For those who have paid off their mortgage

[crisi]

The other thing to do is to avoid "trading up". So many people buy more house and more house and more house as they grow older and their income increases -- but they'll never get it paid off. We're in our second house, and we've never had a mortgage on it. Yes, most of our friends have bigger, nicer, newer houses, but ours is comfortable and PAID FOR. Now that we're mid-40s, many of our friends are concerned about their kids' college educations and their own retirement . . . but we're not, and having chosen to stay in a modest house is one of the biggest reasons that's true. We've never been particularly high wage earners, but we've done a great deal with what we have.

I have a number of friends who've realize in their mid-40s that they are closer to retirement than to the beginning of their careers - generally shortly AFTER they take out a 30 year mortgage on a big house and their oldest starts middle school and they wake up to "but I have to save for retirement and pay for college." (Honestly, some of my friends are slackers who wake up at 40 to "I'm close to retirement and I haven't STARTED anything like a career, or a family.")

My advice to anyone starting out - live beneath your means. Make yourself comfortable at a reasonable standard of living. Think and plan ahead. You'll be 40 in what will seem like a few weeks - and I'm sure in a mere few weeks (I'm 45, my kids are eleven and twelve), the kids will be going to college, and a few weeks later, I'll be 65. Make hay while the sun shines and save it for a rainy day. Don't do this at the expense of being comfortable - no one should bank a million dollars and live off ramen noodles and wear holey underwear - but do this before you fall for those beautiful granite countertops. You don't have nearly as much time as you think you do, either to live for today or plan for tomorrow.

 

[MrsPete]

Thanks so much! I've never heard of an 'amortization' chart and look forward to showing him it when I get home!!!

I thought they had to give you one when you closed on your house? Maybe I'm wrong on that. Regardless, you know now.

I have a number of friends who've realize in their mid-40s that they are closer to retirement than to the beginning of their careers - generally shortly AFTER they take out a 30 year mortgage on a big house and their oldest starts middle school and they wake up to "but I have to save for retirement and pay for college." (Honestly, some of my friends are slackers who wake up at 40 to "I'm close to retirement and I haven't STARTED anything like a career, or a family.")

My advice to anyone starting out - live beneath your means. Make yourself comfortable at a reasonable standard of living. Think and plan ahead. You'll be 40 in what will seem like a few weeks - and I'm sure in a mere few weeks (I'm 45, my kids are eleven and twelve), the kids will be going to college, and a few weeks later, I'll be 65. Make hay while the sun shines and save it for a rainy day. Don't do this at the expense of being comfortable - no one should bank a million dollars and live off ramen noodles and wear holey underwear - but do this before you fall for those beautiful granite countertops. You don't have nearly as much time as you think you do, either to live for today or plan for tomorrow.

Excellent advice, as usual. If you start saving a little in your 20s, live moderately, and avoid debt, you can achieve your plans so much more easily than if you wait 'til your 40s. If you wait 'til then, you are forced to put away large chunks to achieve a lesser retirement AND you won't be able to do as much for your children's education. The two keys are starting early and looking for a good balance between your wants and your needs. If you want to travel frequently, you might have to say no to those granite countertops; on the other hand, if your house (or your car or whatever) are more important, then you might have to accept that a vacation is going to be a once-every-couple-years-thing for your family. Choosing and planning. They aren't popular things in today's society, which encourages us to have it all TODAY by borrowing.

 

[MSSANDRA]

I used the money to adopt a baby! (20K in cash) The her daycare, preschool fees, gymnastics & ballet sucks it up year after year.

Oh but look at that face!! Worth every penny!

We are debt free ( mid 40's). Paying off the house will allow us to stay that way. We had a pretty big house payment so there is a difference. We are starting a "car fund" to save for future new cars. And most will go into savings. DS's college fund is secure, but we will start one for DGS(4) that lives with us.

We are also talking to a financial planner on the best way to invest any extra. We are ok on retirement but would love to have more to allow us to travel etc.

 

[Disneywedding2010]

My husband and daughter passed away in 2008. With the settlement I recieved I paid for my house in full. I didn't want the hassle of a mortgage payment. The money that I have each month that would of gone to a mortgage (had I decided to go that route) I have invested so if something comes up down the road I have money to fall back on.

