Investments? Or No debt?

[Troy]

It's actually pretty straightforward: Consider the pay-off to the mortgage to be an automatic return on money of whatever the mortgage interest rate is. Unless you can hypothesize an investment with an equally secure guaranteed return, you can certainly justify paying off the mortgage. Things that would make me reconsider would be whether the mortgage is "underwater," that is the mortgage is higher than the value of the house. In that case, you probably need more sophisticated advice -- but if it is a place where they want to continue living, I really see this as a choice that depends on their overall tolerance for investment risk. What they no longer pay in monthly mortgage payments can be devoted to monthly investing.

[kd1]

Sometimes it might be smarter to invest, but think of the peace of mind of not having a mortgage payment and using that money to invest.

[Dawnn]

Ok, so to add on to the geek angle, you should recalculate your taxes based on the assumption that you did not get the interest deduction. So for fun, lol, you could assume you make 100K and get a 10K interest deduction, for a taxable income of 90K, since you wouldn't have the interest deduction you should re-run your taxes on the income of 100K and see if your tax bracket changes, and or get a new tax calc. You can do this by adding back the interest deduction back into your taxable income to get your new taxable income and re-run your taxes from last year (just for fun LOL). That is the "cost" of losing the allowable deduction....

[Shazadio]

Most real financial gurus choose no debt over any other investment. The return on no debt is instant, real and absolutely reliable. Any investment comes with risk. Pay off the house and put the mortgage money towards another investment every month.

[LauraG1]

OK, if you're a geek, I'm in real trouble. I'm imaging you have all kinds of things in excel files, no?

[sfpierce]

exactly the question I was going to ask...

depends on age...

[zmaditto]

Definitely pay off the mortgage. I can't tell you what peace of mind it gives you. We chose to go with a mortgage again when we moved (didn't want to throw most of our liquid assets into the new house)...I cannot wait to pay off this monster!

You'd be amazed at how much more purchasing power you have after your mortgage is paid off. Until you're left with that extra money every single month for a couple of years, you just can't fully grasp it. It adds up very quickly. Given that you don't just start spending frivolously, you can invest, buy more property, travel, remodel, pay for private school, do whatever you want. It's sooo liberating.

FYI...if you buy a second home or an RV on loan, you can deduct that interest from your taxes.

GL with your decision. Nice position to be in.

[Dawnn]

I've converted most of my files to mint.com to track and graph activities, investments, spend categories, etc. I do write a summary on a piece of paper to track my progress weekly and do some cash flow projections but most of my stuff is done on mint.com. If you don't have it you should try it - it's awesome and tracks and categorizes your spending. We use our debit card for everything (no debt) on daily spend purchases, groceries, gas, etc. so that it can systemically capture and categorize all spend.

[fatcat]

similar here, we had like the world's lowest mortgage until we moved. It still kills me to write the mortgage check every month now. I think it'll weigh heavily on my mind until the economy is back in boom times.

[jackubrich]

Investment is the best option for you. You need to invest and get profit from it. If you have any type of debt then you need to clear it before starting any work and you can calculate it by using heloc interest calculator. After clearing it just invest in best opportunity