Explain to me Why its Good to Pay off Your Mortgage quickly!

GettingThingsDone

@Dithering Dad, you're very good at only reading what you want to hear (if you see what I mean), and you are very argumentative - not very MSE? In fact, you are mainly arguing with yourself (or previous arguments that you have had with people maybe?).

Nobody here is saying MFW is a bad idea. We all know it is a good thing, but whether you can/should do it depends on your personal circumstances. And all people want to know is, generally how do they get themselves into the most favourable situation so that being a MFW makes sense to them.

I'm not here to win or lose points in arguing (I know I'm right )

As I said earlier, why are you holding other investments? Surely, you would use those to overpay your mortgage and then invest in those other things later. And that is the key question - I know you are doing the 'right thing', but I think it does need to be explicitly explained.

Just because you think people think they are financially astute, doesn't mean they can't make bad decisions. Also, not everyone who reads this forum posts in it, so there could be people attempting to become MFW with an unsuitable mortgage product or not making the most of their tax-free options, for example.

Ok, some questions:
As you keep saying you have emergency savings and pensions in place - how much should one have in savings? What kind of pension provision should one have in place. How do you decide what term you are going to aim for? What kind of mortgage product should I have. Should I do up my house first to improve its value? Should I sell my shares first? Should I spend the money on school fees for my children? Should I buy another property first and rent it out? Should I move first or pay off my current mortgage? Should I have a long term mortgage but aim to overpay it, or should I get a shorter term e.g. 5 years) mortgage?

The reason for having a simple list, isn't because people are 'mere children', it's so that they are reminded in the future (e.g. 5, 10 years) under what conditions they undertook their endeavours. If your situation changes you can then simply review whether you should keep up your MFW or ease off, or whatever. Again, when I say 'you' or 'your' I'm talking generally, not specifically for you DD.

Also, mortgage regulation is a very serious business, and it is worth considering what is or isn't financial advice.

I know it is not your forum, but you are influential here.

I'm still waiting for any (reasoned) response as to why MFW is a bad financial strategy

IT DEPENDS ENTIRELY ON YOUR CIRCUMSTANCES

gtd

mountainlioness

Hi All

I'm going to sidestep the previous discussion - not that I don't have an opinion, just that I haven't got enough energy! - and just say what I've been doing, which is probably around the middle ground...

Our mortgage and bills comes to just under 50% of our joint take home pay (depending on DH' salary, which is commission-based and includes a car allowance, which we put aside for his car expenses) Add food and petrol and some fun money each we probably have a pot of about £1000 to invest in our future somehow (BB I know this may sound a lot but this approach could be scaled up or down...)

I don't throw it all at the mortgage - now this may not technically be the most cost-effective strategy long-term but it's a balance I've struck...

Around £150 goes into annual bills and expenses accounts (for holidays, car insurance, xmas etc)

£200 goes into our ISAs

£200-300 goes into a separate internet savings account - we're saving for our holiday of a lifetime to Tanzania and this account is otherwise a 'no touch' for major projects

£300 is the target to overpay on the mortgage (so less than a third of the pot)

Anything remaining goes into a 'float' account for emergencies.

For us, this spreading of the remaining cash allows a balance between our longer-term ambitions (the MFW side of things - buying us a bit of leeway for when we have kids as well), medium-term security (being able to weather stormy periods) and short-term desires (having the funds for fun and travel!) It's this balance that should make sure we don't miss out while still putting something into our future prosperity...

The balance may change over time as our life circumstances and priorities change... maybe the mortgage o/payments will rise compared to other savings, maybe we'll stop overpaying at all for a period, but my aim is that the current strategy will give me that choice further down the road.

HTH

BTW, I would say I'm savvy at a basic level which probably is reflected in my strategy and my financial comfort zone, but haven't taken MFW/MSE to the next levels as some here have.

InMyDreams

Dithering_Dad wrote: »

Odd that your (and MUSTBEFUNNY AKA Keeperbear's) first post on this thread is to attack me. Surely if you are so interested in the MFW debate you would have contributed before now?

I wish that every debate on this subject didn't end up with you and MUSTBEFUNNY (AKA Keeperbear) coming out fo the woodwork to attack me personally. You play no part in the discussion except to do this. I can almost set my clock by your appearence... :rotfl:

geeze, talk about a woman scorned!!

(p.s. please remember not to keep PMing me, obsession is such an unnattractive feature)

I'm sorry DD, I don't mean to attack you. (In fact I have specifically asked people not to post negatively on your other thread.) I have not contributed until now because I knew as soon as Beachbeth opened the discussion, how it would end and I did not want to be accused of helping it along its inevitable path. But it's got to the point now where Beachbeth and GettingItDone (and other lurkers) are probably scratching their heads wondering what on earth happened, and I wanted to warn them (and others) against responding in your MTiF thread. At least they know that they are not alone in how they feel. But I'm not surprised if there are others that they will keep quiet.

And as for the PMing plea, I don't know why you keep bringing this up. You responded unpleasantly to me a few months ago in another debate and asked me not to PM you again (although I had only ever sent you polite PMs, the final one was an attempt to clear the water as we clearly had got off on the wrong foot) and I have respected that completely. Why the need to keep reminding me?

GettingThingsDone

hi mountainlioness - well side-stepped

we're saving for our holiday of a lifetime to Tanzania

Exactly - being totally hardcore MFW would mean you would only be able to save for this after you had paid off your mortgage. That is the kind of warning I am talking about - if there is something in your life that you really really want to do, then just becoming mortgage free doesn't just make it happen.

