paying off the house in the normal course (it was an old mortgage with very low interest) and put the money I would have used to pay off the house into investments. I eventually paid the last payment on the house a few years before I retired and made more on the investments than I would have saved in interest by paying off the house.

Putting all my eggs into the house just didn't feel right to me. And I didn't really lose any money in the 2008 mess because I just gritted my teeth and rode it out. I think most of the people who lost a lot of money were people who panicked and sold while the market was down.
 
Butterfly said:
When I was looking forward to retirement, I made the decision to just continue paying off the house in the normal course (it was an old mortgage with very low interest) and put the money I would have used to pay off the house into investments. I eventually paid the last payment on the house a few years before I retired and made more on the investments than I would have saved in interest by paying off the house.

Putting all my eggs into the house just didn't feel right to me. And I didn't really lose any money in the 2008 mess because I just gritted my teeth and rode it out. I think most of the people who lost a lot of money were people who panicked and sold while the market was down.
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yep , channeling to much in to the house on an accelerated basis may feel good but usually it is not the best financial choice ...
 
I went to see two different financial planners when I was starting to think about retiring, didn't like the first one, but really liked the second one. He seemed very down-to-earth and more in tune with people at my income level. I think the first guy was accustomed to dealing with people who where wealthy so his outlook and goals didn't match mine.

Anyway, I've met with the second adviser 3 times now and even though I always thought I would/should take a big chunk of 401(k) money to either pay off or pay down the mortgage, he has convinced me that this was probably NOT the best decision for me and my husband. Our mortgage interest rate is only 3% and the monthly payments aren't exorbitant, so he thinks it would be advisable to keep investing my money and paying my monthly mortgage. I have to admit, in my case, it DOES make sense.
Sue
 
Sue777 said:
I went to see two different financial planners when I was starting to think about retiring, didn't like the first one, but really liked the second one. He seemed very down-to-earth and more in tune with people at my income level. I think the first guy was accustomed to dealing with people who where wealthy so his outlook and goals didn't match mine.

Anyway, I've met with the second adviser 3 times now and even though I always thought I would/should take a big chunk of 401(k) money to either pay off or pay down the mortgage, he has convinced me that this was probably NOT the best decision for me and my husband. Our mortgage interest rate is only 3% and the monthly payments aren't exorbitant, so he thinks it would be advisable to keep investing my money and paying my monthly mortgage. I have to admit, in my case, it DOES make sense.
Sue
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My ex had a financial adviser. She allowed this person to strongly influence how she set up her finances: She went bankrupt, got her home foreclosed, and now lives in a trailer! That is the absolute truth. Living debt-free, as I do, is the way to go.
 
obviously she couldn't afford the house to pay it off in the first place ... that is not the same thing as the question here ..

the person has the money to pay off the house . the question is should they tie up more money in the house or diversify the extra money in to other assets ...

it is no where near the situation you are describing where there is no choice to make . you need money to have choices
 
I paid off my houses as soon as I could, many years ago. Living debt free is the way to go, as I posted, previously. Investments may go south, and see you lose a bundle. Once you pay off something, it's yours, yearly taxes notwithstanding. I only posted about my ex to show that financial planners can be full of it.
 
treeguy64 said:
I paid off my houses as soon as I could, many years ago. Living debt free is the way to go, as I posted, previously. Investments may go south, and see you lose a bundle. Once you pay off something, it's yours, yearly taxes notwithstanding. I only posted about my ex to show that financial planners can be full of it.
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I fully agree that living debt free is the ONLY way to go. Fortunately, I had parents who loathed debt, and their attitude rubbed off on me. We made our last house and car payments somewhere back in the mid-1980's, and used that money to start saving and investing for retirement...IRA, etc...Luckily, we realized that we, too, would some day grow old, and we had better plan for it. I talked to 3 or 4 "financial advisors", and came away with the feeling that I could get better advise by just reading a diverse selection of good articles in publications such as the Wall Street Journal, Investors Business Daily, etc.,etc. "Self Education" is far more valuable than ANY "advisors, IMO.

I am constantly amazed at the number of retirees who are still deeply in debt, and have only a paltry sum set aside for emergencies, etc. I guess they figured they would never grow old. We're not rich, but if we get bored, and decide to go the the bank and pull out some cash, and head for the casino, it isn't going to impact us. We're sure glad that we "saw the light" decades ago.
 
treeguy64 said:
I paid off my houses as soon as I could, many years ago. Living debt free is the way to go, as I posted, previously. Investments may go south, and see you lose a bundle. Once you pay off something, it's yours, yearly taxes notwithstanding. I only posted about my ex to show that financial planners can be full of it.
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ending up house rich and cash poor because you ACCELERATED dumping your extra money in to the house at the expense of growing other assets is not a good financial idea .. the longer you give market investments the `less pressure you put on time frame .

having a nice amount of savings from investments can add a lot more safety and security to a plan then having to much dumped in to house where it is trapped .

