If you could pay off your motgage but .....it would empty all of your savings accounts (except your retirement accounts) would you?
How about if you could pay off half of it?
Or if you could get it down to "if I empty my accounts I'll only have 2 years of payments left"?
Would you be making this decision based purely on statistically numbers or on any psychological factors, such as, if I empty all my accounts I'm now gonna be scared into really buckling down?
__________________ GG
March Grocery: $/$350 Christmas: $40/$500 Mortgage goal:$787.07 /$10,000
EF upgrade: $700/$2000 Leap Goal: $16,300/$23,000
I have always hated owing anything. I could have paid off my first house with savings but didn't because of dh having a seasonal job. For me I would pay alot of it down (just because I hate owing anything) but I would keep some for emergency fund. I actually took out a he loan (with a much lower interest rate) to pay off my house and then paid that off. I learned from a real estate agent when I was very young about paying extra on my mortgage every month when I could. One of the best money saving advice I ever received. And for me not owing money is such a GREAT feeling.
The Following User Says Thank You to craftypam For This Useful Post:
We would not deplete our emergency funds to pay off our house. What if we did and then had an emergency before we could replenish the funds?
I wouldn't deplete retirement to pay off the house either - a paid for house w/ no money is a depressing thought.
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If you could kick in the pants the person responsible for your problems, you wouldn't be able to sit for a month.
Did you know that a 4 year student paying $20,000/year who finances their education graduates with over $103,000 in debt to start? But a student who works and pays cash and takes 6 years to graduate ends with $6,300 in their pocket! So much for "getting a head start by financing!"
Greebo(Nerd Spender): Loving and extremely patiently tolerated husband of ceashels. WARNING: Y Chromosome behind the keyboard. Adjust your listening filters appropriately!
Three Two mortgages, twoone no car loans, one no credit cards, and a partridge in pear tree!
The Following User Says Thank You to Greebo For This Useful Post:
Depends on the amount and how quickly I could replenish my savings. If my mortgage was under 15k I'd pay it off with my LOC though, since the rate is lower and it's easier to pay extra.
I definitely wouldn't wipe out my savings to pay it half off.
The Following User Says Thank You to monkeywrangler71 For This Useful Post:
no...i would never sacrifice savings to pay the mortgage down...for multiple reasons...
financial....if you have your savings invested properly you should be able to be turning a decent rate of return...by the time you factor in money your money should be making for you through the years to the mortgage deductions you should be able to take on tax returns you would be better off leaving your money untouched and in fact stockpiling all the savings you can with current monies...i know that some say that the tax deductions are not worth it but if you are earning enough 'gains' on the investment side you can use all the deductions you can get....the easiest money you will ever earn in your lifetime is the money that you earn on investments (your money is working and earning for you).....that's one less day 'toiling' on the jobfront that you may have to do....let your money earn the 'paycheck'...and by the time all the numbers are 'crunched' a mortgage is not that bad of an investment....(I know, the amor schedule that you get when you purchase the home makes it look pretty darn bad with all the interest being paid...but keep in mind that the majority of the interest is paid in the 1st yrs of the loan...each yr that the loan matures, more goes to principal than to interest)...so if you want to pay your house off...do it in the 1st few yrs you take out the loan...that is where the bulk of the payments are going to the interest only)....and also you are entitled to mtg exemptions on your property tax that you lose when you no longer carry a mtg on the property...so taxes could increase as a result..
emotionally: a house is just a tangible asset... i can live with or without the current house that i am in... if i should 'lose' it for whatever reason having money to fall back on will be the difference between whether i end up with in a dry place to sleep at night or under an underpass (though i suppose its dry there too)....i would rather have a 'huge' safety net in place...
and if you struggle psychologically with making that payment each month as you write that check (or electronically transfer or however you do it) get out your investment stmts at the same time and train yourself to look at it like i may be paying on the one end but on the other side i am more than making up for it....(i know..right now those stmt's look pretty bleak but you are thinking LONG term here....) things will get better with the numbers.....
if you use an accountant have him/her run the actual numbers for you for your individual life...i know that when i see my own numbers each year it is hard for me NOT to take out additional mtg's and invest the money in the markets (and i am not just talking wall street...there are other avenues).... because i can see the potential there... that is where my 'own' emotional problems come into play...but i will say that once my current debts are decreased significantly (i have 16 rental property mtgs i pay in addition to my own home and 2nd home mtgs) i will more than likely be 'pulling' money from these investments to purchase additional (not real estate...i am heavy enough there as it is)....but other investments where that money can work for me making more money....
the real key here is you sound like you already have a nice 'nestegg' (outside of retirement monies)....let it go to work for you.....you can put it to much better use than handing it all back to the bank....(and....keep in mind that if you 'tap' into your retirement accts early...before 59 1/2 you will be subject to penalties...what if you needed some money before then...?).....
