Why We Are Still Prepaying Our Mortgage

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Early last year, we were making some serious headway on our primary mortgage.  In addition to our regular monthly payment, we were paying lump sums of $1,000 each month, and sometimes more.  The balance was dropping quickly, and I was super excited about the prospect of becoming 100 percent debt-free.  Then boom – it was all over.  Let me explain.

Starting the Mortgage Game Over

Right about the time we were busy murdering our mortgage last year, my husband decided to make a huge career change from the mortuary industry into sales. He really hated it, and we instantly discovered the a career in sales is not for everyone.  I’m honestly not sure what we were thinking.  He’s awesome with people, but hates imposing on them.  He’s just too sweet.  For that reason alone, it was never going work.

With a shattered ego and his tail between his legs, he quit just a few months after he started.  Fortunately, he was lucky to find an awesome job just a few weeks later.  Unfortunately, we had to move for him to take this new job.  So we did.

The good news is, we ended up in a town that I absolutely love.  We’re much happier here, in fact, which is why I constantly thank my husband for his mid-life crisisSeriously.  The bad news is, we started our mortgage over, even though we rolled our huge profit back into the loan on this house to minimize what we owed.  Still, it was more of a mental defeat than a simple numbers game.  We weren’t any more in debt than we were before, but our momentum was gone.

Why We Are Still Prepaying Our Mortgage

The last time we were killing our mortgage, I sent random payments in with wild abandon.  Any time I got my grubby paws on some extra cash, I would just mail it in, and scream expletives at our mortgage out the car window in the post office drive-thru.  Seriously, I did.  F!@#@#!%@ YOU, Home Loan!!!!!!!!!!!!!!!!!

But now we’re taking a more cautious approach.  Instead of killing our mortgage, we’re slaying it…slowly and painfully.  It’s a 15-year-loan, but we are still determined to knock it out in less than 12.  Here’s why:

I Still Hate Debt

The mortgage may be new, but the fact that I hate debt has never changed.  For some reason, the fact that I have mortgage debt hangs over my head as if it were some serious emergency.  I just dislike the feeling for some reason.  I want to be freeeeeeeeeeeeeeeee…………………………………………..

I Like Watching Balances Drop

It’s probably because I’m OCD, but I just think there’s something sexy about watching a balance drop against it’s own will.  Each month, I send in my payment.  And each month, my balance inches slowly down.  One day it will be gone completely, and I will probably take my husband out to Benihana.  Until then, I will enjoy watching it drop…drop…drop…until it’s gone for good.

We Want to Retire Early

I recently started tracking our expenses on Personal Capital.  One thing I learned is that our net worth is headed in the right direction, and that we can probably retire in about 12-16 years – if we want.  My oldest daughter should also start college in around 13 years and I want to be totally debt-free before that.  I think it will be a lot easier to pay for college and get ready for retirement if this stupid mortgage is gone by then.  We’re also using some of the free tools offered by J.P Morgan

Yep, we're still prepaying our mortgage. Here's why we still think it makes sense....even after all these years.

Wealth Management.  Both of those services combined are making a huge difference in the way we plan for the future.

Note: If you sign up for Personal Capital (it’s free!) and link up to $100,000 in investable assets, you get a free consultation with a Personal Capital Financial Advisor.  And yes, the 100K minimum does include retirement accounts for both you and your spouse

I Don’t Think We’re Moving

You never know what will happen in life, but I honestly believe we’ll be in this home for a really long time.  It’s big enough to raise our family in, but small enough that we shouldn’t have to downsize once the kids move out.  It’s also in an extremely desirable neighborhood, and has low taxes to boot.  Unless anything major changes, I don’t see us moving.  (I don’t see us tapping into our home equity either.)  That’s just another reason I feel good about kicking our mortgage to the curb.  See-ya.

Goodbye Mortgage, Hello Freedom

Beyond all of these excellent reasons I mentioned, I’m just tired of owing someone money.  I’ve been in one form of debt or another for my entire adult life, and I’m just sick of it.

