If you were to inherit $2 million, would you pay off the remaining $150k of your very low interest mortgage?

[Anonymous]

Anonymous wrote:

Anonymous wrote:To those of you that wouldn't pay off the mortgage, how many times in life do you spend money on yourself that you don't need to spend, like on an expensive vacation, jewelry or a new car? Those expenses are more wasteful than paying off a mortgage.

+100

The whole "I'm more interested in optimizing my money" philosophy rings hollow unless you are extremely frugal in all other regards, which many on DCUM are not, as evidenced by all the "We make $350K but live paycheck-to-paycheck" threads.

This is just late-stage bubble stuff that happens after a 16-year bull market, and we've seen this before. I've watched all of Berkshire Hathaway's annual meetings, and there are instances of Buffett in the late 90s talking about how unrealistic expectations had become, citing a survey showing that investors were now expecting to get 16-17% a year from the market based on returns from the early 80s through the late 90s. And, of course, shortly thereafter, we began a "lost decade" for stocks. How many people who inherited $1M in 2008 were likely eager to put it all in the market instead of using a small fraction to secure their family's home and eliminate their largest bill??

THIS 1000%

The mortgage payoff is a Guaranteed Rate of return (whatever interest rate you have). Nobody can take that away from you. so as long as you have an Emergency fund (which with $2M you should), it's likely a wash. Because you pay taxes on the CD/MM interest, and the stock market can take a 40% dive at anytime. And now for the future, you can take you monthly mortgage payments and continue to invest it in the market.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:To those of you that wouldn't pay off the mortgage, how many times in life do you spend money on yourself that you don't need to spend, like on an expensive vacation, jewelry or a new car? Those expenses are more wasteful than paying off a mortgage.

+100

The whole "I'm more interested in optimizing my money" philosophy rings hollow unless you are extremely frugal in all other regards, which many on DCUM are not, as evidenced by all the "We make $350K but live paycheck-to-paycheck" threads.

This is just late-stage bubble stuff that happens after a 16-year bull market, and we've seen this before. I've watched all of Berkshire Hathaway's annual meetings, and there are instances of Buffett in the late 90s talking about how unrealistic expectations had become, citing a survey showing that investors were now expecting to get 16-17% a year from the market based on returns from the early 80s through the late 90s. And, of course, shortly thereafter, we began a "lost decade" for stocks. How many people who inherited $1M in 2008 were likely eager to put it all in the market instead of using a small fraction to secure their family's home and eliminate their largest bill??

THIS 1000%

The mortgage payoff is a Guaranteed Rate of return (whatever interest rate you have). Nobody can take that away from you. so as long as you have an Emergency fund (which with $2M you should), it's likely a wash. Because you pay taxes on the CD/MM interest, and the stock market can take a 40% dive at anytime. And now for the future, you can take you monthly mortgage payments and continue to invest it in the market.

So lock in the “guaranteed rate of return” by paying off your mortgage because the stock market could crash. Then after you pay off your mortgage, use the monthly payment you would have made and invest in the stock market?

You contradicted yourself.

[Anonymous]

Anonymous wrote:Assuming no other debt, fully funded 529s, etc.? In other words, what's the peace of mind value of no longer having a mortgage?

At that level of wealth, the peace of mind value is very low.

You have a $150k. Are you really gonna lose sleep over losing your home when you have $2m in the bank?

[Anonymous]

No way. I have more peace of mind by keeping the money in liquid investments.

[Anonymous]

My financial advisor said not to when faced with very similar numbers.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:To those of you that wouldn't pay off the mortgage, how many times in life do you spend money on yourself that you don't need to spend, like on an expensive vacation, jewelry or a new car? Those expenses are more wasteful than paying off a mortgage.

+100

The whole "I'm more interested in optimizing my money" philosophy rings hollow unless you are extremely frugal in all other regards, which many on DCUM are not, as evidenced by all the "We make $350K but live paycheck-to-paycheck" threads.

