DON'T Pay Your Mortgage Off Early!!!

nrsql

Sloppy_Saver wrote:

Not one person (except mi'laddo here) thinks that diversification across all of these sectors is mad, and he thinks it is because of mediocre returns.

Think you're probably well named.
I didn't say it was mad nor do I think that. I guess you are a troll or maybe just not good at reading/understanding but anyway:
The people who are successful (if you think of success in terms of money) are those that take risks and put all their resources into their choosen area - whether that is their business, their choosen investment sector, their education, ...
Sure they end up bankrupt - often several times.
Anyway they make their choice that they not willing to accept mediocre returns.
And if you do a bit of reading you will find a lot of people advising against diversification for just the reasons I have stated (but at much greater length but I guess they realise some things aren't as obvious as they appear to me)

You may be willing to settle for that (as am I) but why do you think people are mad if they don't?
I guess their thinking goes "this has a good chance of working but if it doesn't then I'll just pick myself up and try again hopefully having learnt a lesson".
Our thinking goes "I really don't want to fail and that's more important to me than having the chance of success"

It's like the difference between wanting nice safe employment or running your own business.

A lot of people here say that if you should just keep enough money for emergencies and anything you can leave for 10 years should be invested in the stock market. Where's the diversification in that? Why stop there, that's just an arbitrary risk and another example of sloppy thinking.

What should you do? Pick the best performing sectors and the best performing funds/shares in those sectors and invest in those? Might sound good but as a strategy is likely to underperform. Some would consider it "mad" but I heard it advised and a lot of people do in effect do that and it might work.

Everyone is different and statements that try to be all encompassing will necessarily be incorrect.
Again if someone is motivated to pay off their mortgage then that is probably better than squandering the money (I say probably as quality of life also comes into it).

Spendless

I haven't read all of this thread:D so don't know if this has come up, but if you fall on hard times eg lose job and you have x amount of savings you then cannot claim certain benefits, you are expected to live on your savings until it falls below whatever threshold it is.

Of course you then have the same size mortgage but few savings. Paying off more on the mortgage does not penalise you in this way should you ever need to claim anything.

Dithering_Dad

Hi guys, I'm a newbie - hope no one minds me adding my 2p.
I'm not in a position to even think about paying down my mortgage, but thought I'd pop in and see how the other half live

Glad I did because this thread looked quite heated. I'm not sure if the trading of insults helps, but it does make for interesting reading for third parties. I can kinda see the theory behind this, but if you only have a small amount of cash left at the end of the month, putting a couple of pounds here and there won't amount to much, even after several years.

I think it depends on your circumstances and with mine I'll be concentrating on one problem at a time, starting with my credit cards and working my way up

Hopefully once I've done that I'll be able to join you guys in paying down the mortgage, cos mine is a tad worrying!!

savingforoz

Thanks, Dithering Dad - it's good to see that although you're taking a different approach, you put your point across without being rude, unlike Sloppy. I don't think it was the fact that he had a different point of view to others on this thread that was the problem, it was his high-handed and arrogant attitude. I've been away for the weekend and was amused to see how his bile had increased in later posts :rolleyes: . He hasn't learned a basic money saving fact - good manners cost nothing. As you say, WishIwasrich, I think we'll end up having the last laugh :rotfl:

Being mortgage free feels wonderful and really opens up options, like giving up full time work for one. For me I've concentrated on building up my investments, which is much easier now I don't have the monthly mortgage payment going out. As I said before, I wish all the mortgage free wannabes all the best - it's well worth it.

Dithering_Dad

savingforoz wrote:

Thanks, Dithering Dad - it's good to see that although you're taking a different approach, you put your point across without being rude, unlike Sloppy. I don't think it was the fact that he had a different point of view to others on this thread that was the problem, it was his high-handed and arrogant attitude. I've been away for the weekend and was amused to see how his bile had increased in later posts :rolleyes: . He hasn't learned a basic money saving fact - good manners cost nothing. As you say, WishIwasrich, I think we'll end up having the last laugh :rotfl:

Being mortgage free feels wonderful and really opens up options, like giving up full time work for one. For me I've concentrated on building up my investments, which is much easier now I don't have the monthly mortgage payment going out. As I said before, I wish all the mortgage free wannabes all the best - it's well worth it.

Sounds great to be mortgage free, especially when you're young enough to enjoy the benefits. Right now I'd be happy to just put enough on mine to make up for the shortfall of my crappy endowment :mad: Oh well, enough dreaming - heading back to the DFW forum. Good luck with your goals everyone - hope to be back on here soon as a bonafide Mortgage payer-offer

savingforoz

Good luck to you DD with paying off those credit cards.