When I became self-employed two years ago, I took a big risk with my future.  I walked away from a stable, well-paying job to forge my own path and stake my own claim for freedom.  Now I want to recreate that act of defiance in personal life as well.

This is my life, and I want to break down any and all barriers that stand between my family and our ability to live the life we want to live.  To me, that means goodbye to any form of debt- even the “good” kind.  It’s standing in my way right now, but only until I stop letting it. Oh, and since we’ll be saving money on interest, paying off our mortgage early is a great low-risk way to invest some of our extra cash.

Do you prepay your mortgage?  What are your feelings on mortgage murder?

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  1. We’re not murdering the mortgage, we have been slaying it like you say. We are free and clear on the condo, and the house, we have been paying extra on to shorten it. It’s the only debt we have left. I had to crack up at the vision of you screaming at the post office 🙂 . Do it online, and you can yell at the screen instead..lol! Love that Monkees song..

    1. I have yelled at many computer screens in my day!

  2. I know this feeling – it’s great. My parents paid off their house before they were 40 and I grew up in a post-mortgage cash flow home.
    What a difference it made to them, not being beholden to a monthly debt payment. I’m almost 40, and our house is almost paid off. I can’t wait for the coming financial flexibility.

    1. That sounds awesome- what a huge gift to your family too. Your parents were smart- so many people would just go out and upgrade into something bigger!

  3. We stopped prepaying our mortgage when we refi’d into a 15 year loan a few years ago. At 3.25%, we’re pretty happy to ride this loan out for its full term, which will end when we’re 43.

    1. That sounds reasonable! We’re 34 now, so we’ll be 46ish. I need to run a calculator again to see the exact date.

  4. We refinanced our mortgage last year to a 15 year at 3% so I now only round up the payment to the next $100 to make an even payment. I don’t pay anything else extra since we can make more in our Vanguard accounts.

    1. Yes, I like it! I love my Vanguard accounts too =)

  5. After 5 years, I refinanced to a 15 year at 3.25%. I’m now slaying like you, but I hate the debt and the owing someone money. I hope to pay it off in 10-12 years instead.
    Since I took a paycut for one year to switch careers, I would like to start paying a lot more when I get my pay raise next year. All extra money will go here. I can’t wait to be rid of it.

    I don’t want to owe anyone anything.

    1. I can totally relate- it just gets old, doesn’t it? It makes me feel as if I’m not in control.

  6. We are currently mortgage free, but are looking to move so we will probably take a mortgage. Depending on how frisky I feel we may use the proceeds from the sale of our home to pay off a chunk of the new home, but then again we may not… it will probably all depend on what Mr Stock Market is doing and how the math works out.

    1. Yay for mortgage free! Is it hard to consider having a mortgage again?

  7. I love that you scream at your mortgage! That’s too funny. We have been prepaying for a while now, even though our interest rate is only 3.75. We would like to be completely debt free by the time our daughter is in kindergarten, which is two years from now. I want to feel that freedom!

    1. Our interest rate is something like that- 3.25% maybe? I forget. Either way, it’s not really about math for us anyway.

  8. Good reasoning behind wanting to be mortgage debt free. I’m sure you guys can do it in 10 years. Hopefully the market will increase as well in the same time, and retirement will be that much closer for extreme savers.

  9. We haven’t attacked our mortgage yet, but would like too. Just letting the dust settle on our consumer debt repayment first, beefing up retirement, college saving, then going to start throwing all extra on the mortgage.

  10. We bought our house 3 years ago on a 7 year owner-financed loan. I would love to stick out the next 4 years to see the mortgage gone, but we’re selling the house instead to move out of state. It’s been fun watching that balance drop like crazy each month. The farther it drops, the better the profit on the sale.

    Keep up that determination, Holly! You’ll get there. I do understand the OCD thing. 🙂

  11. I’m generally the person who likes to invest rather than pay off low interest debt. Although I have to admit that after getting a mortgage just recently, I have this urge to pay it down faster and I do love seeing the balance drop. I do plan on making extra payments but I also want to save up some money to invest in rental property or to invest more in retirement accounts.

