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    financial choices

    Do you guys ever look at your financial choices and think maybe I should do something financially stupid for peace of mind? I keep sitting here and honestly I don't know if it's age or what but I'm jealous of everyone paying off their homes. I sort of want a paid off home. The crazy thing is that I know it doesn't make sense at all financially. We've always done the financially prudent thing. We finance everything and invest the rest. But now I sometimes feel tired of it. I hate the idea of carrying my mortgage. But at the same time I know it's the "right" thing to do.

    Do you guys ever do things that are stupid just because? Do you guys remember corvettegranny. She'd finance corvettes so her husband would only buy one at a time? Or there was a guy phil who would always finance his rentals to 80% on 30 year fixed rates and pull out cash to buy more? He'd continually do this and had something like 30+ rentals for years and would never pay them off?
    LivingAlmostLarge Blog

    #2
    Calling paying off your mortgage "financially stupid" is a pretty big stretch. There are a whole lot of wealthy people in the world with paid off houses.



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      #3
      In short, yes. But I also don't think paying off a home is financially stupid. It can be financially advantageous as well as accomplish non-financial goals. If paying off a home improves life by reducing expense so you can take a less stressful job, or stop working, or doing something with life that doesn't involve paying on a mortgage, then it's worth every penny. Life is short.

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        #4
        Originally posted by LivingAlmostLarge View Post
        Do you guys ever look at your financial choices and think maybe I should do something financially stupid for peace of mind? I keep sitting here and honestly I don't know if it's age or what but I'm jealous of everyone paying off their homes. I sort of want a paid off home. The crazy thing is that I know it doesn't make sense at all financially. We've always done the financially prudent thing. We finance everything and invest the rest. But now I sometimes feel tired of it. I hate the idea of carrying my mortgage. But at the same time I know it's the "right" thing to do.

        Do you guys ever do things that are stupid just because? Do you guys remember corvettegranny. She'd finance corvettes so her husband would only buy one at a time? Or there was a guy phil who would always finance his rentals to 80% on 30 year fixed rates and pull out cash to buy more? He'd continually do this and had something like 30+ rentals for years and would never pay them off?
        Did Phil ever post here? I've only seen him on the old MSN Money boards, and the new YMAM on Proboards, where everyone migrated.

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          #5
          I can't agree that carrying a mortgage is the "right thing to do". No thanks. We bought an affordable home and paid it off years ago. I really don't care what "Phil" says. I have a paid off home and peace of mind.

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            #6
            The person who decides what is "right" financially should be YOU, not some finance guru. Never made any sense ot me whatsoever to finance you home which is valuable and pay cash for a depreciating asset like a car. I think the opposite. Pay off your home, finance your car instead.

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              #7
              I paid off my home last year. That felt really good. Then we moved and could have paid cash for the new home but we got a 30 year fixed mortgage @ 2.75%. Put the proceeds from the other home into our 60/40 portfolio and made a boatload of money. Maybe we'll pay it off before I retire next Mar, maybe not. Having a paid off house didn't feel good enough to give up an excellent inflation hedge.

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                #8
                I don't think paying off a mortgage is financially stupid at all. But yes, I often do want to do stupid things with my money, I think we all do. After being in debt for a long time, and now being 100% free of it, I think actually owning the things you have is important. No telling what investments might do in the future. Or real estate prices for that matter. So I say, own what you need to own to be happy and secure, have a fat emergency fund, and then invest the rest. But I can think of things plenty more stupid than paying off a mortgage.

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                  #9
                  Paying off our primary home & rental house were absolutely the right choices for me. Doing so has reduced our financial stress level, and opened up a significant chunk of our monthly income for investing. Our rental cash flows like a bandit, and we're able to save 40-50% of our income while still living very comfortably & not really watching our spending closely.

                  Would the math say that the money I put into our RE could earn a higher return? Possibly. But my chosen path is far more secure, lower risk, less stressful, and as a result, more comfortable. It's not necessarily the right choice for everyone. But it was definitely the right choice for my family.

