Spouse Insistent on Paying Mortgage Off Early

[Anonymous]

The bottom line is that with a net worth of $1.1M in your early 30's, it doesn't matter what you do. You will have more than you need barring catastrophe.

With that in mind, compromise with your husband. Make a plan to save at least 20% of your gross income to your investments and also pay down the mortgage. In a marriage, both partners have a say in how money is spent. While paying off the mortgage may not be ideal (you'll only know in retrospect), it isn't a terrible idea.

We paid ours off in our 40s. We would have more money if we had not paid it off. We have no regrets. We have more money than we need regardless of a few extra $100,000.

[Anonymous]

I never understand why people think putting more money into your house is a wise financial decision if you are trying to guard against job loss/illness etc. You want to be able to access the money if those things happen.

Otherwise it’s a question of returns. My general opinion is that the market will return a lot better than 5% a year over the long term.

[Anonymous]

Op, here is the question to ask yourself, "is there a reasonable person anywhere who might make the same decision as your husband?"

The answer is yes. Don't flight about it. Not essential-enough to fight over this.

[Anonymous]

Anonymous wrote:I never understand why people think putting more money into your house is a wise financial decision if you are trying to guard against job loss/illness etc. You want to be able to access the money if those things happen.

Otherwise it’s a question of returns. My general opinion is that the market will return a lot better than 5% a year over the long term.

The thing is that this couple has enough money to invest and also pay off their mortgage.

My spouse and I disagreed on this, so we put an extra 150-300 per month, depending on finances at the time, towards the mortgage, and then paid off the rest with a windfall this past month. Basically, we paid off a 30 year mortgage in 20 years. Maybe you could do something like that? Put some but not a huge amount towards the mortgage? We also socked away a lot for retirement and college.

[Anonymous]

Long-term stock market returns of 5% after tax are not guaranteed. I would pay off your mortgage but not pay it down. That is, I would save and invest and when I had enough cash would pay it off. There is a liquidity cost to paying extra each month. If you pay down the loan but don't pay it off, you still owe the bank the monthly payment. So it is better to pay it off completely to eliminate the liquidity risk. Look at everything that is happening right now with the federal government and federal government contractors. Liquidity gives you options.

[Anonymous]

When you need the money most, and it's locked up in your house's value, the money is hardest to get. You want to stay more liquid if you have any financial anxiety, which it seems your husband has. Also, remind him that a mortgage is only a portion of the cost of a home. The monthly bills will keep coming, mortgage or not.

At 5%, I'd still go with investing. Plus, you should be able to refinance at some point.

[Anonymous]

maybe you can pay a certain amount extra per month to go to principle. or pay bi monthly. either of those will help you pay it off earlier without raiding your retirement savings.

[Anonymous]

If you are very certain you will stay in the home maybe paying off is wise. But you are young enough a move could still be at play. If you were closer to retirement age and planned to stay and needed a lower monthly then I understand his push.

[Anonymous]

Pay it off. It takes a load of stress of your back.

If one person loses a job you don't lose your house.

[Anonymous]

Have you calculated what the difference would be with a few different scenarios?

[Anonymous]

Stay away from that 401k past the match. This will be earned income and taxed way higher than regular investment account. High 401k will cause lots of troubles down the road.
Where is your Roth?
So that you know, regular investment account can be taxed at 0% plus state if even applicable. 401k's tax deduction cannot overcome the long term negatives of the account.
As for paying off mortgage vs Roth, tell him to work extra job if paying off mortgage is so important.

[Anonymous]

Anonymous wrote:Stay away from that 401k past the match. This will be earned income and taxed way higher than regular investment account. High 401k will cause lots of troubles down the road.
Where is your Roth?
So that you know, regular investment account can be taxed at 0% plus state if even applicable. 401k's tax deduction cannot overcome the long term negatives of the account.
As for paying off mortgage vs Roth, tell him to work extra job if paying off mortgage is so important.

This is tinfoil hat stuff.

[Anonymous]

Anonymous wrote:Is the paid-off rental something you would not mind living in yourself? If not, i agree with your spouse. It makes good sense pay off your current home while you can. You never know what the future holds, job loss or illness.

So much this. When you are in your 20s and 30s and employed and healthy and things are going well, it’s easy to feel like you will be able to keep going like that indefinitely.

I’m in my upper 40s now and if I were laid off, I don’t think I could find a job paying close to what I make now. And I just don’t have it in me to hustle again like I did to get where I am. Having my house paid off would be so much better and allow me to weather storms. And the storms are looking likely and severe at this time.

[Anonymous]

Anonymous wrote:Pay it off. It takes a load of stress of your back.

If one person loses a job you don't lose your house.

This is why we paid ours off. DH had the big job, but it was always at risk. And he was right, one bad year and he was out at 56. We have plenty invested, so it's early retirement instead of looking for another six-figure job to pay a monthly mortgage.

[Anonymous]

Anonymous wrote:I never understand why people think putting more money into your house is a wise financial decision if you are trying to guard against job loss/illness etc. You want to be able to access the money if those things happen.

Otherwise it’s a question of returns. My general opinion is that the market will return a lot better than 5% a year over the long term.

I agree with this, from a standpoint of "just paying a little more each month towards the mortgage." It's a more complicated question when it is, "should I pay off the house in one fell swoop," because that will substantially reduce your monthly obligation, and allow you to stay in the house during a period of job loss.