    1. Yes! I like to do all of those things. We are squared away on rental properties- definitely not buying any more of those!

  12. The earlier payments are worth more.

    We’re going to stop pre-payment this summer sometime. We need the cash instead. We have about 2.25 years left on the mortgage and it would be paid off in less than a year if we kept up with our prepayment, but we need the cash next year more than we need no mortgage two years from now. We’re at the point now where the most we can save in pre-payments over the next two years is under $2K. So even if we paid it off tomorrow we’d only be gaining 2K, and the liquidity is worth more to us than that. (Of course, there’s not going to be much inflation in the next two years so that 2K is really close to 2K in today’s dollars.)

    1. Yep! I can see that happening to us. The motivate to prepay is much greater at the beginning. I would feel very “smeh” about saving that last 2K, especially if we had other goals in mind.

  13. I can totally see where you’re coming from, especially from the being completely free of debt once and for all. We’re not killing ours currently as we’ll likely and hopefully be moving within the next few years and really concentrating on getting a sizable down payment built up. If we were planning on staying we’d definitely take the approach of pre-paying as much as we could.

    1. Yeah, it doesn’t make nearly as much sense if you plan on moving!

  14. I’m pre-paying my mortgage. Because I started saving for retirement so early (19) and have saved so much, I’m already set to retire at 50 without any further savings on my part. So when I had the choice between saving in a taxable account for retirement or paying down the mortgage, I went for the mortgage. I took out a 5/1 ARM and the rate could reset to something crazy high like 7.5%. Plus, who wants to have a $286,000 mortgage? That’s huge. It’ll also make it easier to consider taking a job with a lower income if I have $1,000 less expenses. Having it paid off would also make it easier to keep it separate property were I to get married in the future.

    At any rate, I took out a 30 year mortgage in June 2012 and it could very well be paid off in December 2015. I’m pretty excited for that day!

  15. We murdered the mortgage on our first house. Those efforts went a long way when we rather suddenly moved out of state earlier this year. Because of timing, we weren’t able to roll our equity into the new house. So we used it to rid ourselves of loan on property where we would like to retire. It worked to our advantage as we swapped the higher rate (I thought ag loans were supposed to be low rates?) for a lower one here. We do send some extra here, but prefer to send our huge chunks of money to our Endowment for retiring early. That’s our ultimate goal!

    1. Mine too. Don’t……want to work anymore. Ugh.

  16. We are finally getting around to making extra payments to our mortgage principal (after purchasing 3 years ago). I love the feeling!

  17. And possibly the most important part? It’s not truly your house until it’s paid off. That’s what drives me to kill our mortgage.

    1. Yeah! I *love* the idea of owning my condo entirely. I would continue owe taxes to the county and dues to the condo board, but I would still own the entire inside of the condo, which is a pretty cool idea! Soon!

  18. Murder is such a strong word. I prefer kill. This is an inspiring message though! I am only prepaying a very small portion right now. I hope to increase them this next year.

  19. lol, we just got a mortgage, and though I hate debt, that is one debt I feel comfortable with. We will be making bi-weekly payments instead of monthly, which will help us shave off some years from the mortgage and reduce how much we pay in interest, but otherwise, we have no plans to attack it. For us, we would make more by investing in other places.. I think everyone has to figure out what works for them.

  20. If I didn’t have consumer debt, I’d probably be trying to murder my mortgage too. First, I need to kill my consumer debt (and student loan) and build my EF. Then I can focus on the mortgage.

