Personal Finance

Guilt/pressure of paying mortgage off quickly as possible

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  • Jul 23rd, 2020 8:04 pm
[OP]
Deal Fanatic
Feb 4, 2010
6397 posts
5769 upvotes

Guilt/pressure of paying mortgage off quickly as possible

For whatever reason, I'm of the mindset that paying off my mortgage quickly as possible is the ideal thing. I have been putting any extra disposable income towards my mortgage (prepayments). I think it's because I think there's some sort of financial freedom to being mortgage free but also I hate being in debt, and wasting money on paying interest. However, due to some expected upcoming changes I will have to reduce or eliminate pre-payments and just pay the minimum as per my mortgage contract but I feel this sense of guilt and/or pressure to pay more than the minimum. I really wish that I didn't have this mentality because I think it puts undue pressure but I don't know how to actually shift my thinking. Purpose of this thread is to get different perspectives on how others view mortgages and their approach to paying it off quicker or investing disposable income. I thinking/hoping maybe if I hear different perspective, I might look at it differently.
58 replies
Member
Aug 5, 2010
409 posts
148 upvotes
Try to seek balance - don't just focus on mortgage pay down. Take a step back and look at your whole financial picture. Are you saving for retirement? have Kids - RESPs? Outstanding car loans?
I have tried to increase mortgage pay down in a responsible manner - increasing monthly payments as income has increased, lump sums, etc. However, it has never been at the expense of doing other things like retirement savings, or just taking the occasional vacation.
Deal Addict
Mar 10, 2010
1513 posts
508 upvotes
I'm completely with you on that mindset. Getting rid of non-producing debt is always a good thing! Like Stendzme said, just make sure you're balancing the paydowns with your retirement planning and investing. Realistically if you're running a well-diversified investment portfolio you'd be further ahead with these low-interest rates to put more into investing, but being debt-free gives you many more options.
Deal Addict
Jun 12, 2008
1445 posts
960 upvotes
Ripley
Sorry - I am not going to give you what you want. I am so glad we paid off our mortgage early. We both worked 2 or 3 jobs while raising kids to get it paid off. Zero regrets. We do have more freedom and sleep better at night. We have zero debt. We resisted upgrading to a bigger house and kept our 'starter' home.

We still contributed to our savings. Now that we know how to live off of less we put the same amount we were putting towards our mortgage to savings every month.
Deal Addict
User avatar
Nov 18, 2007
3528 posts
633 upvotes
Corktown
Renewal time is a good opportunity to use any available savings to pay down the mortgage. This should more than make up for "missed" yearly prepayments and get you back on track to reducing interest paid.

When renewal does come up, try to shorten the amortization period or specify a monthly/weekly payment amount that aligns with your budget.
Deal Fanatic
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May 11, 2014
5499 posts
7289 upvotes
Rankin Inlet, NU
In my situation, I would play the opposite. For me, mortgage debt is one of the cheapest forms of credit and paying it off early is not in my interest. Using my cashflow to make investments that over the long term should yield higher than my mortgage interest rate is in my best interest. I have a very stable job that will likely only get more stable or I can easily find new employment. Even after maximizing RRSP and TFSA, I can now accumulate non-registered investments. Yes, there is risk in doing this, but I believe I have more than covered for this risk.

What you should really do is ask yourself which is better for yourself. If you really aren't sure, you could consider doing half and half. Invest half the money you intend and use half the money for debt repayment. Either way you do it, it is for the betterment of your finances either choice. If you are not a fan of investments, you can always cash them out (especially within TFSA and non-registered) and apply them to your mortgage. If you decide that you are comfortable with your mortgage, you can dedicate some of your future extra payments to investments. Regardless, don't overthink it because it is still better than alternatives (eg. not saving, only making standard payment, or not making your payments etc.)
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Sr. Member
Jul 11, 2017
552 posts
546 upvotes
I'm the same way, but in my case, my debt is OSAP loans. I graduated last year (April 2019) with $29,XXX in OSAP loans, and will have enough to pay them off completely by the end of this year. Right now they are at 0% interest, so I am saving up as much as I can to pay them off come that time (I'm currently sitting at about $27,XXX saved up for them). It'll feel like a weight lifted off my shoulders, and I will have no debt, so I can focus on saving for a home/retirement. And I've been able to do this with essentially a minimum wage job combined with a low cost rental (Student Apartment @ $550/mo all-inclusive).

