5 reasons why it’s smart to strive for a mortgage-burning party.
Burn baby burn. That’s our goal! Jeanine and I want to pay off our mortgage in the next ten years. If I had my druthers, it would be sooner. Why? Living in a home that’s paid for will alter our life. Here are five reasons why:
1. I gain peace of mind. There is something to be said about owning our most significant asset outright. Until this happens, this asset is technically a liability.
2. I no longer have to worry about job loss. Our biggest monthly expense is our mortgage. If Jeanine or I lost our job, we’d have to dip into our savings to cover this cost. If this expense was eliminated then our ability to survive without income increases dramatically. This is a true freedom.
3. It reduces my cost of living. There are two paths to wealth. Increase income or reduce your expenses. Do both and you’re set.
4. It’s a smart bet. I know I’m getting a good return on my investment when I’m using it to pay off my mortgage.
5. The tax deduction is overrated. We still have a big mortgage and believe you me; the tax deduction comes in handy every time tax day rolls around. That said, in my opinion, the 4 benefits listed above outweigh any justification (including the mortgage-interest deduction) for not paying off our mortgage as soon as possible.
What are your plans? Do you hope to pay off your mortgage eventually? Or can you relate to these people profiled in this recent NPR segment about why mortgage-burning parties are almost extinct?
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I do want to pay off my mortgate early. If I paid as scheduled, I wouldn’t pay it off until I was 65. I am aiming for paying it off when I’m 52-53. To me the biggest drawbacks are the lack of the mortgage interest deduction and the fact that even with my mortgage paid off, my property taxes and homeowners insurance will be a sizable payment. Right now those portions are >1/3 of the total payment. So I’ll still have those when the mortgage is paid off.
I totally agree with Nina’s 5 reasons to do it. The peace of mind is incredible and made the sacrifices along the way worth every penny scrimped and saved. I paid off my mortgage 5 years ago at age 41. It was the second best thing I ever did. The first was investing in a home when I was in my mid-twenties and swinging a a 15 year instead of a 30 year mortgage. The mortgage deduction was minimal in the last couple years anyway and, as Nina stated, it doesn’t begin to outweigh all the other benefits. I have also paid off two cars and carry no credit card debt. Six months ago I stepped off the corporate treadmill (voluntarily) to start my own business doing what I love. It’s amazing the expenses that disappear when you give up a corporate lifestyle (drycleaning, lunches, commuting costs, etc.). Since then I’ve been working part-time and finally have time and energy to do some volunteer work. Without a mortgage looming and dominating my expenses, I can afford to do this indefinitely. I’ve eliminated a lot of stress by taking back my life and my health. I now control my own destiny and with my “shelter investment” I will always have a roof over my head. I don’t plan on moving and I love my home. I live in FL so my homeowner’s insurance is ridiculously high but I don’t shovel snow and I’m minutes from some of the best beaches in the country. Turns out all those “fatherly finance lectures” about eliminating debt as soon as possible did sink in. Somewhere in heaven, Dad’s smiling at the realization I was really listening to all those lectures (most of the time). Thanks dad!
I’m looking forward eagerly to my mortgage-burning party, sometime late next year. Your reasons are spot on. I’m already seeing very little benefit from that tax deduction. Without a mortgage, my partner and I could live indefinitely on one income if we had to due to job loss/illness/whatever. And the peace of mind from finally owning the roof over my head? Not priceless — I could work out exactly what 17 years of mortgage payments would add up to — but I think I’ll hold off on calculating that number until it’s time for that mortgage-burning party!
Totally! I bought when I was 22 and finally removed the PMI last month [yes, I wasn’t the smartest at 22]. Without PMI, I’m taking an extra $50 a month for me and putting in $150 a month to principal. It will still be years before my mortgage burning party, but at least my 30 year mortgage will die many years earlier.
Debra: You make a good point about still having to budget for property taxes and insurance. That said, the no mortgage part is still a life-changer!
Mime & S: Congrats! A terrific accomplishment and you both are an inspiration to me!
James: 22?? I’m jealous. I was a late bloomer when it came to real estate and got started with my first home in my early thirties. I wish I had a head start like you. Congrats on moving beyond the need for PMI.