2018 was a bit of a tumultuous year for the ol’ Financial Uproar family.
Most importantly, we switched the cat to wet food, and the results were tremendous. She went from barely eating the dry stuff to scarfing down the canned stuff like it was mixed with cocaine. As an added bonus, the cat no longer begs for food around the dinner table. Although that was kind of cute.
Sure, food costs for the cat have SKYROCKETED to $0.50 per day, but I guess that’s the price we’ll have to pay. Lifestyle inflation is a bitch, folks. You heard it here first.
We also both started new jobs this year. My wife is a substitute teacher, just biding her time until she gets hired full-time. Our small community doesn’t hire that many full-time teachers, and the positions available just weren’t a good fit for what she wants to teach. It’ll happen sooner or later, and with it will come a big change to our financial picture. Hello, teacher pension!
(Immediately liquidates RRSP and makes it rain at the club)
Your trusty writer went from working at a grocery store back to writing on the interwebz. But this time around I’m not being terribly ambitious about it, choosing instead to just focus on one writing client and this here website. Aren’t you guys lucky? This is basically my retirement project, in other words.
We also switched investment focus from a deep value perspective to something a little less active. Instead of buying the trashiest companies I can find at the cheapest price available, I’m choosing instead to buy quality companies in good industries at fair prices. That means buying bank, telecom, and pipeline stocks, as well as some others. It hasn’t worked out so well so far, but damn near every stock has gotten crushed. I’m not worried.
And finally, right at the beginning of the year, we paid off our mortgage. Long-term readers might remember we weren’t really in debt all that long, and we made it a priority to pay off the place in record time. We had a mortgage for just over 18 months. Basically we just shoveled all available cash flow towards the loan for a while, choosing to forego investing in favor of paying off the house.
It’s basically a year later now and I have no regrets. Here’s why I think paying off the mortgage was the best financial decision I’ve made in a long time.
What’s peace of mind worth?
One of the things that used to bug me was just how much it cost to live in my paid off house. By the time we factored in taxes ($150ish a month), insurance ($100), utilities ($400), internet ($65), and a small amount of maintenance (say $100), it costs me $800/month just to live in my paid off house.
I could rent a half-decent 2-bedroom apartment in town for about that much, although it wouldn’t come with the same kind of amenities my house boasts.
I used to fantasize about selling my house, taking the $200k in cash and putting that money to work in dividend-paying equities. I’d gain approximately $800 per month in income from this move and rent the two-bedroom apartment. Since my housing costs would stay approximately the same, I’d be putting about $10,000 per year into my pocket.
But I look at things a little differently now. All I have to come up with is $800/month and I have a $200,000 asset that nobody can take away from me. Sure, this asset could go down in value, but it’s still mine, dammit. I’ll still have somewhere to live even if things get really bad.
In short, my motivation has shifted from greed to peace of mind. God, getting old sucks. I wouldn’t recommend it.
(Promptly empties bowels into a Depends)
My wife is also a big contributor to this newfound feeling. She hates debt more than I hate Italics Man, and so we’ve structured things accordingly. Her mental health is important to me, for obvious reasons. So we paid off the mortgage even though it may have ended up more lucrative to keep the loan as long as possible.
And hey, worst case scenario I can always tap into that sweet home equity. This is an underrated aspect of home ownership. Although that kind of goes against the whole debt free thing I’ve been pushing. Staying consistent is hard, guys!
Let’s wrap it up
The more time that passes, the more I’m satisfied with paying off the mortgage early. Like a lot of people, I’ve gained an emotional (NO, NOT SEXUAL YOU FREAKS) attraction to my place. I like that I can appreciate it without having to worry about paying off a corresponding loan.
It might not be the most financially prudent thing to do, but screw it. Not everything needs to be strictly about the dollars and cents.