  21. We paid our mortgage off a few years ago at ages 41 and 40. House was purchased for $580k with $279k mortgage in 2006. Here is the progression of the paydown…

    $279,023.32 Aug/06 When we bought
    $238,993.34 Jan/07
    $235,499.96 Apr/07
    $216,063.54 Apr 16/08
    $188,161.21 April 22/08
    $172,809.53 Sept/08
    $159,359.25 March 31/09
    $149,385.97 July 21/09
    $139,186.09 November 25/09
    $126,618.79 May 5/10
    $99,321.84 June 1/10 ($25k lump sum from selling our boat)
    $79,321.84 June 2/10 ($20k lump from tax returns)
    $63,260.45 July 20/10 ($10k lump from bonus)
    $54,945.09 October 29/10
    $27,945.09 October 29 ($27k lump from selling company stock)
    $15,698.92 March 17/11
    $3,231.90 April 15/11 ($10k lump from bonus)
    $0 May 11/11

    At the same time we continued to max all retirement accounts and education accounts for our kids. It was a lot of work to get it done but I can’t really express how awesome it feels to have it paid off pretty early and the extra cash we now have to funnel right into our investment accounts is great. House is now worth about $900k (we have probably spent $150k on upgrades, renos and the markets have been chugging along where we live).

    1. Wow, you are officially my hero. You need to start a blog about it! =)

  22. My dream is to be able to buy a condo in cash since we are currently debt free. This would likely mean us moving to a lower COL state in order for this to happen within the next 3-5 years. I also want to FI in about 12 years so being mortgage free is definitely a part of the equation. Whether it’s good or bad debt, a mortgage is debt and like you, debt is something I don’t enjoy having around.

  23. I’m not a homeowner yet, but I feel this way about my car note. I love paying extra on it and I LOVE seeing the numbers go down 🙂 I’m SO looking forward to not having a car note.

    1. Yes! Same idea. Watching balances drop unless we’re talking about bank account balances or investment accounts! =)

  24. Definitely love the mortgage amount dropping, it’s a good feeling to have. I suppose it’s a little bit different in the US since you can deduct mortgage interest on tax returns…here in Canada you can’t do that for your principal property so it makes sense to pay off the mortgage as quickly as possible.

    1. Ohhhh…..didn’t know that. Makes sense! Our mortgage interest deduction is minimal so it’s not worth planning around IMO.

  25. I swear we could be sisters. I hate our mortgage an really have to remind myself every month that we need to put money elsewhere for a better return. We still are paying over the amount each month and have about 8 years left. When it gets down to an amount we could pay off in a year we might kill it.

  26. We’re prepaying our mortgage and I want it GONE! We raised our monthly payment, so I don’t really notice it. Now I feel like I’m missing out on needing to mail in extra payments and getting the chance to taunt the mortgage at the mailbox.

  27. We’re (knock on wood) murdering the mortgage. Yes, watching the balance drop each month is very sexy. Our goal is to have F*CK YOU money. That is our motto and goal. Enough money that whatever we are doing in life for a living, whenever the mood hits, we can say F*CK YOU and walk out the door. Hard to do that with debt / mortgage. When mortgage is paid off we will have zero debt. It is our only debt now. AND. I. LOATHE. IT.
    As you and I have discussed, I’m a big fan. Keep preaching. And we will keep saying AMEN.

    1. Hot! I love it.

      It really is hard to say you are fully in charge of your life if you still have mortgage debt. I feel in charge in a lot of ways, but hate having one ugly loan hanging over my head. Be gone! =)

  28. I’m a bit odd in that I’m looking forward to my mortgage – on my first investment property.

    Given all the bankers making money off bailouts financed by our hard earned, ill spent tax dollars, I want my turn at the trough before the economy self-destructs. Owning my own home and financing an investment property is one way to get a few crumbs.

    It used to be that people would invest extra money in the financial markets thinking you can make more there than the interest on your mortgage. Given how blatantly the markets are rigged in today’s ZIRP world, I’d rather have my money invested in my home, something I can own, live in, and defend, than an illusory piece of a company.

    I’ll take a sure 3% backed by a physical asset over a 5-25% return with a large and growing risk of 100% loss.

    1. Yep, that’s why we invested in rental real estate. It’s real in a way that other types of investments just cannot be.

  29. I swear you were reading my mind when you were posting this. All of the reasons you mention are the exact same for why I want to pay off our mortgage early. Unfortunately, we got started a little later with home ownership, but hope to have our 15 year mortgage paid off in 10 years. Granted we are only two months into it, but I already want it gone from our lives. Great post!

