Just reread this thread, as I was wondering about a different take than the OP. Rather than considering your mortgage prepayment as a cash contribution in the permanent portfolio, or running a 33/33/33, what about prepaying down to the lower rebalancing band of the cash component and rebuilding from there with new contributions, interest and dividends?
I also hate debt with a white hot passion, and I am getting within spitting distance of owning my home outright, about 4 years to go assuming no additional prepayments, although would like to get it done in 2.
One downside I see to this is at present, I am buying the lagging asset, on sale, and I would for a while make that cash.
What say you?
Prepaying mortgage for cash component?
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Re: Prepaying mortgage for cash component?
Pay it off.6 Iron wrote: I also hate debt with a white hot passion, and I am getting within spitting distance of owning my home outright, about 4 years to go assuming no additional prepayments, although would like to get it done in 2.
One downside I see to this is at present, I am buying the lagging asset, on sale, and I would for a while make that cash.
What say you?
It will free up a nice chunk of cash every month and I am certain it will increase your peace of mind.
Paying off your home is, IMHO, a true milestone and cause for celebration.
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Re: Prepaying mortgage for cash component?
What is the interest rate on the loan? If it is near or below 30 year treasury yields, then I would argue paying off the loan doesn't make economic sense. If it is significantly higher than that, then paying it off can be a moneymaker.6 Iron wrote:Just reread this thread, as I was wondering about a different take than the OP. Rather than considering your mortgage prepayment as a cash contribution in the permanent portfolio, or running a 33/33/33, what about prepaying down to the lower rebalancing band of the cash component and rebuilding from there with new contributions, interest and dividends?
I also hate debt with a white hot passion, and I am getting within spitting distance of owning my home outright, about 4 years to go assuming no additional prepayments, although would like to get it done in 2.
The emotional aspects of course are entirely personal - you have to weigh if the happiness from getting rid of the loan would outweigh the financial cost to paying it off early (assuming it does have a good interest rate).