Pam, a Boston-area homeowner, got fed up with endlessly trying to keep going on the
"high-earning, high-spending treadmill."
Pam and her husband are both freelancers, with lots of peaks and valleys in their income.
So the couple took action and paid off their mortgage as a way of taking out one of their biggest, ongoing expenses.
It's an interesting take on the free-and-clear debate, which I posted on the other day. It's the question of whether you are better paying off that big mortgage as fast as you can, or simply riding today's rock-bottom interest rates and pumping your extra savings into the market.
The attraction of paying off the house is pretty universal. But it may be especially compelling here in the Greater Boston area, home to perpetually inflated home prices and big mortgages.
Through no fault of their own, many people like Pam and her husband can easily find themselves stuck on the high-income, high-debt treadmill. Given it can take $400,000 to buy a half decent cape in a middling Boston suburb like Natick, it's not hard to see how this can happen.
And you don't have to be a freelancer, with variable cash flow, to struggle with this. After all, given the state of job security these days, we are all essentially freelancers, but, if you own a home, that payment is due every month.
We made a decision to pay off our mortgage years ago. The reason: we have freelance/consulting positions, which means our incomes fluctuate from month to month and year to year. We feel much more secure knowing that we don't have a huge mortgage to pay each month, so we are free to earn less. I have to say that with each passing year, I feel our decision to be more and more justified, particularly when I imagine our lives as renters. The condo next door to us in exactly the same configuration rents for $2400 a month. We couldn't have afforded that on our salaries. I think as long as you can buy outright without decimating your savings, and as long as you have other investments, it's really the way to go if you want to get off the high-earning, high-spending treadmill.
There were lots of other great comments on the topic from thirtysomething, Lance and others - check out the discussion.
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