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“After the last tree has been cut down, after the last river has been poisoned, after the last fish has been caught Only then will you find that money can't be eaten.”
~ Cree Indian Prophecy
The Following User Says Thank You to sabrelvssammy For This Useful Post:
If you could pay off your motgage but .....it would empty all of your savings accounts (except your retirement accounts) would you?
Would you, having no mortgage (or only two years left) but also no savings (or half of what you'd like to have), take out a mortgage to fill your savings account?
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Start date: May 20th, 2009
Babystep 1: Emergency fund 1000 EUR - done
Babystep 2: Debt snowball. Still to pay: 13880/23300 EUR (Progress: ~40%, Feb 2010).
ETA Babystep 2 completion: May 2011
Disclaimer: Male hormones are at work in close proximity to this key board. Therefore, please bear with me and if push comes to shove, please do blame anything stupid said on male 'logic'.
The Following User Says Thank You to a.nonymous For This Useful Post:
That, except, if you totally lose your income I doubt you could get a mortgage, right?
Exactly. That's why EF first, Mortgage second.
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If you could kick in the pants the person responsible for your problems, you wouldn't be able to sit for a month.
Did you know that a 4 year student paying $20,000/year who finances their education graduates with over $103,000 in debt to start? But a student who works and pays cash and takes 6 years to graduate ends with $6,300 in their pocket! So much for "getting a head start by financing!"
Greebo(Nerd Spender): Loving and extremely patiently tolerated husband of ceashels. WARNING: Y Chromosome behind the keyboard. Adjust your listening filters appropriately!
Three Two mortgages, twoone no car loans, one no credit cards, and a partridge in pear tree!
No, no, and no........all too risky...at the current time.
As most of the others posted.........what if something happened after you had done this? And I would say, in this economy, there is a better chance of 'something happening' now than ever before.
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The Following User Says Thank You to frugalfranny For This Useful Post:
Would you, having no mortgage (or only two years left) but also no savings (or half of what you'd like to have), take out a mortgage to fill your savings account?
actually...yes.... mtg money is one of the cheapest monies you probably ever will be able to borrow....and one of the few left that you can write off on your taxes.... solely depending on the terms of the mtg (rates, costs, etc) and based on how the 'borrowed' monies are invested if the research is done properly you can come out quite ahead of the game....the term OPM (other people's money) is what works here... borrow cheaper money...invest in higher income producing assets...
i have many times borrowed on ELOC's (equity lines of credit) invested the monies...used the invested monies money (meaning money that the investments were producing) to pay back the ELOC payments and if done correctly you can 'produce' a higher rate of return after taxes on your investments than the cost of the 'borrowed' monies....
the key here though is discipline...you must only use the money for investments (no new cars, clothes, eating out, etc...) and know that what you are investing in will produce a greater return than the cost of the borrowed money....
i did this for years with 0% credit cards... back when you could get cash advances for no fee...borrow the money for 12 months at 0%...i would take out $5,000 lines of credit...immediately invest the cash and work on making the monthly payments from my current paychecks...if i could not knock the debt down within the 12 month 0% period i would balance transfer over to another card to keep the 0%...continue paying off like a madwoman.... once the card was paid...i started the cycle all over again... (and this was when we were earning record returns in the markets too)....then we started doing it on a bigger scale with the ELOC's.....
once my mtg is paid down (i am only 2 yrs into my current home)...(depending on the state of the economy at the time and if i still even want to live in the states) i will probably start taking more money out of the house and investing it again.
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“After the last tree has been cut down, after the last river has been poisoned, after the last fish has been caught Only then will you find that money can't be eaten.”
~ Cree Indian Prophecy
Oh, sabrelvsammy - for an actual INVESTMENT - turning debt into income, I would. I have, and I would again. My rental property is nicely cashflow positive after paying its own mortgage *and* the heloc we used to pay for it and it's renovation.
But savings isn't an investment. And this is an area where I part ways with Dave Ramsey.
__________________
If you could kick in the pants the person responsible for your problems, you wouldn't be able to sit for a month.
Did you know that a 4 year student paying $20,000/year who finances their education graduates with over $103,000 in debt to start? But a student who works and pays cash and takes 6 years to graduate ends with $6,300 in their pocket! So much for "getting a head start by financing!"
Greebo(Nerd Spender): Loving and extremely patiently tolerated husband of ceashels. WARNING: Y Chromosome behind the keyboard. Adjust your listening filters appropriately!
Three Two mortgages, twoone no car loans, one no credit cards, and a partridge in pear tree!
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If you could pay off your mortgage but .....
GG 
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4/2030 making progress
And this is an area where I part ways with Dave Ramsey.
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