This is guest post from my dad. In an old post, he described his thoughts on the business of relationships.
When you get to looking back on things in your life that seem important one day and have very little lasting impact on your quality of life, the biggest one has to be the status symbol. Advertisers, bankers, friends and others convince you that these things are something you have to have and your life will not be as good as everybody else’s without them. I can recall many things that were at one time considered status symblols if you had them. Vacation homes, expensive cars (Mercedes or BMW), trendy Christmas toys and clothing brands that are too many to remember have come and gone over the years. I think even the most frugal and level headed among us will admit to falling victim to a status symbol for the value of it. Most are no longer considered to have much status as the $100 pair of jeans has been replaced by the $185 pair of jeans. The price of attaining status has continued to go up over the years. I think the air Jordan craze started it all in clothing. Nobody wanted their kid in Converse all stars anymore, and no kid wanted to be wearing Converse all stars when Air Jordan’s’ came out (Jeffs note: unless you were/are an L-7 weenie)! I think I have finally noticed a new status symbol creeping into people’s financial discussions- Paying off a mortgage!
This latest status symbol has been seen sneaking into the main steam now is one with more value and more lasting impact than your worn out BMW that now costs an arm & a leg to fix. I believe that symbol of having a paid off mortgage on your home has come to the forefront since the aftermath of the financial crisis left people gasping for their financial lives. The current state of the financial meltdown has upended many people’s financial life and lifestyle. Using your house as a piggy bank and emptying out the equity that you build up propped up many unsustainable life styles. Those chickens came home to roost and now I hear people talking about having there mortgage paid off and how much better they feel. Although the U.S. tax system makes it seem like you should always have a home mortgage (I subscribed to the theory for a long time) to get the tax write offs, I recently decided that having a paid off mortgage would allow me to pay whatever I owed as my fair share of the national tax burden. The old fashion 30 year note is now so low that making double principle payments is within many average income peoples reach. A 15 year loan makes the most sense for those just starting out as they will save a load of interest over the life of the loan and get it paid for just when kids’ college bills may be kicking in. Interest rates are so low now you could easily get into a 15 year note. My first home loan was 19% and the owner bought it down to 16%.
Jeff’s note: I agree with this. Many people have seen family members, friends or neighbors lose their home, and I think it has rattled a lot of cages. Once you pay off your mortgage, no one can take your home from you – it’s yours (Unless you fail to pay taxes, but we wont get into that).
Less Stress (and Cash Needed) Later in Life and Retirement
Having a paid off mortgage would make many people’s lives and retirement a much simpler and less stressful process. I cannot imagine having a mortgage to pay going into retirement. I think that is why they say you should have 70-80% of your pre-retirement income when you retire. Not having a mortgage will enable you to get by on much less. The pride that I have seen in people with a paid off mortgage note is unmistakable. This has been a much more difficult goal to attain, but worth the long term commitment. Having a paid off mortgage demonstrates an ability to plan and make sacrifices over the long term to attain a truly worthwhile goal. Having accomplished this, it will enable a person to make many more choices in their life and be much more financially secure. Owning your home (not living in a bank owned home) has now taken up its rightful place in the American consciousness again. For true financial security, you should strive to pay off your home. You will be able to sleep better at night because of it. Time is your ally in this endeavor and getting in a hurry will almost always lead to dire consequences.
Readers: Do you have a paid off mortgage? If not, are you working on paying it early, or are you focused on other debts? Those of you with a mortgage, how would it feel to not have to pay that amount every month, but instead keep it?