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Monday, March 27, 2017

Crawling Out of Debt For Good

Posted by Tim Stobbs on June 15, 2009

I’ve been having a long debate in my head.  Pay off the mortgage and be done with it or invest or do a bit of both.  The debate goes something like this: I could pay off the mortgage easier since interest rates are so low and interest rates are likely to rise in the future are rising so I could save that future debt load.  Or do I invest since interest rates are so low and try to get a better rate of return in the mean time and off set future interest costs.

Since my crystal ball is cracked and foggy I know I can’t know the future on this one.  In reality the debate is rather useless, both are good ideas.  Either way I’m investing for my future which is a good idea.  So once I realized the numbers don’t matter so much about this debate it got easy.  It’s really about what do I feel is the right way to go.

So after a short discussion with my wife where she asked a few questions about either way I found out we are thinking the same way.  We have decided to kill off the mortgage over the next several years.  We will only been doing a bit this year as I still want to finish off my other goals for this year first and then at the start of 2010 we will kick the process into high gear.

Comments

5 Responses to “Crawling Out of Debt For Good”
  1. Guy Davis says:

    Why not do both? See your articles on the Smith Manoeuvre…

  2. Ben says:

    We used to put full 18% into RRSP’s, and the rest to the mortgage.

    Now, it’s 8% into RRSP’s to get the company match, and mortgage with the rest. Bit of a no-brainer situation.

    I’m not entirely sure how I would direct the excess cashflow in the absence of the company match. I suspect I would continue to put away a nominal amount for retirement, even then.

    Like you say, don’t think it matters a lot either way. The probability of higher after-tax returns through investmenting is balanced against guaranteed return on mortgage reduction, and the “security” factor. The security factor has to have some value: less stress = live longer!

  3. Dave says:

    I believe you have made a wise, safe, guaranteed choice for this point in time.

    I know someone who is doing the ‘SM’ and boy they are in trouble now with the losses over the last 6+ months, and no one seems to be expecting the markets to be great performers over the next few years. They are truely in for the long haul now if my understanding of the the SM is correct.

    With rates on the rise in the next year or so, getting that mortgage principal down will save you more money in the future.

  4. chad says:

    100% agree with your choice
    can’t beat the guaranted investment which is your house
    lots of market volitility and who really know s what’s ahead for the markett ” smart people” are even all over the map where this markett is going
    green shoots turning into tumble weeds in a hurry.this markett is a ride that most people are going to get sea sick

  5. Canadian Dream says:

    Guy,

    I might do a SM, but not right away.

    Chad,

    Sea sick. Good choice of words, it does describe things well. Thanks for the support.

    Tim

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