We Cleared Our Mortgage Early Despite Contrary Advice, Sometimes I Second-Guess It

I vividly recall the moment I cleared our home's debt, sitting in a parking lot with a jubilant heart as the end of our mortgage was made official during a phone call.

Suddenly, with extra funds newly available each month, my spouse and I envisioned a life full of indulgent meals, wardrobe upgrades, and finally trading in our very aged car, not to mention increasing our savings cushion.

At 30 years old, I was convinced our lifestyle would be vastly transformed. Yet, six years onward, the expected liberation remains elusive.

The Intense Struggle to Repay Our Mortgage

In 2011, amidst low housing costs and interest rates post-crisis, we invested in an affordable foreclosed home, accepting a $150,000 mortgage.

Driving our ambition was the desire to break free from the rat race, believing a mortgage-free existence was key. We pursued extra work and converted our loan from a 30-year plan to a 15-year timeline, thereby clearing over 30% in just three years.

A settlement from a serious accident presented a chance to cover 80% of the remaining mortgage, but we hesitated, unsure of the best course.

A session with a financial strategist suggested channeling this windfall into investments due to our low 3.25% mortgage interest, which could potentially grow at a much higher rate.

Unsettled by the Advisor's Counsel Yet He Proved Correct

Driving back after the advisor's meeting, apprehension clung to me. His advice seemed sound, yet unappealing.

I aspired to shed our housing debt for the coveted 'financial independence' often discussed by experts like Dave Ramsey.

Compromise led us to invest some funds into maximized Roth IRAs and bolster our liquid savings to cover several months' expenses, following the advisor's guidance. The surplus helped eliminate the mortgage entirely within three years.

Our newfound $1,100 monthly wiggle room excited me. I enthusiastically organized a budget via Every Dollar, and started investment accounts with Robinhood and Betterment.

The Reality of Debt-Free Life Wasn't as Promising

Day-to-day costs quickly piled up: unexpected fix-ups like car parts and home repairs, alongside insurance excesses, never seemed to diminish.

While relieved from mortgage payments, property tax and insurance demands remain, cumulatively reaching several months' worth of former payments annually.

Unexpected Outcomes and Reflections

Our advisor was indeed prescient; our Roth IRAs have been appreciating at an 8% annual rate. With hindsight, retaining the 3.25% mortgage could have allowed larger gains from an investment portfolio.

One undeniable merit of having repaid the mortgage is the serenity it brought.

Faced with my husband's job loss in 2024, we adeptly navigated fiscal strain, curtailing spending to essentials and depending on our reserve funds, which staved off any debt accumulation during a challenging period.