    1. Hey, nothing wrong with that. Might as well start paying it early right away! =)

  30. Well, technically at the moment I don’t have a mortgage soon, so no, I’m not prepaying it. 🙂 That said, fingers crossed, we will soon hopefully have a mortgage again! LOL! I’m certainly not against anyone prepaying their mortgage, but it’s not something we have typically done, although I certainly understand why you do it.

  31. catherine says:

    Also, it’s not like you’re losing a TON to interest which is a settling feeling. We’re only focused on non-mortgage debt right now but will shift to mortgage when debt is paid off but like you, slower, a few hundred extra per month 🙂

  32. I use to get a dividend check from my 401K Company match stock every November for around $1200 that I would add to the mortgage but that ended after about 5 years when the company was taken over. I retired early the first time with a $100K still on the mortgage and then paid it off later with money from a second career. I have to say that I love being mortgage free and it is really more than just dollar and cents (loan rate vs investment rate) when making that pay off early decision. I haven’t ever met anyone who regretted paying off their mortgage.

    1. Yep, me neither! My parents paid theirs off early and never looked back.

  33. I have to give my husband the credit for being diligent about paying our mortgage off on both our home and lake home. Because of his diligence, we are semi-retired in our mid fifties. We both enjoy working part time with little job responsibilities so we can spend more time at our lake house! We’re done with all major bills – 3 kids through college and 3 weddings paid for/contributed to. Our goal now is to travel a lot more. Life is good!

    I can say from experience and watching friends that made WAY more money and will be working for years and years, that paying off debt is the way to go. It’s been very interesting in our age range to see where our peers are at and I just love when they tell us how “lucky” we are!

    1. Lucky?!?!?

      Ugh, I hate when people say stuff like that. You’re not lucky- you made excellent decisions and likely sacrificed other things you wanted to get what you *really* wanted! Good job- my plan is to be just like you!

  34. Go ahead and murder that mortgage. We’re doing the same. Everyone should try and become debt free in my opinion. There’s something to be said about not having to owe people money. My wife and I might even downsize in the future to make it easier.

  35. Mortgage? this is something I never miss to pay. I have a goal and I am committed to it until the next year. I just hope that I can finally pay it off next year, you know the stress it contributes once it’s time to pay. I firmly hold on to the picture of us being debt-free.

  36. This may be my favorite post of yours personally! I LOVE paying down debt. But even better, I am taking away a new perspective on sales. My bf is considering making the switch and I’m sending him your post on why it’s not for everything.

  37. We paid ours off and I love not having the monthly cash flow requirements. The ability to exist on much lower earnings, if we really needed to, is fantastic. Plus, it’s one less thing to think about. Now we get to focus all of our attention on piling money into the market and savings accounts.

  38. Seriously, I did. F!@#@#!%@ YOU, Home Loan!!!!!!!!!!!!!!!!! Love this line and the angry aggressive picture it portrays.

  39. I’ve never had a mortgage but can totally see that! I don’t think anyone likes to be tied down to anything in particular. 🙂 It’s very freeing now owing anything!

  40. We never had a traditional mortgage with an institution. We purchased a house from a relative. Still in the same house 28 yrs later. Paid it off quickly. Only had one car loan. Paid that car loan off and bought all follow on cars in cash. Lived frugally, retired early. I couldn’t agree more…debt free is pure happiness and freedom.

  41. Michelle Churchman says:

    I sympathize with your husband’s trial in sales. I got took a position as a financial advisor because I love helping people feel more secure, but the majority of the job was sales. I didn’t make it a year.

    A lot of financial advisors encourage people to keep that loan on their house for tax purposes. While some arguments can be made for that in special cases, it would have to be a really special case to warrant it. The psychological well-being that comes from having a home paid off and having one less – rather significant – bill by the time retirement age is reached will, for most people, outweigh any tax break.

