“Paying off that much that early is always a tough call. If you had a low interest rate you may have been better of investing that money (unless it was just lying around waiting to be used).
Paying off that much can lead to a risk of being house-rich and cash poor.
But it is an individual decision. It is clear you despise debt as much as I. But I just couldn’t let my good interest rate just go away (even if I did pay off early).”
The APR I was paying at the time I “paid it off” was 6.95% And I had RE-finanaced _down_ to that rate from an original rate around 8.5% from when I bought it in 1988.
There is NO comparison to being mortgage-burdened vis-a-vis being mortgage-free. Free wins every time in my book.
Two things I have done greatly increased my personal savings rate:
1. Paid off the mortgage, and...
2. Got out of the 401k at work.
I’ve become convinced that the entire concept of the 401k savings plan was one of the greatest scams ever foisted upon wage-earners. Ours began in 1994 and I pulled out at the end of 2009 (note: where I work there was no “employer contribution” — it was 100% “employee contribution”). Over a 15-year period I contributed $88,147 in wages. When I pulled out, I had $100,756. That’s $16,212 earned over 15 years — virtually nothing. I could have done WAY better by simply paying the taxes “up front” and investing the $$$ in CD’s. Just my experience, YMMV. I should have bought gold coins instead! :)
By the way, when I hired out on my job in 1979, I had a 13-year-old Volkswagen bus and about $40 in life savings. 32 years later, I think I’ve done ok. And when I retire later this year, it will be on the same train as the first one I ran when I was promoted 30 years ago!
The 401k was devised by Ted Kennedy as a “supplement” to traditional pension plans.
You had better believe it’s a scam.
>>The APR I was paying at the time I “paid it off” was 6.95% And I had RE-finanaced _down_ to that rate from an original rate around 8.5% from when I bought it in 1988.<<
Mine was 4.5% — I refi’d when rates hit the hard deck: pretty cheap money.
>>There is NO comparison to being mortgage-burdened vis-a-vis being mortgage-free. Free wins every time in my book.<<
I am not sure it is that simple (although, as I said, it seems you are debt averse as I am). had you been hit with a $50K emergency the day after you wrote that check, you may have found how expensive free can be. That is why I accelerated while hanging onto my nest egg.
>>Getting out of the 401K might not be so wise.<<
It is tax deferred, so you have to calculate your marginal tax rate (now) into determining its value. I had the same hit you did, but moved some things around a few years ago and was able to get it back to performing like I need. I have been able to get about 2:1 from inception to the last statement. When you calculate the tax advantages it seems like a “can’t miss.”
But as we have seen on this thread, everyone’s opinion of risk, cash, leverage and investment are spread very widely.
But I think we can agree that unsecured debt is not good, eliminating debt is good if you can do it, keeping a good cash reservoir is better still. No matter what your situation, frugality is always a good strategy.
put money away, pay taxes on your Roths, don't spend money just to save for "later"...and now the govt will simply take it over, or just index it for medicare/ss, and once again, the savers will be no better off than the lazy impulse buyers with the new cars and boats...
so I stopped adding to it as well....
not that we've had extra money, but paying off bills or helping adult kids makes more sense to me now....anything to keep the govt off our money....