                  That's really what matters -- do what's right for you & your family. Personal finance is personal, so you have the privilege & responsibility to choose what's right for you.
                  "Praestantia per minutus" ... "Acta non verba"

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                    #10
                    Originally posted by LivingAlmostLarge View Post
                    Do you guys ever look at your financial choices and think maybe I should do something financially stupid for peace of mind? I keep sitting here and honestly I don't know if it's age or what but I'm jealous of everyone paying off their homes. I sort of want a paid off home. The crazy thing is that I know it doesn't make sense at all financially. We've always done the financially prudent thing. We finance everything and invest the rest. But now I sometimes feel tired of it. I hate the idea of carrying my mortgage. But at the same time I know it's the "right" thing to do.
                    Everyone's situation is different, along with priorities. So a certain decision that may come off as "financially stupid" to others may make a more sense that particular individual's circumstances. The answer really comes down to, "it depends." Similar examples for me were financing a car vs paying cash. As soon as I financed it, I immediately regretted it, and paid off the loan. A bunch of my peers decided to reduce their 401K contribution rate when the company match was removed. On my last trip, a buddy was criticizing his cousin for continuing to make payments on his student loans regularly even if they've all been deferred, and he's still employed. His arguments were that with no interest accruing, why bother paying now? And is counting on Biden to forgive up to 50K (I had to hold back from laughing on that one) in his term. But to each their own.

                    Outside of this forum, I personally only know maybe one or two friends with paid off homes, along with my parents. So if everyone around you has paid off homes, that's awesome. But also in a weird way sounds like keeping up with the Jones, based on the tone of your post or your circle. So if paying off your mortgage quicker is a bigger priority than focusing on investing for retirement (just an example), who are any us to say you're doing it wrong, even if the math makes more sense to distribute somewhere else? As others said, the right thing to do is whatever you're most at peace with. If paying off your mortgage earlier is it, then do it.

                    "I'd buy that for a dollar!"

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                      #11
                      Originally posted by LivingAlmostLarge View Post
                      Do you guys ever look at your financial choices and think maybe I should do something financially stupid for peace of mind?
                      Managing your finances isn't solely about the numbers, peace of mind is a big part of it as well. If paying off your home would give you peace of mind I'd suggest it's a worthwhile investment. I'll share that early in the pandemic when there was a high level of uncertainty, the market dropped significantly, and many, including me, transitioned to work from home, living in a paid off house gave me a great deal of peace of mind.

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                        #12
                        I've paid off debt in favor of investing even though that investing would probably yield more money in the end.
                        I can't stand payments.
                        Money is great, but what about the years and decades of stress from making all the payments?
                        Peace of mind is intangible, but it has value to me.
                        I'll gladly forgo a little bit of wealth building if I can live a debt free and stress free life.

                        Brian

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                          #13
                          I actually never if heard of "financially stupid" and "peace of mind" in the same sentence. Basically you are buying a peace of mind, which is usually never financially stupid to de-risk.

                          I know the opposite us true, which is to increase risk due to greed by doing financial stupid things.

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                            #14
                            I personally HATE debt. So, as a result, we paid almost everything off early. Our student loans were well paid in advance. Our home was paid off well in advance. We have paid cash for cars. We do not run balances on our CC, it gets paid in full at the end of the month. And we don't take out Helocs or buy things on credit. That is our lifestyle for our peace of mind. We live well within our means. No I dont' have the nicest house on the block, that's ok. I buy the car I want which is a Honda CRV with heated leather seats but I will drive it for a decade. We have a very content simple lifestyle. We did finance our most recent cars, but instead we are paying our children's (2 in college) tuition in full. Our children will graduate completely debt free from college which seems to be a rarity but we think that will be a good start of life for them. Those are our values and what we live. And, I get the arguments about not paying those things off and investing instead but we prefer a debt free life.

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                              #15
                              I'm with everyone else in saying that if I do something for peace of mind, it's not financially stupid. When I finished residency, my goal was to pay off my student loans in 10 years. Due to a job change along the way, it took 12, but we got it done. The point, though, is that we did it during a great bull market. We could have made way more money investing and dragging out the loans, but I didn't want to still be paying my own student loans when our kid was in college. So we happily sacrificed the higher potential return for the guaranteed return of erasing the debt. Was it stupid? I don't think so. Years later when colleagues were still talking about their student loans, I just kept my mouth shut and enjoyed the fact that those were long behind me.
                              Steve

                              * Despite the high cost of living, it remains very popular.
                              * Why should I pay for my daughter's education when she already knows everything?
                              * There are no shortcuts to anywhere worth going.

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