554: Should I Pay Off My Mortgage or Invest? (We Did the Math)
Episode Details
Pay off your mortgage or invest? If you’re on the path to FIRE, you’ve probably asked yourself this question. Without a mortgage payment, you could put thousands more in your pocket every month, and your FIRE number would decrease significantly. On the other hand, investing all the money you could have spent on paying off your mortgage may allow you to build considerably more wealth and reach Fat FIRE with more assets to your name. So, which move do you make?
Mindy and Scott are coming on to debate this common investing question. On team “Don’t pay it off!” is Mindy, who just recently made a six-figure profit by NOT paying off her mortgage. How did she do it? Stick around to find out. Scott, who just bought his recent home in cash, is pro-paying off the mortgage (for some), as it may lead you to FIRE much faster than you thought.
In this episode, Scott and Mindy discuss WHO should pay off their mortgage early, the pros and cons of investing vs. going debt-free, and why one move may be MUCH better for those closer to FIRE. Want more money for your future retirement? Sick of your job and want to quit quickly and retire on your terms? We’ve got options for BOTH!
In This Episode We Cover
Whether you should pay off your mortgage early or invest instead
How Mindy made a six-figure stock profit by NOT paying off her home
Why paying off your low-interest rate mortgage may make sense EVEN in 2024
How those close to retirement can shave off a BIG portion of their FIRE number and retire now
Whether you should keep cash in a high-yield savings account instead of paying down a low-rate mortgage
Other BIG cost-saving benefits of paying off your mortgage early
And So Much More!
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BiggerPockets Money 543 - How the “Middle-Class Trap” Stops Your Early Retirement
00:00 Intro
01:27 Why You SHOULDN’T Pay It Off
05:35 Why You SHOULD Pay it Off
15:07 Keep Cash in the Bank?
20:54 Big Benefits of Paying it Off
27:51 What Would You Do?
29:29 Scared of Stock Performance?
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See moreIn this episode of the BiggerPockets Money Podcast, hosts Mindy Jensen and Scott Trench engage in a spirited debate about a common dilemma for those on the path to financial independence: whether to pay off a mortgage or invest in the stock market. Mindy, advocating for the benefits of not paying off the mortgage too soon, presents real-life examples where investing has yielded a higher return than the cost of a low-interest mortgage. On the other hand, Scott argues for the value of paying off a mortgage early, especially for those close to achieving their financial independence goal (FIRE). He presents detailed calculations demonstrating that paying off a mortgage does not significantly hinder wealth accumulation if managed carefully and can actually accelerate the journey toward financial independence by lowering overall financial obligations. Throughout the episode, listeners are given practical advice on how to analyze their personal financial situations to determine the best course of action regarding mortgage repayment versus investing. The hosts emphasize the importance of understanding both the mathematical implications of their choices and the psychological comfort associated with being debt-free. A key takeaway from the discussion is that personal finance is highly individual; what works for one may not work for another. Hence, the decision should be based on one's unique financial circumstances, risk tolerance, and future goals.