Thornhill Wealth Forum
Best ROI and POM Money Can Buy
Almost everybody I know, who has a mortgage, wants to pay if off as soon as possible. There is no shortage of advice on how to get the job done. At the end of the day it boils down to “pay more principal”. Paying mortgage principal early is a powerful money saver because small debt reductions compound dramatically over the life of the loan thus eliminating many times the payment in interest. Now that we know how to pay off your mortgage early let’s look at the benefits to following this strategy.
Guaranteed Return on Investment: With the stock market and real estate going up and down like a roller coaster, it is comforting to put your money toward your home and know with certainty what the ROI will be. You get the imputed rental value of a place to live and the immediate return of eliminated interest expense. The certainty of this return stream is a huge benefit for investors who feel beat-up by unreliable financial markets.
Save Money: The first and most obvious reason to pay off your mortgage early is it can save you tens of thousands of dollars in interest costs.
Peace of Mind (POM): The second reason is peace of mind from owning your own home. It gives you a warm-fuzzy feeling to know you have a secure place to live and you won’t be put out on the street at the first temporary setback in employment.
Reduced Cost Of Living: For most people, mortgage payments are their biggest monthly expense after taxes. Without a mortgage payment you can save more, work less, or take that dream job you always wanted but couldn’t afford because of the lower salary.
Retirement Planning: A free and clear home takes on additional significance for near retirees. If you are entering retirement with a fixed income (Old Age Security, Pension, fixed annuity) then it can be a real benefit to pay off all debt rather than put money in fluctuating investments. This allows you to reduce financial variables and more reliably match forecasted income to expenses.
Achievable: Paying off your mortgage feels more motivating than most financial goals because it is concrete. It is big enough to get excited about yet tangible enough that you can wrap your head around it. It is achievable and will make a significant difference in your life. I have a spreadsheet that tracks my bi-weekly payments and measures what happens when I accelerate my payments. It makes me very happy to see that that my capital payments are more than my interest payments.
None of this is rocket science. There is no better ROI (Return on Investment) and POM (Peace Of Mind) then paying off your mortgageas soon as possible.
Almost everybody I know, who has a mortgage, wants to pay if off as soon as possible. There is no shortage of advice on how to get the job done. At the end of the day it boils down to “pay more principal”. Paying mortgage principal early is a powerful money saver because small debt reductions compound dramatically over the life of the loan thus eliminating many times the payment in interest. Now that we know how to pay off your mortgage early let’s look at the benefits to following this strategy.
Guaranteed Return on Investment: With the stock market and real estate going up and down like a roller coaster, it is comforting to put your money toward your home and know with certainty what the ROI will be. You get the imputed rental value of a place to live and the immediate return of eliminated interest expense. The certainty of this return stream is a huge benefit for investors who feel beat-up by unreliable financial markets.
Save Money: The first and most obvious reason to pay off your mortgage early is it can save you tens of thousands of dollars in interest costs.
Peace of Mind (POM): The second reason is peace of mind from owning your own home. It gives you a warm-fuzzy feeling to know you have a secure place to live and you won’t be put out on the street at the first temporary setback in employment.
Reduced Cost Of Living: For most people, mortgage payments are their biggest monthly expense after taxes. Without a mortgage payment you can save more, work less, or take that dream job you always wanted but couldn’t afford because of the lower salary.
Retirement Planning: A free and clear home takes on additional significance for near retirees. If you are entering retirement with a fixed income (Old Age Security, Pension, fixed annuity) then it can be a real benefit to pay off all debt rather than put money in fluctuating investments. This allows you to reduce financial variables and more reliably match forecasted income to expenses.
Achievable: Paying off your mortgage feels more motivating than most financial goals because it is concrete. It is big enough to get excited about yet tangible enough that you can wrap your head around it. It is achievable and will make a significant difference in your life. I have a spreadsheet that tracks my bi-weekly payments and measures what happens when I accelerate my payments. It makes me very happy to see that that my capital payments are more than my interest payments.
None of this is rocket science. There is no better ROI (Return on Investment) and POM (Peace Of Mind) then paying off your mortgageas soon as possible.
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