 

[Purseval]

I paid off 2 houses early and paid cash for the one I live in now. We are thinking of buying a house in a retirement community about an hour from Orlando and renting it out until we're ready to retire. Between the rental money and what we get for selling this one that will also be paid off by the time we get into it.

 

[starann]

I was told once that owning your home outright (without a loan of any kind) can open you to losing it should you ever be sued. I don't know how true that is..but I was told you should at least have a home equity loan or something this way of sued a person can't take a house from the bank.

I am a nurse and have to carry malpractice insurance so that may have been where I heard it.

Again, I don't know how true it is and since we are no where near paying off our house (we have been in it for almost 6 years!) it's not too much of an issue for us!

 

[crisi]

Well, if you don't own anything, they won't get much from you. Although even if you don't own anything, they can sue you and put a lien against future earnings. If you own something, you could feasibly loose it in a suit. Its unlikely that you will if you carry decent insurance, incorporate your business and run your life carefully.

But if you don't want to own anything so you don't get sued, you'll really never increase your net worth. Plus, if you get sued, they'll garnish your wages.

 

[bdcp]

I was told once that owning your home outright (without a loan of any kind) can open you to losing it should you ever be sued. I don't know how true that is..but I was told you should at least have a home equity loan or something this way of sued a person can't take a house from the bank.

I am a nurse and have to carry malpractice insurance so that may have been where I heard it.

Again, I don't know how true it is and since we are no where near paying off our house (we have been in it for almost 6 years!) it's not too much of an issue for us!

That's why you should have an umbrella insurance policy to protect you from lawsuits. We have one and no one but us and our insurance co. knows for how much. You don't want someone suing you for the full value of your insurance either.

 

[dobball23]

Let's say I have an extra $100,000 and have decided to either invest it in bonds/mutula funds etc. or pay off my house, which has $100,000 remaining on the mortgage. Which option is better? Investing or paying off the house?

My wife and I are currently in our early 30s, if that makes a difference.

 

[crisi]

Let's say I have an extra $100,000 and have decided to either invest it in bonds/mutula funds etc. or pay off my house, which has $100,000 remaining on the mortgage. Which option is better? Investing or paying off the house?

My wife and I are currently in our early 30s, if that makes a difference.

Depends on a lot of things. What your interest rate is and what your rate of return is. How stable your job is. What your monthly cash flow is like. What your tolerance for risk is. Whether you are capable of saving on your own or if you need windfalls. What do you anticipate the market doing.

I have a mortgage right now. Because my mortgage is at 4%, the dividends from my investment portfolio pay no lower than 5%. My husband and I both have stable jobs. The mortgage is for investment property we can sell. We have adequate savings to cover risk, and we are regular savers. For us, keeping the money in investments made more sense than paying off the mortgage at this moment in time.

 

[MrsPete]

I was told once that owning your home outright (without a loan of any kind) can open you to losing it should you ever be sued. I don't know how true that is..but I was told you should at least have a home equity loan or something this way of sued a person can't take a house from the bank.

I am a nurse and have to carry malpractice insurance so that may have been where I heard it.

Again, I don't know how true it is and since we are no where near paying off our house (we have been in it for almost 6 years!) it's not too much of an issue for us!

Well, anything you own -- a home, a car, land -- could be taken from you in a lawsuit. Having a loan against it wouldn't protect you from a lawsuit.

Let's say I have an extra $100,000 and have decided to either invest it in bonds/mutula funds etc. or pay off my house, which has $100,000 remaining on the mortgage. Which option is better? Investing or paying off the house?

My wife and I are currently in our early 30s, if that makes a difference.

I'd vote for using it to pay off the mortgage. Once it's done, your take-home pay will "increase", and you'll be free to build up the investments. However, at the same time you'll also have more financial security: If you should lose your job, if you should have medical issues that require one of you quit your job, you don't have to worry about keeping up with the mortgage. Perhaps you won't be able to invest as much as you could've, but you won't be without a roof over your heads.

 

[lisaross]

We will also be paying off our Mortgage just as our older son will be starting college...so we won't have to think about where our extra money is going - we know - COLLEGE!!