This question has been taking laps inside my brain for a while – Should we focus on getting rid of our mortgage or take that extra money and invest?
Here’s what we figured out:
Scenario #1 –
If we invest $800 every month for the next 15 years @ 5% return rate, we would have a nest egg of $214,722.12 ($144,000 from our injection + $70,722.12 in interest)
💰 Our money would be put to work and we would technically be making money in our sleep
💰 The rate of return isn’t guaranteed and can fluctuate based on the state of the economy.
💰 Not only can the rate decline, our contributions could also be affected if the economy plummeted
💰 Investing isn’t easy to do for persons who are risk averse 🙋🏾♂️🙋🏾♀️
Scenario #2 –
If we make an additional payment of $800 monthly to our mortgage @ 4% interest, we would be mortgage free in 13 years and stand to save $73,977.16 in interest.
🏠 Peace of mind – our house would be OURS
🏠 Less interest paid
🏠 A substantial reduction in our monthly expenses (expenses would go below 50% of our income)
🏠 Complete debt freedom
🏠 Not recommended since mortgage interest rates are so low
🏠 Money could be used to complete other short term goals
All in all, our peace of mind was the driving factor in our final decision. Some financial gurus would frown but that’s okay with us – personal finance is personal.
The loose plan is to clear our mortgage and eventually purchase a few acres of land to build our dream home. Our current home would then be a rental property and the rental income would cover / subsidize our dream home expenses.
QOTD: Are you team early mortgage payoff or team invest invest invest? Leave your 🏠 or 💰 in the comments below.