Should I Pause Investing to Pay Off My Home by 40?

Should I Pause Investing to Pay Off My Home by 40?

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[shawnm]

It makes more sense to pause investing to start a business or have extra working capital. Whether it's just for 3, 6 or 9 months and then resume.

[FIRE_DrNinjaTurtle]

Thank you so much. You are so consistent and have kept me company for the past month.

[missgui]

I pay extra towards principal every month and also maximizing my retirement accounts. I will payoff my house faster when I increase my salary again but my retirement will always be first before mortgage.

[DaveM-FFB]

Well, that's absolutely the right answer for the right reason. One additional point is that all of the extra money that you throw towards paying off your mortgage early is essentially dead money that isn't earning or compounding for you. And for that 7 year period you're still making mortgage payments. The rule of 72 says you could have doubled your money in that time if it earned 10% in an index fund.

[kckuc]

I would do both, I lived it and really invested more, my whole mortgage payment has been invested for over a decade

[Mike-zflo]

Amazing how much easier the information is to digest when they're not shouting into the mic with their hands in their armpits.

[willisvanstar]

I don't think it is as straight forward as you guys make it out to be. It's important to mention that payments on your mortgage have the exact same compounding effect that investing does so really it comes down to if you think you can beat the 4-7% return your getting from mortgage payments. The difference is you know what the return on the mortgage will be; where as the market can fluctuate up and down. This is more of a risk/goals discussion then just a simple answer of investing is always better. Lowering your debt service can open up investment opportunities that wouldn't be available to people who have mortgage payments eating up cash flow. I agree that anything that is matched or creates tax incentives should always come first, that extra bump makes it easy to beat the low rate mortgage debt, but after that it gets a little more complicated.

[armandoweckmann]

I paid off my mortgage at age 39. I think 🤔 that wasn't the best decision. I am 42 now... I have $100k in liquid cash, and I have absolutely no debt. All my vehicles are also paid off, and I have 50K in retirement. How much should I invest in retirement? I have 20 years left 🤷‍♂️ oh I also am bringing in a 105k annual income. I hope I can recover from my bad decisions 🙏

[provideos]

Similar question, my wife and I could stop Retirement contributions, for six years and pay off our house by the time we are 33. Our current rate is 5.75% we have about 250k in retirements account now, pending the next several years in the stock markets could this be a better alternative then investing?

[TGIM]

I've never met anyone that has regretted paying off their mortgage. I have kids and a wife, my goal is to assure their safety and a roof over their head, no matter what. Jobs and health aren't guaranteed. I will focus on paying my mortgage off over the next 2 years then invest just as much.

[tkhemjinda]

Nope! You start investing since ur first check. Max out 401k when you can. Invest in after taxed account too. Live within ur means. Compounding interest need time! Start investing at 40 will not do you good unless you invest big which most people can't. I have both home and investments. I started investing since I was 27 now I'm 46 and smiling so big when I see my portfolio😊

[stephenfrantzen]

It’s tempting to want to pay off the mortgage because I see how much interest I pay every month as opposed to investing. It goes against the grain for me to see that money being “wasted”. I think that may be why a lot of people are tempted to pay off the mortgage early vs invest. I say this, however, we put 25% into investments and pay the minimum on the mortgage. I do understand why some want to attack the mortgage, though.

Y’all may have a video on this, but it would be nice to see data on a conventional 30 year note at multiple rates vs investing at different ages - ROI / break even.

[kevinschultz]

I can invest in CD's and get a better rate of return, even after taxes, than I can by paying off my mortgage. Assuming the OP has a similar rate - worst case scenario? Invest in that instead that until CD rates drop beneath your mortgage rate.

[boydsummerhays]

Thinking is retiring in 20 years? Due to inflation, you may need upwards of $2.6 million to maintain your existing lifestyle, with the ongoing effects of high inflation. Lower forecasted stock market returns, and stagnant wages, achieving a secure early retirement could be more challenging than ever before.

[hanwagu]

what do you mean you don't like paying off mortgage or investing? Finances are entirely binary, because numbers just don't lie. What lies are feelings and those feel good. Feel good is highly inefficient and leads to things like pulling out of markets early or trying to time the market. I find it amazing personal financial experts simply are gaslighting things like simple math. Feeling good paying off my 30yr mortgage at 2.375% fixed early extremely inefficient compared to even low risk treasuries or cd's currently, let alone the simple index funds. Plus, because of amortization, you've already paid the interest up front on your mortgage, so you've basically already took the hit so I can't understand the argument to speeding up paying off the latter part of your mortgage early. To argue that warm fuzzy feeling paying off mortgage early versus reality of opportunity cost is ridiculous.

[DaveM-FFB]

Many of the folks in the "pay it off early" camp are reacting to the fear of possibly not being able to make their payment at some point and possibly losing the house. They're sitting on a 30 year note with plans to pay it off in 15 or so. But most of those folks never stick to the plan. Why didn't they get a 15 or 20 year note to begin with? Most will accelerate for a few years then life will inevitably get in the way and they'll go back to making regular payments, and they'll forever miss out on investing that money and having it compound.

[jordanmadden]

Pay off your house. When you have cash flow and no debt, you have options. Others can’t touch their money until 55 or 59. It’s just a number on paper. You’ll breathe easier and be able to take more chances throughout your working life which will probably lead to higher income and more job satisfaction.

[ominous]

You can't eat the equity in your house