Now, you could argue that you can get a better savings rate by offsetting, and that is fine, but that bit of the plan isn't still isn't MFW, it is 'I want to have a life and get things in perspective'. Using offsetting in that case would just be financial management of savings.

gtd

[Deleted User]

(response moved from other thread)

Dithering_Dad wrote: »

Once again I find that I'm beating a hasty retreat from another "Don't pay your mortgage off" thread. :rotfl:

Do I argue the MFW corner too hard because I seem to be attracting a throng of anti-MFWers who all come out of the woodwork when I express my my pro-MFW opinion?

I can understand the view that people would have other priorities than being MFW, or may not (want to) pursue that goal as aggressively as some others. I can also understand the caveats about ensuring that one doesn't get obsessed with paying off one's mortgage to the exclusion of all else: sometimes it doesn't make sense from a money saving POV (if your mortgage interest rate is 5% and an ISA is paying out 6%, for instance, the money is going to serve you better if it's invested in the ISA), and sometimes people go overboard and try to work to a budget that denies them or their dependents of any kinds of luxuries or treats whatsoever (that's fine for short-term debt crisis management, but not really recommended as a voluntary lifestyle choice). Both of these are fair points, and I don't think there's really any disagreement about them - at least, from reading the several pages of that this thread, there's no real disagreement that I can discern. Just a lot of people talking past one another.

It seems to me that all these (real or imagined) differences and disagreements become amplified thanks to this wonderful medium known as the Internet discussion board, where otherwise quite sane and rational people end up talking past one another and sniping at one another. In't the Web brilliant?

MUSTBEFUNNY_2

DD-

The reason you are beating a hasty retreat (yet again) is because you seem to think the following does not apply to you -

"The motto “Please be nice to other MoneySavers” includes all site users." This is part of MSE's terms and conditions. And for the record no-one has banned me from posting anywhere.

beachbeth

Dithering_Dad wrote: »

If you post a message that states that unemployed people on benefits are all a bunch of benefit seeking layabout, then yes I will respond. I generally find that the Daily Mail throws out the "council house scrounger" or "Assylum seeker, potential terrorist" arguments on a regular basis. I felt that your blanket statement reflected that sort of opinion.

This just proves to me that you are not reading my posts (or this thread) properly and that you want me to be a particular type of person so that you can argue with me and bully me. You must have seen the title of this thread when I first posted it and thought "here we go, another person slating MFW's" because you then proceeded to put me down at every turn without really taking in any of my points or listening properly to my views.

I have never said that "unemployed people on benefits are all a bunch of benefit seeking layabouts." I did say, and I quote: "people can (and do!) live in council houses, never work, claim benefits, and then when they are old are looked after for free."

There are people who are like this because I have relatives who live near such people, but not all unemployed people or people on benefits are layabouts. I myself am unemployed and on benefits (which you would know if you were reading through this thread properly). I certainly am not a benefit seeking layabout. I am genuinely unable to work and would love to be out there earning and being able to contribute more to the household.

Dithering_Dad wrote:

geeze, talk about a woman scorned!!

Now I think we're getting to the route of your problem. I suspected quite a few posts ago that your problem with me was because you knew I was a woman and I have been wondering if you would have reacted the same towards me if you had thought I was a man. Well, now you've answered my question.

beachbeth

Dithering_Dad wrote: »

And yes, I do get annoyed when people think we MFWs are scrimpers who have no financial "savvy" (your word).

Another example of you twisting something I said.

Yes, I used the word "savvy" but I have never said that

"MFWs are scrimpers who have no financial savvy"

You have completely hijacked this thread to put me down and you could have just discussed it like a reasonable, normal person as others here have. Thats obviously not how you work. You prefer to antagonise and argue over points that people have not made instead of talking about what they actually did say.

beachbeth

Dithering_Dad wrote:

Once again I find that I'm beating a hasty retreat from another "Don't pay your mortgage off" thread. :rotfl:

Can I reiterate once more that this is not a "don't pay off your mortgage thread"

I would like to discuss whether you should:

1. go all out to pay off your mortgage as quickly as possible.
2. strike a middle-ground balance
3. pay as little as possible over as long a period as possible.

Please note that I am more an advocate of the first two and would like to get views from people who are doing any of the three. I am not anti MFW because I would never have come onto the Mortgage Free Wannabe Board if this was the case.

Of course, if you go for option 3 then you are going to pay a lot of interest but there are people for whom this is the only option (we were once in this situation ourselves).

Is there anyone trying option 1 and finding it really difficult?

cupid_s

Hi beachbeth.
I am a member of the mortgage free in three tribe. But I'm not going for option 1. I am spending every spare penny on the mortgage. But my spare pennies are calculated after holiday costs, clothes costs and entertainment costs and anything else I want costs. I am kind of on target to complete the mortgage challenge despite both myself and DH being unemployed for the foreseeable future whilst we struggle to finish our degrees with no income at all!

I have saved so much money since being a MFW without actually compromising my standard of living. Ok I haven't had a holiday for 18 months but this is because we weren't allowed any time off during that time so it coincided well. But I never have to think 'I really want that and can't afford it'. I have what I want, when I want and we still will have paid off our mortgage within 6 years of buying the house. If we worked flat out and went for option 1 then we could have paid it off in less but we want a good standard of living as well.

I have my own reason for wanting to pay my mortgage off early. And I wont be persuaded to think otherwise but I hope that by being sensible now and overpaying the mortgage as much as we can whilst still doing the things we want will mean that at a time when we could really do without having a mortgage (ie when we have kids who will be taking all our money and more) we really wont have to worry.

We could pay of the mortgage and then both my husband and I die in a car crash. But we probably wont. I could win the lottery - but I probably wont. And I will get a hefty inheritance from my nan but I hope she lives long enough for me never to need it. I'm a scientist so I rely on stats and probabilities and I'm happy paying extra now knowing that soon I'll have one less thing eating away at my money.