Should I Pay Off My Home Early?
Paying off your home early is a great goal to have, but sometimes people chase this a bit too early in their financial journey. For those familiar with Dave Ramsey’s baby steps, it is baby step number 6 so there are a number of steps that really should be finished before you start paying extra on your mortgage. For example, you really want to have your other debts knocked out first, eliminating payments on items like credit cards and car loans. You also want to make sure that you have a solid emergency fund built up to protect you from life’s unexpected expenses before you start chipping away at your mortgage.
Paying off a mortgage is a key part of a good financial plan, but this doesn’t become crucial until you are approaching retirement. A large percentage of retirees still have mortgages, so knocking the mortgage out is a great goal before retirement. That is a time when your income will be lower and you really want your expenses to be tamped down. Eliminating that mortgage payment makes your expenses much more manageable. Keep in mind, though, that this is a decision that should typically fall after a number of other steps, so be sure you’re at the right stage in your plan, and then do all that you can to go ahead and knock out that mortgage.
John Travis is a Financial Advisor at Richard Young Associates and is a Dave Ramsey SmartVestor Pro. Want to learn more about him and our other advisors? Find out more here.