If I can help anyone along the path of becoming mortgage free, then please do PM me - I'd be happy to lend support and encouragement if I can.

cupid_s

Spendless wrote:

I haven't read all of this thread:D so don't know if this has come up, but if you fall on hard times eg lose job and you have x amount of savings you then cannot claim certain benefits, you are expected to live on your savings until it falls below whatever threshold it is.

Of course you then have the same size mortgage but few savings. Paying off more on the mortgage does not penalise you in this way should you ever need to claim anything.

My husband and I are both PhD students. Our funding runs out in october but I know that I wont finish exactly on time. There's a big pot of money available for people who overrun, provided they have no savings. As all our savings are going to be paid off our mortgage we wont have savings but if we did we wouldn't be able to get a penny from the Uni and would end up spending a lot of our savings on the standard mortgage payments/bills etc and be worse off.

I think it good to think about what's best in terms of investments but sometimes what's right for one person wouldn't be right for someone else and you have to do what you think is best for you at the time.

IFA

2 ways of making money:

1) High risk, stock and shares/ investments etc..
2) Low risk Long term small overpayments off mortgage or into savings account/ISA resulting in interest compounding over the years.

I'm opting for number 2 as it is less risk, Of course you only notice the difference in the last few years..

There is no quick fix, and I for one don't trust those city traders get rich quick shares schemes - If they were that good everyone would be doing it. No better than gambling imo..

Keep overpaying the mortgage and watch those savings mount up! It takes time like everything good in life. Well done to everyone who has perservered it will be worth it in the end,

Cheers

Dithering_Dad

Dithering_Dad wrote:

Sounds great to be mortgage free, especially when you're young enough to enjoy the benefits. Right now I'd be happy to just put enough on mine to make up for the shortfall of my crappy endowment :mad: Oh well, enough dreaming - heading back to the DFW forum. Good luck with your goals everyone - hope to be back on here soon as a bonafide Mortgage payer-offer

Just had to pop back in and say that maybe I'll be paying down my mortgage (a bit) after all!

After just one day of being registered on this site. I've been able to research endowments, mortgages and life assurance and have come up with the following plan:
Cash in my rubbish endowment & put the money onto my mortgage.
Convert my mortgage to a repayment for the remaining amount, including the interest free bit supposedly covered by my endowment - but for less than I currently pay each month (I'm on a dismal rate).
I'm even going to break even on my life assurance (I have to make up for the portion the endowment covered) because I found it a lot cheaper using a link from this site.

Phew, all from just a couple of hours mooching about on this great site. _party_

Just need to find a bit of info on how to magic away my credit card debts and I'm sorted

Tim_L

IFA wrote:

2 ways of making money:

1) High risk, stock and shares/ investments etc..
2) Low risk Long term small overpayments off mortgage or into savings account/ISA resulting in interest compounding over the years.

I'm opting for number 2 as it is less risk, Of course you only notice the difference in the last few years..

There is no quick fix, and I for one don't trust those city traders get rich quick shares schemes - If they were that good everyone would be doing it. No better than gambling imo..

Keep overpaying the mortgage and watch those savings mount up! It takes time like everything good in life. Well done to everyone who has perservered it will be worth it in the end,

Cheers

This is a very simplistic way of looking at savings and investments, and in fact creates a false dichotomy, i.e. the choice you present is not the only one.

The key to building wealth - as opposed to financially treading water - is to build up diversity in your investments. And you will certainly not build wealth by saving money at interest rates fractionally above inflation, even if they compound. Savings are a place to start, not a destination in themselves, and at some point whether you like it or not you need to take some risks with some of your capital to generate better average returns across the whole portfolio - some choices will win, some may lose, but overall you end up ahead.

One of the points this thread has been making is that in sinking cash into bricks and mortar you are investing in one of the most risky sectors imaginable, i.e. residential property. At the end of the exercise you have a house and not much else. You may not see it as an investment, but that's what you're doing.

Back to the false dichotomy: you basically categorize investments as "High risk stocks and shares" v. low risk "savings". Shares are high risk, certainly, but there are plenty of lower risk investments available by either buying into unit trusts where risk is spread, or taking on other types of investment, for example commercial property which was very much in vogue last year. Some options are volatile rather than risky inherently, which means you might take a short term hit but win longer term. There is a whole world of options out there.

A good financial advisor will look at your attitude to risk and make some suggestions accordingly. But don't let prejudice limit your options before you even know what they are.