Friday, December 23, 2016

Maybe paying off the house early isn't a financially smart goal

After my last post on personal finance, I got $20 in cash every time I had a big grocery run, set it aside, and when I had $100, I put it on the mortgage principal.  I did this from August through November.  

Good for me.

But then, a week or so ago, I sat down and actually used a mortgage calculator to figure out how much this $100 a month would mean in months taken off our mortgage loan.  

And it was nothing.....not even a year.

So then I figured out how much we'd have to pay off on the principal every month to see a sizable difference in loan reduction (like 2 years).  

It was something on the order of an extra $800 A MONTH!

Um, we don't really have $800 a month floating around doing absolutely nothing.  We don't live paycheck to paycheck, but we also save money in various accounts to help pay for car repairs and house repairs and Christmas expenses and medical expenses and travel.  It would be irresponsible for us to move our cash savings into the house, where it is stuck, and we can't get to it.  

I apparently forgot that in getting a 15-year-mortgage, we had already shaved off 15 YEARS of a mortgage, which is great.  I just wanted to shave off more.  

It was N's orthodontic visit, during which we got the go-ahead to have full braces put on (and the bill that went along with that that), that induced me to really run the numbers.  And I sorta realized that the $500 I had put on the principal might have been better funneled into our medical savings account...

because that is 4 months of braces paid off or over a month of weekly occupational therapy appointments for G.  
It is years of monthly viola rental payments paid off.
It is a little over what I just spent on tires and a coolant flush for my minivan, which really needs to last us another 5 years.  

Security has always been one of our primary financial goals.....having some wiggle room for the unexpected things that come down the pike.  As it happens, when I took the time to look rationally at the numbers (instead of emotionally at the numbers....which is what paying off the mortgage is for emotional desire), it seems that at this stage in our lives, that is not the smartest, most secure financial decision.  

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