How much is your mortgage payment (principal and interest only)?

[Nutria]

the biggest "loss" when the mortgage gets paid off is probably still to come for most people with modest means.

Very common and probably even on this very board there are examples of cash squeezes for modest means people.

Cash squeeze when the mortgage is finally paid? Since you now have a one less (relatively large) expense, how does that squeeze your cash flow?

[QuarterMillionMan]

$450 on a 1 bdrm condo in Hawaii. The HOA is another $170.

[Nutria]

$450 on a 1 bdrm condo in Hawaii.

That actually seems downright reasonable.

[sv2007]

Reasonable? Why?

Shouldn't that'd depend where in HI. Which island, which area, which building?
There are certainly many cheap buildings, e.g. old, leaseholds, etc.
How can something unknown be labeled "reasonable".

[Nutria]

That actually seems downright reasonable.

Hawaii is known to be expensive at everything.

[snafu]

$ 0 mortgage but municipal tax nd insurance continue. I dislike paying interest so when the initial annual payment print out arrived in the mail I chocked on the fact that nearly every dollar less tax and insurance was ascribed to interest. We do not get a tax deduction on interest and were only allowed one 'balloon' payment per year. My plan was to pay the 30 yr mortgage in 15 years, but the savings in interest made pay-out 13 years. [interest rates were much higher]

[TexasHusker]

It isn't fair to measure mortgage interest cost against opportunity cost of investing the money when the "stock market" is your definition of "investing".

The "stock market" (using that term very broadly) has evolved into nothing more than a glorified carnival game. All of the tools, gimmicks, trading methods, TV shows, and fancy TV commercials showing some jerk building a custom boat -- not one of them can accurately predict what "the markets" are going to do five minutes from now, much less tomorrow or next year.

A decent annual yield in the markets comes by dollar cost averaging, a very long time horizon, and some fortuitous timing when you need the money and it is time to get out.

"The markets" are a very poor overall investment in my humble opinion.

[sv2007]

Hawaii is known to be expensive at everything.

Everything is not being talked about, it was a monthly mortgage + HOA.
Last time I checked, Molokai is HI, and you can get something there for $50k.

[TexasHusker]

duplicate post sorry

[tripods68]

$450 on a 1 bdrm condo in Hawaii. The HOA is another $170.

That's even better in today's market condition.

This reminds me back in late 1998 to 2000 I rented a room (nice home/neighborhood 3 miles from where currently live today) for $350 a month utilities included, except I had vampire of a G/F that pretty much ate my disposable income for a year (going out on trips a lot) felt broke. oh how I learned so much today

[Jluke]

Very common and probably even on this very board there are examples of cash squeezes for modest means people. There're tons, just do a bit of search.

I don't know what to say to you but this would be a situation to agree to disagree. Maybe you'll learn the truth later.

Do you have a story to share on this cash squeeze topic (personal or otherwise)? I would like to be in a position where I am best prepared to handle what you are referring to now that the mortgage is paid off. What surprises will there be that we haven't thought about? What would be the best use of the money that went to pay the mortgage? Are you thinking in terms of a person who is retired or a person who is actively working?

What is your definition of modest means and what expectations/benchmarks do you have for people saving their money - do you subscribe to the 3x gross at 40 for retirement, a certain net worth at a certain age(s), etc?

Sorry for so many questions - trying to learn as much as I can.

[QuarterMillionMan]

Everything is not being talked about, it was a monthly mortgage + HOA.
Last time I checked, Molokai is HI, and you can get something there for $50k.

Location: Honolulu, HI 96813

Paid: $60,000 in 1999

Assessed value today: $185,000

[sv2007]

Do you have a story to share on this cash squeeze topic (personal or otherwise)? I would like to be in a position where I am best prepared to handle what you are referring to now that the mortgage is paid off. What surprises will there be that we haven't thought about? What would be the best use of the money that went to pay the mortgage? Are you thinking in terms of a person who is retired or a person who is actively working?

What is your definition of modest means and what expectations/benchmarks do you have for people saving their money - do you subscribe to the 3x gross at 40 for retirement, a certain net worth at a certain age(s), etc?

Sorry for so many questions - trying to learn as much as I can.

Unfortunately I do have experience in this area. For me it was a law suit, important enough that I really, really need to win. Out of nowhere. But I'm sure one can easily imagine a lot of different situations.

Cash squeezes aren't minor/medium spends like new car, missed connections on vacations, your budget should cover these. Here I'm talking about situations where you need all (or even more than the 6-months emergency fund).

I paid about $100k in 2001 (you'd be surprised at how much 3 lawyers and 5 expert witnesses costs for the ordinary person); fortunately I had enough liquid assets. But imagine if I had put all that money into my house and paid off the mortgage; I'd have to grab a high-interest short-term loan, then quickly get a HELO (i.e. no time to shop around) and hope the appraiser comes out even faster; then pay short-term with HELO ASAP. NOTE: if you paid off your mortgage you cannot refi; so you are stuck with HELO and variable, tied to prime rates.

The other thing is, that money you aren't paying your mortgage isn't doing nothing. Hopefully it's working hard for you. You can always pay off your mortgage with it whenever.

It is about having options vs not. When paid off, you close your refi option, which is probably the cheapest money for most people.

I did pay off my mortgage, but it was a toss up. I have enough money outside to probably never need money from my house. It wasn't a big deal as I could have paid if off a long time ago if I had wanted to. My liquid taxable account is a few times my house value (and I live in a pretty expensive area).

Maybe modest means is a bad choice of words as it is vague. I personally wouldn't pay off my mortgage unless I've got my house value saved up outside. Mortgage is so predictable and rates are so low, it is almost comforting to have one. When you pay it off, you are adding risk and uncertainty unless you've got enough money outside to not care too much about that amount.

As for working vs retired. I don't know. I'm retired but I can go back to work anytime I want to so my psychology may be different than another retired person who cannot return to work. Everybody's risk tolerance different and changes based on his/.her situation too. Some people may not think they'll need that extra option, and that's perfectly fine too. Like some people don't carry insurance for car, house, disability, etc. and lives just fine.

Personally, I learned most things the hard way. I never knew about all these personal finance, estate planning books (well, I knew them, but I thought I knew MORE. Oh silly me.) I'd suggest everybody who's like my old self go and read a few.

[sv2007]

Location: Honolulu, HI 96813

Paid: $60,000 in 1999

Assessed value today: $185,000

I'm actually not specifically looking for your info, just to let to other poster know that HI isn't all expensive. BTW, I wasn't too far from you, we owned a vacation house in Hawaii Kai from 2012-2015, kind of missed the low price in 2008-2010.

[Nutria]

I paid about $100k in 2001 (you'd be surprised at how much 3 lawyers and 5 expert witnesses costs for the ordinary person); fortunately I had enough liquid assets. But imagine if I had put all that money into my house and paid off the mortgage; I'd have to grab a high-interest short-term loan, then quickly get a HELO (i.e. no time to shop around) and hope the appraiser comes out even faster; then pay short-term with HELO ASAP. NOTE: if you paid off your mortgage you cannot refi; so you are stuck with HELO and variable, tied to prime rates.
...
Mortgage is so predictable and rates are so low, it is almost comforting to have one. When you pay it off, you are adding risk and uncertainty unless you've got enough money outside to not care too much about that amount.

What this tells me is that you'd rather definitely pay low interest for a long time than maybe pay modest interest for a medium amount of time.