Paying Down a Mortgage Early for Mathematical Reasons

There are few topics more hotly debated in personal finance than the age-old mortgage pay-down discussion. One side argues that you should never make extra payments on a mortgage.

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Instead, those additional funds should be invested in something with a higher return on investment. The other side argues there are behavioral benefits to paying extra on a mortgage.

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First, A Story

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Unfortunately, not everyone (myself included) has the financial discipline of the personal finance community. Logic does not always prevail. Often, life happens. And life is expensive.

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In the past, many would have invested their money into bonds, Treasury bills, or certificates of deposit.

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[{"selector":"#anim-e7b867c5-8d82-4f8c-b3a2-dcc0a4350b7d","keyframes":{"opacity":[0,1]},"delay":200,"duration":1000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-769379e9-cd28-410a-9a12-df98821f354d","keyframes":{"transform":["translate3d(0px, -99.64486%, 0)","translate3d(0px, 0px, 0)"]},"delay":200,"duration":1000,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-b0ecff16-6c56-458c-b7dd-ca0b5bd6d617","keyframes":{"opacity":[0,1]},"delay":0,"duration":1200,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-caebc4a5-08cb-460b-85eb-8a15b505800f","keyframes":{"transform":["scale(0.3333333333333333)","scale(1)"]},"delay":0,"duration":1200,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] 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. Learn more

Where Besides Stocks Do You Plan to Invest?

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