This is just late-stage bubble stuff that happens after a 16-year bull market, and we've seen this before. I've watched all of Berkshire Hathaway's annual meetings, and there are instances of Buffett in the late 90s talking about how unrealistic expectations had become, citing a survey showing that investors were now expecting to get 16-17% a year from the market based on returns from the early 80s through the late 90s. And, of course, shortly thereafter, we began a "lost decade" for stocks. How many people who inherited $1M in 2008 were likely eager to put it all in the market instead of using a small fraction to secure their family's home and eliminate their largest bill??

THIS 1000%

The mortgage payoff is a Guaranteed Rate of return (whatever interest rate you have). Nobody can take that away from you. so as long as you have an Emergency fund (which with $2M you should), it's likely a wash. Because you pay taxes on the CD/MM interest, and the stock market can take a 40% dive at anytime. And now for the future, you can take you monthly mortgage payments and continue to invest it in the market.

So lock in the “guaranteed rate of return” by paying off your mortgage because the stock market could crash. Then after you pay off your mortgage, use the monthly payment you would have made and invest in the stock market?

You contradicted yourself.

Well you can lock in the guaranteed rate of return for the mortgage payoff (no more interest). Then it's up to you if you take that mortgage payment and invest in the market, put into a ladder of CDs/MM/Treasuries or burn it on vacations/dining out/fine wine/etc. It frees up the mortgage payment to do whatever you want with it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:DH and I inherited $3M in 2021 after having just refinanced our $750K mortgage into a 2.4% 30-year fixed. We donated half of it to charity (as I assume you did as well, OP), which left us with $1.5M. We used half of that to pay off our mortgage so that we have no debt of any kind. The remaining $750K was invested in the stock market and we now have almost $3M again…plus no debt and the satisfaction of having donated $1.5M to help those less fortunate than us.

Why do you assume that OP donated half of their inheritance to charity? I certainly wouldn't.

Because only a selfish and greedy person receives a gift without paying some of it forward. This is common etiquette and integrity – sounds like you possess neither.

[Anonymous]

Anonymous wrote:

Anonymous wrote:DH and I inherited $3M in 2021 after having just refinanced our $750K mortgage into a 2.4% 30-year fixed. We donated half of it to charity (as I assume you did as well, OP), which left us with $1.5M. We used half of that to pay off our mortgage so that we have no debt of any kind. The remaining $750K was invested in the stock market and we now have almost $3M again…plus no debt and the satisfaction of having donated $1.5M to help those less fortunate than us.

DP but yeah, uh, no. If I receive a potentially life-changing inheritance, it's going to be used to...actually change my life and that of my family. Especially if I still have a mortgage!

I honestly don't understand charity. I do know for sure that once I've achieved financial independence, I wouldn't continue the same meaningless job in the financial industry and could very well end up working in some low-paid endeavor in which I strongly believe. But that's totally different from giving up half of the money that would actually give me the independence.

Ironic that you’re willing to accept a gift but you aren’t willing to give one to someone else. It’s called greed and it’s one of the seven deadly sins: congrats!! Your talk of financial independence sounds strikingly similar to not wanting to work. That’s called sloth and now you’re 2 for 7.

Guess we can thank people like you for everything that is wrong in our society.

[Anonymous]

Anonymous wrote:My financial advisor said not to when faced with very similar numbers.

Does this advisor earn fees from your investments?

[Anonymous]

Anonymous wrote:

Anonymous wrote:My financial advisor said not to when faced with very similar numbers.

Does this advisor earn fees from your investments?

No. Just we just pay hourly for advice.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:DH and I inherited $3M in 2021 after having just refinanced our $750K mortgage into a 2.4% 30-year fixed. We donated half of it to charity (as I assume you did as well, OP), which left us with $1.5M. We used half of that to pay off our mortgage so that we have no debt of any kind. The remaining $750K was invested in the stock market and we now have almost $3M again…plus no debt and the satisfaction of having donated $1.5M to help those less fortunate than us.

