Spouse Insistent on Paying Mortgage Off Early

[Anonymous]

My husband is obsessed with paying our mortgage off early and I have been unable to convince him that this is a sub-optimal financial decision. He hates the idea of paying interest and is allergic to debt. Our mortgage rate on our home is only 5% but he would rather contribute to paying our mortgage off early instead of investing more in our retirement accounts. Just for context here is a summary of our financial situation. We are in our early 30s and our total NW is around 1.1M. We have 240k in retirement accounts and we are contributing a combined amount of around 36k a year to our retirement accounts. We own 2 rentals, one is paid off and the other rental has a sub 3% mortgage on it. Our total income is around 250k per year. Basically the disagreement is that he would prefer to pay off our mortgage by 2035 and I would prefer to max out our 401k's. What should I do, just give in and pay off the mortgage early or double down on 401k contributions?

[Anonymous]

Honestly at 5% either is fine. Why not split the difference and you max your 401k and he can use an equivalent amount towards the mortgage. Is 2035 your projected retirement date or is there some other reason he picked that date?

[Anonymous]

Split the difference. Do a bit of both. I won’t get into the pros and cons (which depends on present and future tax rates, how overvalued you think the market is currently etc), I will just say that marriage is about compromise.

[Anonymous]

Do NOT pay off mortgage early. If he wanted a shorter mortgage, he should have requested a shorter term. We just paid off a 15 year old mortgage, which comes with far less interest than a 30 year. If you pay off a 30 mortgage early, you're still paying more interest. It negates all the benefits of having that longer term.

Invest the money in the stock market instead. Apple, Nvidia, Microsoft, Alphabet (Google), Netflix, Meta. Maybe not Tesla.

[Anonymous]

Wow, you have a lot of debt for that income. We paid ours off. It as freeing. You should be doing both.

[Anonymous]

I get how one can become fixated on this type of goal because it can be gratifying to see that loan balance go down. But it’s likely no one is ever going to had you that much money for 5% ever again. And an interest deduction is available. So yes, do other things with the money, especially because you are relatively young and still working.

[Anonymous]

Anonymous wrote:Split the difference. Do a bit of both. I won’t get into the pros and cons (which depends on present and future tax rates, how overvalued you think the market is currently etc), I will just say that marriage is about compromise.

Yeah this is a relationship issue not a financial issue.

[Anonymous]

I’d keep mortgage but I understand why others might not. However, you should still contribute to your 401K, especially up to the match.

[Anonymous]

Anonymous wrote:I get how one can become fixated on this type of goal because it can be gratifying to see that loan balance go down. But it’s likely no one is ever going to had you that much money for 5% ever again. And an interest deduction is available. So yes, do other things with the money, especially because you are relatively young and still working.

This.
Can you get him to reframe the 401(k) contribution as paying yourselves first? Saving for retirement is an obligation just like (well, sort of like) paying your debt. There are serious consequences if you don't, and there is a timeline and a value to the interest.

If you are meeting your legal obligation of monthly payments then your next priority is making the legally allowed contributions to your future. Only afterward can you do something optional like pay the mortgage faster.

[Anonymous]

I’d payoff the mortgage

[Anonymous]

Anonymous wrote:Wow, you have a lot of debt for that income. We paid ours off. It as freeing. You should be doing both.

Our mortgage is only 3k a month and the rental with a mortgage provides positive cash flow. I would disagree that it’s a lot or debt.

[Anonymous]

Anonymous wrote:Honestly at 5% either is fine. Why not split the difference and you max your 401k and he can use an equivalent amount towards the mortgage. Is 2035 your projected retirement date or is there some other reason he picked that date?

This. My answer changes if you have a lot of mortgage interest and that allows you to take out more than the standard deduction. Where are you guys on that?

Because if you have more than enough mortgage interest to claim more than the standard deduction, you absolutely should not pay down your mortgage

[Anonymous]

I would pay off the mortgage and then live in peace but after that start putting mortgage amount into investment accounts and invest aggressively until I'm 55, start playing safe after that.

[Anonymous]

Interest based banking is based on exploitation of poor people.

[Anonymous]

Anonymous wrote:Do NOT pay off mortgage early. If he wanted a shorter mortgage, he should have requested a shorter term. We just paid off a 15 year old mortgage, which comes with far less interest than a 30 year. If you pay off a 30 mortgage early, you're still paying more interest. It negates all the benefits of having that longer term.

Invest the money in the stock market instead. Apple, Nvidia, Microsoft, Alphabet (Google), Netflix, Meta. Maybe not Tesla.

Awful advice. First, if they pay it down faster, all amounts over the regular monthly amount come straight off principal, so it's wise to do so.

Second, investing in a handful of stocks is highly risky because it's not diversifying. Most of those stocks have really high P/E ratios too = potentially overvalued.