But I would agree with your though of not wanting to have that mentality. For me it's that I've always worried about money, and will continue to worry about it. I feel that even If I made three times what I make now, I would still find a way to worry that I won't have enough to pay my bills and save up money too.
Deal Addict
User avatar
Nov 1, 2001
1150 posts
470 upvotes
Toronto
zeddy wrote: Sorry - I am not going to give you what you want. I am so glad we paid off our mortgage early. We both worked 2 or 3 jobs while raising kids to get it paid off. Zero regrets. We do have more freedom and sleep better at night. We have zero debt. We resisted upgrading to a bigger house and kept our 'starter' home.

We still contributed to our savings. Now that we know how to live off of less we put the same amount we were putting towards our mortgage to savings every month.
I'm impressed you did this while raising kids
Deal Guru
Dec 5, 2006
12649 posts
7775 upvotes
Markham
I don't see anything wrong about it.

Mortgage payment is a guaranteed cost and investment is not a guaranteed income. Paid off guaranteed cost is better in some situations except you are really good on investment.

Just like in current situation, you would feel much less stress if you paid off mortgage than worrying where to get money next month
Deal Addict
User avatar
Sep 14, 2012
2361 posts
1760 upvotes
Montreal, QC
ranjeet2000 wrote: I'm impressed you did this while raising kids
It would depend on where he/she lives since it would be next to impossible to do this in Vancouver, Toronto, or the island of Montreal (and I'm referring to houses, not condos).
Deal Fanatic
Apr 5, 2016
5884 posts
4330 upvotes
Calgary/Vancouver
Depends on your life style, life stage and goals. Nothing wrong with paying down debt especially if you live a relatively simple life.

For me, I prefer to have as much mortgage debt as possible with the lowest rate possible so I have available cash on hand. Cash is king in case of whatever happens or comes your way. If a business opportunity comes by, I know I have cash available to invest it and don't have to worry about qualifying for a second mortgage. Even for investments, if a good stock comes by, or the next "crash or dip" comes, I have cash to get in the market. Or even emergency, roof needs fixing or tenants broke shit, I can freely use cash and not be strained with cash flow issues.
Deal Fanatic
Jan 15, 2017
5133 posts
5085 upvotes
Ottawa
OP, as you hate being in debt and view paying interest as a waste of money, then for you, paying off your mortgage quickly makes sense. I do agree with a previous poster though that you should try and seek balance. Depending on the size of your mortgage, paying it off quickly could mean 5 years, 10 years or even 20 years. Have you taken the time to sit down and actually plan how you will pay off your mortgage? If it will take you a long time, you should plan to also live during that time and that includes saving for retirement and possibly having some fun.

The financial freedom to paying off your mortgage is the increased cash flow that you have from not having to make that payment every month. Our strategy to pay off our mortgage was to reduce the amortization period. Reducing the amortization raises the monthly payment and is a forced pre-payment option and it worked really well for us. We then used any extra funds to get rid of any consumer debt that we had. Once that consumer debt was eliminated, we were then able to divert these funds to paying off the mortgage completely. This meant we were completely debt free when the mortgage was paid.

I think what is missing for you is a plan to pay off your mortgage. Having a workable plan may help lessen your stressing about it.
Sr. Member
User avatar
May 27, 2011
520 posts
549 upvotes
Montreal
+1 on the find a balance approach.

Yes, you could invest that money and get a consistent 5-6% per year or you could go several years with negative yields and not sleep well at night ... suddenly those 2.4% saved on mortgage interest doesn't look that bad, eh?