Why do you assume that OP donated half of their inheritance to charity? I certainly wouldn't.

Because only a selfish and greedy person receives a gift without paying some of it forward. This is common etiquette and integrity – sounds like you possess neither.

PP here.

You sound like a nut! It wasn't a gift, it was an inheritance. That means that someone who worked hard and left me money trusted me to make good use of it. I would try my best to not waste it, but giving half of it away to a charity wouldn't be on my agenda. Half is a very
significant amount.

You don't know me, so get off your high horse with your nonsense about telling me that that possess neither etiquette or integrity.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:DH and I inherited $3M in 2021 after having just refinanced our $750K mortgage into a 2.4% 30-year fixed. We donated half of it to charity (as I assume you did as well, OP), which left us with $1.5M. We used half of that to pay off our mortgage so that we have no debt of any kind. The remaining $750K was invested in the stock market and we now have almost $3M again…plus no debt and the satisfaction of having donated $1.5M to help those less fortunate than us.

Why do you assume that OP donated half of their inheritance to charity? I certainly wouldn't.

Because only a selfish and greedy person receives a gift without paying some of it forward. This is common etiquette and integrity – sounds like you possess neither.

PP here.

You sound like a nut! It wasn't a gift, it was an inheritance. That means that someone who worked hard and left the money trusted someone to make good use of it, and to help them with their journey in life. I would try my best to not waste it, but giving half of it away to a charity wouldn't be on my agenda. Half is a very significant amount.

You don't know me, so get off your high horse with your nonsense about telling me that that possess neither etiquette or integrity.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:DH and I inherited $3M in 2021 after having just refinanced our $750K mortgage into a 2.4% 30-year fixed. We donated half of it to charity (as I assume you did as well, OP), which left us with $1.5M. We used half of that to pay off our mortgage so that we have no debt of any kind. The remaining $750K was invested in the stock market and we now have almost $3M again…plus no debt and the satisfaction of having donated $1.5M to help those less fortunate than us.

Why do you assume that OP donated half of their inheritance to charity? I certainly wouldn't.

Because only a selfish and greedy person receives a gift without paying some of it forward. This is common etiquette and integrity – sounds like you possess neither.

Everyone's definition of "charity" is different. We do "donate to charity" we also do even more for our extended family, but don't get a tax deduction for that. Paid for 2 nieces college, pay for many family members to join us on vacations, given parents large sums of money to help with their living in retirement, helped financially strapped SIL and a BIL. I just don't normally announce it to everyone, as it's our choice what to give and to whom.

[Anonymous]

Anonymous wrote:Assuming no other debt, fully funded 529s, etc.? In other words, what's the peace of mind value of no longer having a mortgage?

absolutely not, especially since that money would make me at least 150k/yr. Frankly i would
not even touch a penny of the inheritable for 8 years until it hit a projected 3.5M and only then at that point would i begin to live off the interest of 267kyr. I’d be 55 at that time and ready to retire.

really dumb to dig into that money unless you are in dire circumstances.

[Anonymous]

Anonymous wrote:This is kind of an interesting question from the perspective of economic class. Like most people, I will never be worth $2 million and don't have any living relatives worth that much (our parents are dead anyway). I owe over $100k on my low interest mortgage and probably WOULD pay it off if I magically came into a huge windfall.

My reasoning is this: In my tiny experience, life has a way of chewing away at any money that might accumulate. An unexpected layoff, child's medical emergency, parental dementia, broken cars. At some point down the road, I know that the money will be all gone and the best move I can make for my mood is to remove that mortgage debt hanging over my head.

It's not rational but I know I'm not as clever as most of the folks on DCUM.

it is indeed a very very class based response. yours is a mentality of someone who will never create wealth and never teach your children how to create wealth. This is because you come from a scarcity mindset and have an emotional bond with money. Money sis. tool to create more resources not a resource ti spend down. you never spend more money than you are creating after you get to a certain point.