Educating the Wheelers


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Chronicling the Experience of Educating our Children and Managing our Family

Friday, December 02, 2005

That Pesky Mortgage

Our house cost about 225k, our mortgage was for about 185k. [We actually refinanced our mortgage within a couple of months of buying the house, but the story of why on Earth we did that may make its own post some day. Heh.]

We've now had this mortgage for about two and a half years, and we've whittled the principal down to about 146k, as of this month. That's pretty aggressive, and my goal is to have it paid off in less than 10 years. Even if we run into any financial trouble between now and then, I still hope to have it paid off before Audrey enters college -- we have a good 15+ years for that.

I have friends who think it is foolish to pay down your mortgage early. Some because they think the mortgage deduction is so wonderful [though I don't see why paying a dollar so you can get about 30 cents back is so great], and some because your mortgage loan is the cheapest money you can get. Then there's the "put it somewhere else where you'll get more return!" crowd. Well, we don't have any other debt whatsoever, so that sort of wipes out #2. And #1 is kind of silly on its face. As far as #3 goes, we already max out our 401k and our IRAs, plus put an extra chunk every two weeks into Emigrant to bolster our emergency fund, so we've got all of our basics covered already. Plus we have another chunk just "in the market" that's non-retirement. I guess what I'm saying is that we're not exactly skimping on our other investments. And paying down the mortgage has a few add bonuses: First, the return is guaranteed. Second, the psychological advantage of having zero debt whatsoever is worth quite a bit to me. Third, the cash flow issue -- that's a pretty large check that I'm looking forward to no longer having to write every month.

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