I Have a 2.85% 30-Year Mortgage. Should I Pay It Off Early or Invest?

I Have a 2.85% 30-Year Mortgage. Should I Pay It Off Early or Invest?

Let’s make sure you’re on the path to financial success - then help you stay there!
The Money Guy Show takes the edge off of personal finance. We’re financial advisors that believe anyone can be wealthy! First, LEARN smart financial principles. Next, APPLY those principles! Then watch your finances GROW!

We can’t wait to see you accomplish your goals and reach financial freedom! New shows every week on YouTube and your favorite podcast app. Thanks for coming along on the journey with us.

[yhckelly]

I paid off my 2.87 percent mortgage. The feeling you get from being debt free transcends any math equation. It was like being released from a prison that I didn't know I was in. I was blown away.

[mikelee]

$700K home. I'm 52. I completely paid it off in February 2024. I have never had more peace of mind, Ive never had a higher networth (which is the only thing that matters) and I've never slept better. My interest rate was 2.85%. Now I'm hoarding cash and investing like never before.

[lmelior]

With the market being down, I'm absolutely investing over paying down low interest debt right now. I learned from The Money Guy Show that one month after the market hits bottom (which we won't know until much later), the market returns 14% on average. Three months after the bottom it's 21%. Now there's no guarantee that it'll be that quick this time, but the fact is, we WILL reach all time highs again at some point. And by pumping money in now, we're just compressing that spring. At some point the bulls are going to take over again, that pressure will be released and our net worth will jump. I didn't have the money to take advantage of the 2008 downturn but I'm catching this next wave!

[tjwiersma]

I agree with BO saying being debt free is great but so is being able to be debt free.

[kingjames]

i think the one thing we always miss in calculations.. if you pay your mortgage off early, you can then start investing the money you are saving in mortgage to help make up for the missed compounding and you own your house

[sugarskulllyfe]

great video!!! "being debt free is awesome, the ability to be debt free is even more awesome"

[jordanmadden]

Just wish they would acknowledge the PROS to having a paid off mortgage at an early age. It is not a math question. If all financial decisions were math questions it would be best to NEVER retire and just work until you die. I don’t see many people suggesting that. At some point you realize there is more to your life than money. If you pay off your mortgage at an early age, you will have more than enough cash flow to save for a comfortable retirement while having the benefit of not having a house payment looming over your head. Give me $5M at retirement and a peaceful work life over $10M and a stressful work life.

[PCConditioning]

Recommended reading: "The Psychology of Money" by Morgan Houssel. This is a math vs psychology issue, and people should just do what makes them sleep better @ night. It's that simple. I applaud people who admit they prefer to pay off low interest debt without worrying about what they COULD have made in the market. Do what works best for you- psychologically.

[kckuc]

People don’t realize the risk of a mortgage, pay it off as soon as possible. Ever lose your job? Would you take a loan out to invest? Stress free life with no mortgage!

[sasukesuite]

Capital One is giving out 3% APY for their HYSA. It’s definitely worth it to pay minimums at least while the rate is that high and then just pay extra when the rate drops again.

[dennish]

I am 56....paid All debt home included 3 years ago. My income is my tool, mine!

[shanarobinson]

Best explanation ever!!!! Thank you both!!!

[kennethwers]

Create a investment account named house. For your extra house payments. So if you want too. You can at any time pay off the house. "Peace of mind, Plus" As it's could be used as a reverse mortgage.

[joekuhnlovesretirement]

What most people miss is the behaviors of people. If you have $1MM in your 401k and $300k in debt, your ego thinks you have a million dollars. In fact you have $800K after tax and $500k after debt. This ego prompts you to make bad decisions.

Debt free is worth an additional 3% return in feel good.

[maheshseth]

I like y’all’s conversation aroind money and investment. Lot of time it’s hard to understand the idea of age and time but you both being in different stages of your life it’s so easy to follow what you are saying as you are living it. Thank you guys!!

[ddellwo]

Whenever I have these types of internal struggles about things financial, I allow “logic” to dictate the outcome - thus, I would never pay off 2% - 3% debt unless I had NOTHING else to do with my extra income! I see any angst about the decision as just another type of “deferred gratification” we deal with in life…….😐

[MattAlsaker]

In 2020 I had 2.5 years remaining on a 15 year fixed at 3.35%. Unrelated, I chose to sell an equity I owned. With some of the capital gains, my wife wanted to pay off the mortgage and I wanted to hold the cash back for other opportunities. We paid off the mortgage. Totally an emotional decision, but we could afford it and admittedly it felt really good.

[estd]

I am going to have to take people's word for how good it feels to not have a mortgage payment. I cannot imagine paying off my 3.5% mortgage when my investments are doing so much better.

[Casey-summer]

Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.

[andrewdiamond]

Bo's answer is really good here. Being able to pay off your mortgage is as good as paying it off, IMHO. I have a 15 year mortgage at 1.99%. I want to pay it off the day I retire, and not before.