17 January 2011

There WILL Be A Ceremony.

I MAY have just done something exceedingly stupid. Only time will tell.

The balance on our mortgage was $23,319.45. Calculator at hand, I multiplied my mortgage payment by the number of payments remaining and was somewhat shocked at the figure:
$62,400 and a little change.
So this month my check for that loan read $23,319.45. I'm sure there will be adjustments to come... escrow issues, etc., but those should be minor.
Our house no longer belongs to us, the bank, and taxing authorities.
It belongs TOTALLY to us, AND the taxing authorities.

Over the next months I'll get the answer to my question...
Would I have been better served instead to have taken that money to my silver merchant? Silver and Gold are both down a little as I write this, so it's actually a good buying opportunity. And if the bottom does fall out of the economy, the $$ I'd have used to pay the remaining loan would have been of lesser value, maybe even near-worthless.
But it's one less responsibility to worry about, and I now have a few extra disposable dollars to use monthly to buy silver, ammo, water purifiers, or whatever.

So whatd'ya think?
Smart move, or dumb,dumb,dumb?


Capt. Schmoe said...

Depending on what it did to your cash flow, SMART, SMART, SMART!!

Precious metals, like any other commodity, will rise and fall. Real estate will as well, but if you do sell in a down market, you will likely be buying in a down market.

Paying off your house not only reduces total cost of the house, but it buys you flexibility if you have to make a move.

If you are so inclined, use the surplus cash each month to buy small (easily trade-able)amounts of precious metals and build up a cash/metal reserve. By buying a set amount of metal each month, the dollar cost averaging principle applies and you will be insulated against minor fluctuations in prices.

If the bottom drops out of metal,well, that's a risk you take.

Strong work on the mortgage though, don't give the man any more cash than you have to.

BTW don't listen to me. If I really knew what the hell I was talking about, I would be on an island somewhere basking in the sun and drinking a sissy cocktail rather than offering uneducated opinions to you.

Thanks for the post.

The Old Man said...

Paid mine years ago due to the same calculations you ran through. Both car notes are paid off - only living expenses left.
Feels good. If more folks did that, the bankers might be forced into working for a living....
Did I mention no credit card debt?

Hell yes, as I see it, you done good, brotha.

Old NFO said...

Personally, I think that was a VERY smart move... You are no longer trapped by the vagaries of the loan provider, and your money is now truly your own. The 'only' downside I see is the loss of the tax deduction...

cary said...

There is nothing stupid about NOT having a house payment.

Stupid is using a credit card to pay for ANYTHING.

Stupid is borrowing money to buy ANYTHING.

Smart is being debt-free.

According to Dave Ramsey, you're weird - and that's a GOOD thing!

No house payment = less needed income. Next step - how do your reserves and your retirement accounts look?

Didn't you want to look at retiring sooner than later, anyway?

jinksto said...

While most of America is burning mortgages without paying them off you are paying $23k and change to do it. God bless you.

Smart move? I dunno, it depends on how you look at it. It's yours, no one will come and take it away if you miss a note. There's a lot of comfort in that. I don't worry about getting laid off in this economy. I worry about not being able to make my mortgage note if that happens.

I'm about to pay off about $19k in other debts myself. Mrs Jinksto and I were talking about it earlier and discovered that we are paying about $900.00/month to carry that much debt. I'm going to pay it off and worry about what to do with the extra $450 every two weeks for a while. Maybe buy gold. :) Short term comfort vs long term security. Either way your home is yours and getting that house note back every month... that's gotta be worth a lot.

Again, congratulations!

jinksto said...

That's the whole trick right there really. Look at the remaining term of the loan and realize that over that period you just paid yourself $39,080.55 based on the numbers that you used..

It's one thing (and smart) for you to plan for SHTF but it's just as important to cover yourself if it doesn't and putting nearly 40k back into your pocket over a few years... that's smart business.

the golden horse said...

It seems that anytime you are holding a deed or a title to a car in your hot little hands, is a good thing. Nothing like thumbing your nose to the big boys. Congrats.

On a Wing and a Whim said...

Greybeard, you've saved almost fourty thousand you don't have to come up with over the years to come. You've removed a hold another man had over you by his hand on your house (granted, it was by the faceless remove of a corporation, but it still rings true.) You've lessened the amount by which you are beholden to your job, for you are no longer tied to needing the amount of the mortgage payment every month.

You have also, should you ever decide to move, given yourself a wide amount of freedom in the way to sell your house - you can now work out terms that may not include a conventional mortgage, but might include swapping land you desire more, or being paid monthly as though you were the bank. Whatever you decide, you are free to decide it without begging the bank's permission and blessing.

True, you are now out twenty-three thousand dollars that might have been used elsewhere. There's always an opportunity cost, as each decision (including the decision not to do anything) limits your possibilities and might-have-beens. Did you have any specific purpose for that money? Is there something you sincerely regret not doing with it, that would have made you feel even better than this? That is a judgment for you and your wife to make. Not knowing any alternatives, from here it seems quite a smart and liberating move.


Timothy Frazier said...

$39,080.55 is nothing to sneeze at and it will take an awful lot of complicated math and a bit of time travel to boot to convince me that $39,080.55 today would be worth less than zero in six months, or even six years from now.

You did good, Broham!

Keep the tax man at bay and savor the victory. And hope nobody comes along with a bucket full of that imminent domain crap to take it all away for a sliver of what you paid.

I'm envious...won't be where you are for at least ten more years.

And here I was worried you'd run out of money 'cause you bought a garage full of motorbikes!

Brighid said...

From where I set (debt free) it's a smart move. Congrats to you & your wife.

Rita said...

A few years back I used to think differently because the taxes we were paying with practically no mortgage was outrageous.

When we sold our first property in Florida in 2009, the cash flow made sense to pay off our home mortgage vs our second property in Florida.

Even paying way too much in taxes today, I believe you made the right choice. If the property values climb back up in Florida, I would almost relish selling our dream property to be absolutely debt free.

My first choice would be to sell our Indiana property and move to oceans and no winter, but I'd have to convince everyone in my family to move along with us.

Smart choice.

Bloviating Zeppelin said...

That is SO odd, sir. I am in precisely that same position. I could pay off my house handily and am thinking of doing so -- or investing in rare elements.

I have decided to pay off my house so that -- no matter WHAT -- I absolutely OWN my house and NO ONE can TAKE it from me. And I will fight for it. My house is, literally, my Stand.

That's my take.