Why We Invest Vs Paying Off the Mortgage

RoadI’ve read more than my fair share of personal finance blog posts during the last three years. I’m sure some of you out there can relate :). One topic that comes up repeatedly is whether it is better to pay off your debts or invest with your extra money.  The answer to this differs from person to person depending on their personality and what motivates them.

I think most people would agree that if you have any high interest debt, say anything above 5-6%, then you should take the guaranteed 5-6% return on investment and pay off the debt.

But when your interest rate is lower, say in the 3-4% range it becomes a less obvious choice.  Mrs. Dragon and I don’t have any non-mortgage debt, and our mortgage is at 3.65%.

Our goals for FI are $600,000 in liquid assets and a paid off house by Feb 2025.

Each of these is a long road, but we’ve decided to prioritize investing over paying off our mortgage and here are all the reasons why (in no particular order).

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Expenses: March 2015

ExpensesExpense report!  Since I’m a total voyeur for finance, these types of details are exactly the kind that I love to read on other people’s blogs.

Don’t get me wrong though, these numbers are primarily written for me and Mrs. Dragon.  Every good FIRE breather knows that to be successful, you have to track your expenses.

You have to track them like Link tracks Zelda.  How else will you know when your Hoard is big enough for you to retire?

We had several one-time expenses that really drove our spending up this month, including closing costs for the house and a trip to Portland, OR, and Tacoma, WA, that I plan on writing a post about soon.

Without further ado, here are the numbers for March (rounded to the nearest dollar):

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We Bought a House

House

Mrs. Dragon and I are officially home owners!  As I mentioned in previous posts, we were in the process of buying a house, and we closed earlier this month.   To be clear, I am not someone who thinks that everyone should own their own home.  In lots of cases, it may make more sense to rent.

However, we knew we were going to purchase a home in our new city (we moved here last summer for jobs).  It was only a matter of when.

Neither of us have ever owned a home before, so we’ve never taken out a mortgage before.  In case you haven’t heard, it’s a huge pain in the ass.  In theory it’s a relatively simple thing.  You want to buy a house, the bank gives you the money, and you use the property as collateral on the loan.

In practice, however, it is a well-oiled machine of cluster-fuckery.  There were all sorts of last minute snags that were totally avoidable.

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