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Thoughts On Savings After A Reader Hits Back On Paying Off A Mortgage
Never Retire Checklist: #14
Today’s installment is as much about how psychology impacts our financial decisions as it is about saving money. So let’s intro it with this before detailing how I view and execute savings.
I received pushback from a subscriber the other day in response to this —
If you had $500,000 left on your mortgage at a payment of $2,300/month, $2,000 in other expenses, $550,000 in savings and work that generates $5,000/month, what would you do?
- I would pay off my mortgage.
- Save $2,300 each month, resulting in a $3,000/month surplus.
- If my work was easy on the body and mind and required only around 20–25 hours a week, I would use $2,000 of that $3,000 surplus to replenish my savings each month. While it would take about 20 years to get back to $550,000, it only takes five years to get to $125,000. Not too shabby.
- $125,000 would cover my $2,000 in monthly expenses for more than five years.
That’s how much having no or a super low housing payment means to me.
We had an exchange where he made the sound mathematical argument against what I would do —