by Vicky Monroe
In my last post I talked about why my spouse and I haven’t been able to make much progress on paying off our mortgage this year. This week I thought I’d dive into some of the reasons why we want to pay off our mortgage early and become totally debt-free.
To give you some more background on our situation, we purchased our home in January of 2021 for $186,000. Our starting mortgage balance was $179,000 because we didn’t put much money down. We had the money to make a larger down payment at the time. But we wanted to keep a bigger cash buffer on hand in case the house had any deferred maintenance or other hidden issues since it was built in the 1970s. We got an FHA loan because my spouse didn’t have the best credit at the time. We pay PMI, which won’t drop off until we refinance or pay off the mortgage. So far we’ve paid off $20,000 of principal and have a balance of $158,000.
Our interest rate is 4%, which is pretty low. But we still want to knock the mortgage out and get it paid off for peace of mind. I’ve had a lot of people online and in real life ask me why we’re bothering to pay off the mortgage when we could earn more in the stock market. I’m a personal finance writer, so I understand the opportunity cost of putting money into our mortgage instead of the stock market. We’re in our mid-twenties, so we could earn a lot of compound interest if we invested the money we’re using for mortgage overpayments instead. So why are we paying off the mortgage?
Why We Want To Pay Off Our Mortgage
The main reason we want to pay off our mortgage is for stability and security. My spouse moved around a lot and went through several evictions during childhood. My parents almost lost their house in the aftermath of 2008. These experiences have made us long for a home that we truly own that no bank or landlord can ever take from us.
The amount of debt we have gives both of us anxiety. We don’t like the feeling of having a six-figure mortgage hanging over our heads, especially since we both have medical issues. From the ages of 16 to 20, my heart condition and other health problems made it impossible for me to work or go to school. I had surgery to fix a hole in my heart, which made my heath situation more stable and enabled me to start my freelance writing business. But it’s possible that my health could decline in the future and make it harder to earn the same level of income.
My spouse also has health problems including dyslexia, celiac disease, and some after-effects from getting hit by a pickup truck as a pedestrian. Autoimmune diseases run in my partner’s family as well, so additional health challenges could crop up. Lowering our fixed monthly expenses by paying off our mortgage would make it easier to weather any hard times related to our health or job status.
Financial Flexibility and Peace of Mind
On a more positive note, becoming debt-free will also give us more financial flexibility to pursue the type of life that we want. My spouse would love to become self-employed eventually, and paying off our mortgage will help get us closer to that dream. We’ll be in a better position to pay for our own health insurance and live on variable income if we don’t have a mortgage.
We also think that paying off our home loan will help alleviate our financial stress. Although the money we spend on mortgage overpayments would earn more in the stock market, you can’t put a price on peace of mind. We don’t feel comfortable having debt, and paying it off is what we need to do to feel safe and secure.
We’re still investing for retirement and saving for other inevitable life expenses like house repairs and car maintenance. But we’re throwing any extra money at our mortgage to save on interest and get closer to being debt-free. Once the loan is off our plate in a few years, we’ll invest much more aggressively and start building a portfolio of rental properties.
Personal Finance Is Personal
At the end of the day, we’re highly motivated to pay off this debt and feel like it’s the right move for us. Personal finance is just that—personal. We all make different decisions based on our risk tolerance and life experiences. Beks, the last writer on this blog, paid cash for her house and acknowledged it wasn’t the “best” financial move. But she only had the stomach for low-risk financial strategies, which is how my partner and I feel as well.
What’s your motivation for paying off your debt? Share your reasons in the comments section below. I’d love to hear more about your debt payoff journey!
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Here’s Why I Haven’t Paid Off Much Debt This Year
Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.
You don’t need to refinance or pay off the mortgage to get rid of PMI. When you have 20% equity in the value of the home you don’t have to have it anymore. Contact the mortgage holder when you get there and they will drop it.
My understanding is it works differently with FHA loans, but I’ll look into it. Thanks!
I think getting your mortgage paid off makes total sense for peace of mind. You’re young, you’re making good decisions, you’ll be fine, even if at the end of the day your account balances could have been even higher if you made some other decisions.
Separately, though, it sounds like you’ve both been through a lot of hard stuff, financial and otherwise. Therapy might be helpful to work through some of that and maybe reduce some of your anxiety about finances.