As a Financial Coach, I recognize that there are a huge variety of ways to approach goals and challenges with money. This post reflects one of those scenarios. You see, I love being mortgage free. I love it and I advocate for everyone to pursue it.
That said, I catch a lot of flak for this. Countless people have told me in person or through online forums that this is unwise. They see mortgages as cheap money because they have a low interest rate on those mortgages. They believe that it is smarter to invest any excess cash they have so that they can get a higher return, whereas I would suggest they pay down the mortgage.
Mathematically, it seems like they are making the best decision. However, I look at it like their approach does not account for the peace of mind you get from owning your home outright. When you own your home outright, you worry less about your income level changing or running into an economic hardship. You worry less about significant inflation during a short period of time.
This was highlighted during a 5am Club Meeting.
During the initial chitchat one member expressed how inflation was negatively affecting them. I stayed quiet and listened as other’s chimed in and said similar things. These women were honestly sharing that the increase expense of necessities due to inflation made it hard for them to maintain their lifestyle.
It reminded me of an article I read that stated recent inflation increased the number of Americans living paycheck to paycheck to 64%.
After everyone had said their part, they looked at me and sought my take. I felt a bit awkward because my take was pretty different. While I totally understood what they were saying and where they were coming from, I couldn’t participate in expressing hardship I didn’t feel. I am 100% confident that this is because our home is paid off.
The largest payment that most households carry is their home payment. We don’t have one. That leaves a lot of room to absorb the increased costs of inflation. Maybe we go out less choosing to maintain our budget rather than cover the extra prices, that’s about it. To be safe, we also paused our after tax investing to build up a little more cash reserve. Hopefully we’ll be able to resume investing as my business grows. Otherwise, life has carried on per usual.
So yes, I am still a fan of paying off your home. Read the comments on my YouTube video and you’ll see that I am not alone.