2008 saw helkocs and lines of credit closed and killed off at the worst possible time and now all the excess funds are trapped .

you need a balance , pay off the house at the scheduled rate of pay off and don't keep feeding excess cash in to it in my opinion . there is no extra security having a load of money trapped in the house vs the normal rate in the house and those addiional funds working for you diversified in other areas that are liquid ... a nice diversified portfolio that includes bonds as well will not be selling stock in a down turn . a typical 50/50 mix can support many many years of draw if retired on bonds and cash ...
 
not true at all ... you would be more secure paying off the house at the regular pace and holding on to more of your money if that was the case so you have more liquidity available to you if that was the case ..

you are trying to pass off what might feel good mentally as something that makes smart financial sense and the two rarely go hand in hand
 
mathjak107 said:
ending up house rich and cash poor because you ACCELERATED dumping your extra money in to the house at the expense of growing other assets is not a good financial idea .. the longer you give market investments the `less pressure you put on time frame .

having a nice amount of savings from investments can add a lot more safety and security to a plan then having to much dumped in to house where it is trapped .

2008 saw helkocs and lines of credit closed and killed off at the worst possible time and now all the excess funds are trapped .

you need a balance , pay off the house at the scheduled rate of pay off and don't keep feeding excess cash in to it in my opinion . there is no extra security having a load of money trapped in the house vs the normal rate in the house and those addiional funds working for you diversified in other areas that are liquid ... a nice diversified portfolio that includes bonds as well will not be selling stock in a down turn . a typical 50/50 mix can support many many years of draw if retired on bonds and cash ...
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Bah! There is total security in owning, outright, where you live! The key is to know when to say, "Enough!," when you're in the market, and then take the proceeds from sales, and pay off what you owe on your house(s), provided you are happy with where you live. I have known older folks who went over and over their investments, each day, in an obsessive way, and then died, failing to ever derive any real enjoyment from what they invested in, other than the act of investing! Absurd, as I see it, although their heirs were sure glad they did what they did. If you can afford to pay off all outstanding debts with stock proceeds, do it! The sooner, the better. I speak from (very happy) experience. The only valid point in the post I responded to is that, yes, you must be able to meet your day to day expenses (ie. not be cash poor), after you pay off your house. If you can't, well, you need a Plan B.
 
mathjak107 said:
not true at all ... you would be more secure paying off the house at the regular pace and holding on to more of your money if that was the case so you have more liquidity available to you if that was the case ..

you are trying to pass off what might feel good mentally as something that makes smart financial sense and the two rarely go hand in hand
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The operative word, in your ramblings, is "rarely." When you can pay off your house, and still live the good life, do it! It's foolish to pay that interest on a long-term loan, no debate possible.
 
mathjak107 said:
not true at all ... you would be more secure paying off the house at the regular pace and holding on to more of your money if that was the case so you have more liquidity available to you if that was the case ..

you are trying to pass off what might feel good mentally as something that makes smart financial sense and the two rarely go hand in hand
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Ok, then I'll pose a question. I have a mortgage of $1870 per month, and I have $20K left on the mortgage principle, which is about 1.4 years of payments. I have $20K in hand. What can I invest in with that 20K which will pay me $1800 per month of growth during that 1.4 years?
 
wrong calculation , shame on you ... all you are saving is the interest on that . you would be prepaying most of that mortgage payment which is principal that has to be paid regardless ,so you are not getting 1800 a month ..with 1.4 years left the interest saved is on 20k and is likely less than 800 bucks a year with a portion of that coming back if you can itemize .. in short hardly worth it with 1.4 years left . sorry to blow it for you

you can likely beat that over the longer term in an index fund by 2 to 3x
 
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Loving this thread because I would bet that the majority of us have grappled with or are still grappling with these two different schools of thought. Yes, each person's situation and financial picture is unique and has to be looked at as such, but still, regardless of how much you made during your life, how much you stashed away, how much you've put into your mortgage, etc. there is STILL going to be the struggle of what to do with however small or large your existing and future income is. I'm there right now. And since I've got an interest rate of 3.8% on the mortgage it makes sense for me to keep my money in my 401K and IRA's and pay the monthly mortgage rather than pay off the house. Still wonder if that's the RIGHT thing to do - I think it is, but such a major life decision always comes with a certain amount of fear and apprehension. Good luck to us all! :)
Sue
 

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