Paying Down a Mortgage Early for Mathematical Reasons

This article does not provide any investment advice, but it shares our story and why we thought paying down the mortgage was the right decision behaviorally and mathematically.

We were neither investing nor paying down the mortgage early in our case. We were spending the money elsewhere. I believe this is the reality for most people.

First, A Story

The Mathematical Reason for Paying Down a Mortgage

The former rule of thumb was to invest your age into these lower-risk assets.

So, for example, if you were 30-years-old, you’d want to be 70% invested in stocks and 30% in bonds or other lower-risk assets.

Where Besides Stocks Do You Plan to Invest?

If you leave that money in stocks for ten years or more, you’ll likely have more money than by paying down a mortgage.

Why Paying Down the Mortgage Early Made Sense for Us

Being old enough to see that unfold, I never want to be in that situation.

Of course, paying down a low-interest rate mortgage may seem restricting at first. Still, a strong financial foundation of being completely debt-free allows us to take more considerable risks in other areas.

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