I totally get this too. If you're older and nearing retirement, it makes more sense to pay off your mortage than if you're young and have 30+ years to go. Historically, the stock market averages about 10%. If you have a ways to go before you retire, you have time to bounce back from market corrections and downturns in the economy.

Notice I said this only makes sense if you're in a low rate fixed mortgage? By low, I mean less than 6%. People who take out HELOCs or get variable rate mortgages to invest money elsewhere doesn't make sense.

__________________
Read my Mommysavers Blog: Forget the Joneses
NEW! Check out the Mommysavers Fan Page on Facebook

I agree with Kim. In Economics 101, you learn about what Kim is saying. If you are young (below 40), you don't need to be paying off your mortgage, but investing in higher yielding stocks, bonds, shoot, even CDs or money market accounts! It just makes sense! I understand there is a psychological aspect to owning your own home, definitely, but it just does not make sense to be so caught up in paying it off NOW if you are not getting the most from your money. I agree you need to pay down your credit debt and other consumer debt as soon as possible. But, typically, cars do not appreciate in value, period. Homes do, so it is a better investment anyways.

For example, we have a 20 year mortgage at 5.375%. We also bought our home at a REALLY good time so our mortgage payments are very, very low. It would be foolish to take an extra $500 and put it towards our mortage given our ages (which are 38 and 43, on the cusp of "old") when we can put it in an account where we can get up to 8%. Over a 5 year time we would put $30K towards our mortgage, sure, but we losing 8% over that 5 year time. If you look at what we would be gaining on our mortgage savings, that is only 5.375%. We could then, when we are older, pay off the mortgage, if we so choose for psychological benefits, or continue to reap a greater reward at 8%. We will have it paid off, or a similar home if we so choose, before retirement. Plus, if we retire, we will probably move anyways to a smaller home. It is simple math, as Kim is pointing out.

From what I have read of Dave Ramsey, he takes debt reduction from a Christian perspective of having NO debt, period. I get that on a consumer credit aspect, but a home is not a consumer credit issue. Those are credit cards, car loans, any other type of consumer good. A home is not a consumer good as much as a long term investment. That is where I don't agree with him.

We're not going to be able to buy a house until dh retires from the army, we just move too much right now, so we'll be in our 40's when we buy our first home (unless we get lucky and get a guaranteed duty station of 5+ years). In our situation I want the home paid off ASAP because it will be somewhere I will stay forever, I've already told dh once he's out of the army I'm not moving again, and we'll be older.

My dad is only 52 and has the option of retiring now or being "forced" to retire at 55. The last few years they really stepped up to pay off their house, it was a 30 year mortgage but if they would have gone with that payoff he would have had to pay on the house for another 10 years after he retired. He does have options to work when he's done with the Feds, a lot of his colleagues have gone into private practice but his goal was not to have to work. After 20 + years with the army, active duty and national guard, and then 20 years working at the prison my dad feels it's time he gets some rest and a break

I should clarify that by 'early', our goal is Freedom 55.

By 55 (56 for dh) our goals are:

a) To have the house paid off.

b) To be able to have the 'freedom' to retire. Not that we will, but to have the choice if we need to.

c) To have partially funded the kids college education (our plan is to cover tuition and books, they have to cover living expenses and spending money - there are many good schools within a short distance to us so they could live at home for free if they wanted to).

Right now we have 24 years left to pay off the house. I want to bring it down to 17 yrs from now. We want it paid off by 2025. We started in 2004 at 30 years so we've knocked off a few years but want to continue to pre-pay some more.

However if someone passed me a cheque for the current amount owning on our home today, I'd have it paid off my nightfall. But that's just me. Then I'd invest the extra cashflow from being mortgage free.