Debt Fast Track

Rebuilding Financial Security: Your Home – Part 2

Why is paying off your mortgage a worthy endeavor?  Because there is simply no financial security that beats owning your home free and clear.  Take a moment and consider what your financial position would be if you had no house payment (or at least a house expense that was reduced to the cost of insurance and real estate taxes.)  How would this impact your ability to save?  If you are committed to having 6 months of emergency expenses saved up, those savings can be substantially reduced if you don’t pay a mortgage payment.  Your ability to survive small and large financial emergencies would be greatly enhanced.  Your ability to invest responsibly would improve by virtue of investing with truly expendable funds.

There are several financial advisors that will tell you it is foolish to pay off your mortgage.  Interest rates are low and the interest is tax deductible.  Therefore, some would assert that you are better off concentrating your efforts on other financial objectives.  However, history has proven time and time again that paying off your home and living responsibly is the key to financial security and peace.  Those who risk their homes along with their investments often lose both in difficult economic circumstances.

For this reason, every debt elimination plan worthy of your attention should have a tangible, consistent mortgage payoff strategy.  I am not recommending that you pay off your mortgage before you pay higher interest debts.  In the right circumstances, I even recommend mortgage debt consolidations, as long as it leads to your overall debt load being paid off quicker.  It is not unusual for me to see debt elimination plans that show the mortgage being paid off in 7-12 years without increasing monthly payments.  At the onset, this may seem like so much voodoo economics.  However, small adjustments in how you attack your debt burden can result in significant long-term benefits.

If you remain unconvinced, spend some time talking to people who have lost their home.  Often you will find that they heeded advice to use their home as leverage towards more risky investments.  Now, the investments are worthless, and their homes are lost.  Alternately, if you own your home outright, and are limiting your more high risk investments to funds that you can truly afford to lose, you are financially secure.  History has shown that risking your home is simply not worth it.