Here's a spinoff question. It seems many of you are uncomfortable carrying a mortgage and would love to eliminate that debt entirely. However, some would rather have money in the bank (or invested in some liquid form). What would you do:

Say you had $100,000 to invest. Assume that amount is the exact amount you would need to pay off your mortgage completely. Would you pay off your mortgage, or invest the money in a conservative account that could yield 7-10% return?

Explain why you chose your answer.

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I picked invest because it will earn money and help fund my retirement. I figure with a mortgage, I can pay on it and eventually get it paid off. If I paid it off now, I'm not confident that I would be that disciplined to invest the money I would have been paying on a mortgage. I think I'd tend to just spend it on stuff and then, though I wouldn't have a mortgage, I also wouldn't have a retirement account.

Good one Kim!!! I love hypothetical dreams..lol.
I personally would invest it, solely because our mortgage is much smaller than most, and is very affordable. We have no problems paying it month to month. However, saying that, in my situation, I wish you had a "both" choice. We owe about $40,000 on our mortgage, and would therefore have a sweet chunk left if we did choose to pay off our mortgage first for whatever reason. But if I didn't, I'd invest it solely for the reason that most accounts are returning more in interest than my mortgage interest is. If that were the opposite, I'd pay off my mortgage first. that's just me though. I might change my mind if ever given the actual $100,000 though.

I said pay off mortgage, but actually, I would rather use it to pay off everything else excpt the mortgage!!! The reason I said pay of mortgage is because that would greatly lower our monthly payments and allow us to pay everything elese off and not have to worry about meeting our monthly bills. I would invest it if and only if I had no other debt and had no problem meeting my monthly bills.

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~Happiness is a large family~

If I suddenly a lump sum of $100K it would be soooo tempting to pay off the mortgage. However, I have to remind myself that we're about to pay off the mortgage anyway (when we move and we'll buy another house for cash) so I must do the wise thing and say, "Cash Is King". I'd invest the money. You never know when I'll have my hands on that kind of lump sum again.

Besides $100K invested at 7% would yield a monthly $580+ in cash. That would improve my cash flow quite a bit. Even if we weren't moving, I could accelerate my mortgage payments and still have the $100K once it is paid off.

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"I've been rich and I've been poor but independently wealthy is where it is at."

I would absolutely pay off my mortgage first. Then I would use the amount I would have paid each month for investing. The amount of mortgage interest that builds up is ridiculous and it's painful to throw that money away each month.

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Jennifer
dd Sarah 1/4/02
ds Brady 1/15/07

I would pay off the mortgage. Our tax rate is 42% and I would be taxed on everything I made off the 7%-10%. It would make more financial sense to pay off the $100,000 with no tax penalty then to continue to pay a mortgage (which isn't tax deductible in Canada) and pay high income tax on any money earned. I would have to be earning about 12% off the investments (not 7-10%) to even break even in this scenario.

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Pay off the mortgage!!!!! I would then take the money we were saving each month and invest that. i could invest that however I wanted and possibly make more than I would havebeen able to with a 7-10% return.

I would invest it. In the long run, we would have more money doing it that way. But, our mortgage is very, very reasonable. We bought in 2001.

Kim, I am curious what YOU would do.

Pay off the mortgage.

Put the "mortgage payment " into CD's each month for retirement income because SS is more than likely not going to be there.