Should you Pay your Mortgage Off Early?

navy blue house

If you own a house, chances are you’ve considered making extra principal mortgage payments in an effort to pay your house off faster.  However, there are some pros and cons to paying a mortgage off early. I was always under the impression that when we were in a financial position to prepay pay the mortgage that we would.  Lately I’ve been reconsidering that, especially while we are in a period of transition with our finances.  Here are some of the factors I’ve been considering.

Better Investment Return

Many investment advisers and finance experts recommend that instead of making extra principal payments, the money is going to bring greater returns if invested instead.  A conservative estimate for stock market returns is around 7%, and if your mortgage rate is around 3-4%, you’re probably going to come out way ahead in the long run if you invest.  Of course, there are other factors to investing, but personally I think it would be a good idea to max out retirement account contributions (I like Roth IRAs at Vanguard) before trying to pay off the mortgage early.

Money is Inaccessible

A huge mental block I have is that any extra money you put toward the mortgage is inaccessible unless you refinanced or took out a home equity loan.  For that reason, I wouldn’t recommend that someone who doesn’t have a 3-6 month emergency fund pay extra on their mortgage.  I would get that emergency fund in place first and then go from there.

Home mortgage interest deduction

If you pay interest on your mortgage, you may be able to deduct the interest on your taxes.  Of course there are stipulations, one being if you don’t itemize your taxes it doesn’t help you. The home mortgage interest deduction is only valid for the amount you deduct over and above the standard deductionwhich is available to taxpayers who don’t itemize their returns.

Those are some of the cons for paying off your mortgage early. Here are some of the pros of paying it off early.

Guaranteed Return

If your mortgage rate is 4% and you make extra principal payments, you could look at it that any money you put towards the mortgage is saving you from paying interest, so you are “earning” 4% on that money.  Sometimes I have to think of things this way to have it make sense to me.  I remember when savings accounts were paying 5%! Those were the good old days.

Financial freedom

I think the biggest advantage to paying off the mortgage early is having financial freedom. Imagine not having to make a mortgage payment each month!  How amazing would that be? That would be a huge amount of money each month that could be put towards retirement contributions, kids college savings, travel funds, or whatever you wanted!  I hate debt and the thought of not having a mortgage payment feels like a dream.

Basically I think it all boils down to your personal financial situation. I don’t think there’s any harm in paying off a mortgage early if it is what you want to do.  I know I would sleep better at night knowing I didn’t have a mortgage payment, and that alone is priceless!  I feel like if you’re even thinking about paying off your mortgage early, you’re probably doing pretty well 😉

What’s your opinion on paying off the mortgage early?

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How Much Does a Dental Implant Cost?

“How much does a dental implant cost?” is not a question I ever wanted to know the answer for.  However, last fall we found out first hand just how expensive a dental implant is. Mr. Money had a tooth that had become painful and he made a trip to our general dentist for an exam. She checked him out, decided he needed a root canal, and sent him to the endodontist.  The endodontist drilled through his tooth to discover it was too far abscessed and that it wasn’t able to receive a root canal but would need to be pulled instead.  The endodontist charged us about $200 for his discovery.

Mr. Money was then sent to Dentist Number Three, who was the tooth pulling dentist. He extracted the tooth, sent him home, and told him to come back in a few months for preparation for a dental implant.  This dentist charged us about $200 for the extraction.  Mr. Money asked about leaving the tooth spot empty and not receiving a dental implant but both Dentist Number One and Dentist Number Three said it would be better to receive a dental implant as teeth often move in the absence of other teeth.  Mr. Money went back to Dentist Number Three a few months later, and he started working on his dental implant.  He screwed a post into his jaw bone and sent him on his way.  This procedure cost us about $1720. Unfortunately, at this point we didn’t have dental insurance since as Mr. Money was unemployed.

About a month later, Mr. Money returned to our regular dentist for her to fit the crown part of the dental implant on.  I am estimating that cost about $300.  As of right now, Mr. Money has a fully functioning dental crown and we are now in debt to Dentist Number Three for about $1200 still, after making payments for the last few months.  We are thankful that the dentist is working with us on a payment plan!  I am estimating we will have him paid off in roughly a year. I think medical debt is probably the least fun debt you can accrue.

Honestly, I’m not worrying myself sick to get this paid off because it will get done when it will get done.  Right now, we’re paying $100 a month to the dentist, which is the best that we can do. I don’t like debt but at this point in our financial journey it is what it is.  It will eventually get paid off, and hopefully we won’t accrue any more debt any time soon.  We’re doing our best to make this happen, and we are both trying our hardest to brighten our financial future.  I’m hopeful that next year this time things look so much better!

The moral of this story is- take care of your teeth.  Brush, floss, and visit your dentist regularly to hopefully prevent anything terrible from happening.  I don’t think Mr. Money could have done much differently to prevent his tooth from becoming abscessed, but routine maintenance is always a good thing to do!  An ounce of prevention is worth a pound of cure.

How do you feel about debt?  Are you currently working to get out of it?

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We are Finally Debt Free!

It feels like it’s been forever, but we are finally debt free! We have paid off our student loans, credit cards, and even a car loan we had to take out. It feels fantastic to just have our mortgage as our only debt. With this freedom comes a new responsibility: handling our money carefully and figuring out what financial goals we want to accomplish next. Truth be told, this next era scares me more than the debt repayment period.

When we were in debt, we had concrete numbers that we knew we had to work towards. It was easy to look up balances at any time and see how much we owed. Those goals were tangible, and easier for me to work towards than an unknown goal. I think now we need to create new goals that have numbers attached to them so that we’ve got that same financial focus.

I feel overwhelmed in the fact that I’ve got so many things that we could be saving for: retirement, replacement cars, emergency fund, future kids, paying on the mortgage, etc. Don’t get me wrong, I am so thankful that we have been able to work so hard to become debt free and I want to stay that way forever.

I’m thinking that we can come up with a strategy to save and maybe even pay extra on our mortgage that will make us happy. We’re also going to have to keep our future career aspirations in mind: I would like to work part time eventually, and when we have kids I would like to be a stay at home mom. My husband will continue to be a chef and try to advance his career when possible. I’d like to have a substantial savings account built up for when that happens for any unforeseeable expenses.

The thing is: I don’t know how much I should save towards each category. And I’m still lenient about paying extra on our mortgage. What if we decide to move? I’m almost tempted to just put all of the money into one account and just not worry about it. I’m thinking that a good plan of attack would be to prioritize our goals, decide a time line on when we want to accomplish them, and then start saving accordingly. It will be a bit easier to digest when we break it down into smaller goals.

The next step of personal finance is one that I’ve waited a long time for. It will be a new chapter of our lives. To be honest, it does not feel quite as exhilarating as I thought it would! That’s ok- the point is we’ve done it! YAYYYYY!

We’re debt free!! What do you think we should focus on next?

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