And leave a little cash (is king) on the side for a vacation, car, renovation, gambling or whatever floats your boat. Life is random and you could end up mortgage free and/or with a ton of investments but in poor health to enjoy it. Live a little while you're 100% sure you can (aka today).
[OP]
Deal Fanatic
Feb 4, 2010
6397 posts
5769 upvotes
Thanks everyone, I really appreciate it.
johnb56789 wrote: I'm the same way, but in my case, my debt is OSAP loans. I graduated last year (April 2019) with $29,XXX in OSAP loans, and will have enough to pay them off completely by the end of this year. Right now they are at 0% interest, so I am saving up as much as I can to pay them off come that time (I'm currently sitting at about $27,XXX saved up for them). It'll feel like a weight lifted off my shoulders, and I will have no debt, so I can focus on saving for a home/retirement. And I've been able to do this with essentially a minimum wage job combined with a low cost rental (Student Apartment @ $550/mo all-inclusive).
Good for you for being able to pay off your student debt so quickly and already having a good financial plan.
But I would agree with your though of not wanting to have that mentality. For me it's that I've always worried about money, and will continue to worry about it. I feel that even If I made three times what I make now, I would still find a way to worry that I won't have enough to pay my bills and save up money too.
You've just described me lol. I am actually in a very good financial position but I still worry...it's my natural disposition. My mother is the same, I think I inherited from her.
Member
User avatar
Jan 7, 2019
368 posts
373 upvotes
I'm also the opposite of you (as mentioned by a few others). Debt is extremely important to growth net worth and I embrace it fully. My mortgage is variable 1.6% and I maxed that baby out.

My parents are Chinese and they hated debt so they tried to hammer that mentality into me.....But with my MBA/business background, I embrace debt.
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[OP]
Deal Fanatic
Feb 4, 2010
6397 posts
5769 upvotes
BrokeMillennial wrote: I'm also the opposite of you (as mentioned by a few others). Debt is extremely important to growth net worth and I embrace it fully. My mortgage is variable 1.6% and I maxed that baby out.

My parents are Chinese and they hated debt so they tried to hammer that mentality into me.....But with my MBA/business background, I embrace debt.
I will try to ignore your username as I ask you expand on your point in bold....what does that mean? You got the biggest mortgage you could get with a variable rate of 1.6% so you could free up your cash to invest it__? Did your parents help you with your downpayment or helping you with your payments or other expenses?
Member
User avatar
Dec 30, 2006
362 posts
159 upvotes
Toronto
Flexibility is key. One thing I learned from COVID is ... make sure you have emergency money that can last you at least 6 months if not more. Not just enough for food but emergency money for bills and mortgage. The biggest lesson learned is you can't depends on the gov't. If I paid down all my debt and COVID hit. I think I would need to sell my current place.
Sr. Member
May 28, 2012
558 posts
538 upvotes
ONT
In 30-40 years you will probably be like us. Early/mid 70's, no debt, still trying to save some $$ every month and not spending on luxuries/unnecessary stuff/expensive vacations. We could but I always come back to wanting to have money for a "nice" retirement home or nursing home if or when necessary.
The number of Covid-19 deaths in lower cost homes has reinforced this the last 5 months.
Sr. Member
Jul 11, 2017
552 posts
546 upvotes
hierophant wrote: Thanks everyone, I really appreciate it.


Good for you for being able to pay off your student debt so quickly and already having a good financial plan.


You've just described me lol. I am actually in a very good financial position but I still worry...it's my natural disposition. My mother is the same, I think I inherited from her.
Thank you so much. I try my darndest to be as good with my money as I can. There is the occassional splurge that I have for myself, but otherwise I am doing very well with my money.

And ironically enough too, I sorta got this mentality from my mother too. My parents divorced when I was young and my mother didn't have a well paying job, and I spent most of my time with her when I was younger. So money was always a struggle. It was also how I discovered couponing, and have been doing this now for about 8 years (Since the 10th grade). It's one thing that I am glad that came out of my childhood/upbringing. Otherwise, I'd be spending hundreds a month on food, versus the normal $50/month I spend now (But normally much less than that!!)
Deal Fanatic
May 14, 2009
6674 posts
1416 upvotes
I’m not sure we made the right choice but we decided to pay our mortgage off quickly. We got rid of it in under 8 years and weren’t AS aggressive about it as we could have been because we also got married, took several vacations, paid off two cars, invested in real estate, put money aside for RRSP etc. during those 8 years. In hindsight, maybe we should have put more than 20% down from the get-go but we are big ‘what iffers’ and always worry about not having enough money saved if some kind of crisis should occur. Even with no personal debt, we still worry needlessly :facepalm:

Although we paid off our mortgage rather quickly, I’d suggest a good balance of paying stuff off while also reserving funds to invest. Ultimately, though, I think it comes down to your personal feelings and financial style. Even if a professional had advised us to not pay off the mortgage so quickly and put the funds elsewhere, I think that deep down we wouldn’t have been comfortable with that and our gut feeling was that we wanted to be mortgage free before we hit 40.

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