I’m super excited Steve is writing his final post of a series of articles leading up to a HUGE event here at Stacking Benjamins. Tomorrow (December 14, 2015) he and his spouse are paying off their mortgage!
Tomorrow my wife and I will be paying off our mortgage. If you know anything about me then you realize this is a BIG DEAL!
Paying off a house should be a big deal to everyone, but there are some reasons people decide to keep a mortgage.
Here are the Top 5 Reasons People Don’t Pay Extra On Their Mortgage:
#5 – You don’t have the income to pay it off sooner
This is the obvious reason. If your lifestyle demands the majority of your income you likely won’t pay extra towards your mortgage.
There is nothing wrong with this as long as you are paying attention to what you are spending money on.
Take a look at your budget and make sure you are getting your money’s worth with every dollar you spend.
#4 – You want the tax deduction
The mantra is “Don’t pay off your mortgage or you will lose the tax deduction”. Umm, yeah. They didn’t do the math.
Americans can use the amount of mortgage interest they pay every year to reduce their taxable income. However, this is not a dollar-for-dollar credit. That means it takes a dollar to save 20 cents. That’s not a good trade.
I wrote more about this in an article called “I’m Losing The Mortgage Interest Deduction – and I Couldn’t Be Happier”.
#3 – You want to invest in other things
Retirement and investing are big hurdles for someone that want’s to pay off their house early.
Compound interest and long-term growth are two powerful reasons to begin investing early instead of sending extra toward the mortgage.
There is no reason you couldn’t do a little bit of both but don’t let me sway you.
Weigh out the pros and cons of paying off the house early or saving for retirement.
Take a few minutes to talk it over with your spouse or close friend. Even if they can’t give you good advice, I’ve found that just having the conversation helps bring clarity to the situation.
#2 – You want to maintain a cash lifestyle
This is a BIG one for me – and it’s why my wife and I didn’t pay off the house even sooner.
We were saving up for a new car, my daughter’s college, and our summer vacations. This year we paid cash to replace all the windows in our house.
There was no chance I would finance any of those activities or purchases after working so hard to become consumer debt free. Instead, we save money and pay cash for them.
Believe it or not, staying out of consumer debt is even more important to me than a paid-for house. It turns out we are able to pay off the house early anyway.
#1 – You’ve never calculated your debt free date
Motivation is key! Have you taken a look to see when your debt free date is?
Your debt free date is when all your consumer debts and your mortgage are paid off. You likely have calculated your debt free date for a credit card debt or car loan – but have you forecasted your MORTGAGE debt free date?
Look, everyone will become debt free someday:
- A 5-year car loan is paid off in 5 years
- A $10,000 credit card debt is paid off in an average of 17 years
- Even a 30 year mortgage is paid off in 30 years
The day you decide to cut up your credit cards and stop borrowing money is the day you solidify your debt free date.
You can drastically move the date up on your calendar by sending extra money to pay off your debts.
Take a look at your current debt loads and make the decision to stop borrowing money today.
That’s what we did in 2005. My wife and I started to pay attention to our spending, saved for emergencies, paid off our consumer debt, put money aside for car repairs and vacations, and now we are paying off the house!
What is your debt free date? I want to hear it!
Steve Stewart has been teaching and encouraging others how to eliminate debt and build wealth for almost a decade. This year he left his day job, used cash to buy a car and new windows for his house, and is paying off the house as a Christmas gift to his wife. You can find out more about Steve, his blog, and his new podcast “No Debt, No Credit, No Problems”, at http://www.SteveStewart.me/paidoffhouse