  42. I certainly don’t think it would feel BAD to not have a mortgage – hard to argue with getting rid of a huge piece of debt like that! I have higher-interest debt that I would rather pay down first, though. I have a very low interest rate (barely above 3%) and with higher-interest debt I can’t justify putting money towards the home loan. Even if it was my lowest interest debt, I would find it hard to put money towards my mortgage when I can pretty much guarantee that over time I will make more than 3% putting the money in the stock market. Long story short I try to look at it from a purely financial standpoint, and that’s why I pay the minimum.

  43. I was about $36K away from paying off my mortgage when a very well-off business-owning cousin told me to stop. He encouraged me to refinance and take out cash to invest in one of his businesses (so I did). He says you should always have a mortgage. Why have $150K+ just sitting there when instead you could be earning income off of it? Even in the standard index funds, you can earn about 10-15% which is way more than the 4% most of us are paying in mortgage interest. Invested money can generate income which can be used to pay your mortgage payment.

    1. Sorry, but that is terrible advice. You should always have a mortgage? On what planet? No, thank you. I have no desire to owe someone money for the rest of my life. Then again, I max out my retirement accounts so I feel very secure in that area.

  44. Christine says:

    We paid our first home off in 3-1/2 years when I was 23 and my husband was 27. We had an unusual situation. When we first got married, he only made $5 an hour and I didn’t work at first because I had moved from another state and didn’t have a job yet, but he had over $25,000 saved in his company’s stock when we got married. We live in a cheap part of the country and our house was about $30,000. We had owner financing and the owner actually offered to take some off the principal if we paid it off, so we did. We bought another house 12 years later and paid it off in about 7 years. I had a very good job and paid 90% of my income towards the mortgage, but the thing was I wanted to quit working, so even though we are debt free now, I don’t work and we can’t save like a lot of people who pay off their mortgages, because we have one income right now. (Well, I do some small things and make an extremely low income).

  45. We paid ours off in about 4-5 years; we began with a $40K down payment and I threw everything we had against that mortgage. Literally, everything!!! Every little bit of money that I saved or came in as say “extra” money, we put it against the mortgage. My husband thought I was a mad woman. So we had a serious talk, and he said you know what you’re right, let’s whittle it down as fast as possible. So the mortgage 15-year payment was about say $1100/month; we put in $1300 a month. And I put in every extra cent I had. Like if I went to the budget restaurant instead of the fancy restaurant, and the difference was $20, I would come home and write out a check/or make a notation to do so, to write out that check. I got the book, the Bankers Secret, by Marc Eisensohn and I got fired up that we could really do this thing, pay it off quickly. But the other thing to do is, go onto the “mtgprofessor.org” website and SEE how much of a different just a measly $20, $50 or $100 a month makes in terms of getting you out from under the mortgage debt.

    For those of you who say, oh but I’m going to make all this money doing other things with my wise investments, I just laugh and say to myself, did the boss guarantee you’d have this job forever? Did the Good Lord guarantee you would have good health forever (no blasphemy intended, I’m making a serious point here about life surprises)? I think not. Chose the safe way. Chose the secure way. Opt for the peace of mind to know, my fixed costs are LOW so I can do anything I want, as long as those taxes/utilities are paid, once you pay off that mortgage.

  46. Grammar error there: See how much of a difference.. cheers SPM

  47. we owe 5000 on our mortgage and 1000.00 a month going to the principal,will be paid off in may and will be debt free.im 58 and will start stashing more away for retirement.cant wait to be debt free.merry Christmas to me.

  48. We too paid off our mortgage. This is our fourth home, we paid it off in four years because of the equity in our former home. We decided to do this while the market was at an all time low. So we knew we wouldn’t be making money at that time.

    We also paid off our four cars and paid off the difference of our children’s college expenses.

    It has been an adjustment, but we are finding ways of enjoying affordable recreation. Being debt free gives us a lot of flexibility. Our kids also seem fiscally sound.

    1. Hey, that’s awesome! You are setting a great example for your children!

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