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Who here makes extra payments on his mortgage? Or has a paid-off house?
I make extra payments, and looking through my amortization table just now I was incensed to learn that a full 75% of all of the reduction in our loan balance is solely due to our extra principal payments! What in the scam? (Edit: I guess I have to clarify that I am not retarded and do not believe that a 30-year mortgage is literally swindling me through nefarious trickery.)
Further, to say nothing of the compounded benefits, we have a present-day benefit in the form of $2,000 of saved interest, and we're still very near the beginning of our loan term! It's obvious when placed next to an amortization schedule that assumes we only make necessary payments.
(2/1/2026 Loan Balance)minimum payments - (2/1/2026 Loan Balance)extra principal - (sum of extra principal paid) = ~$2,000
I do, or at least I add an extra $1k of principle reduction on top of every standard monthly payment.
It's mostly a bad decision. I've got an extremely low mortgage rate, locked in when rates were briefly next to nothing, and I can now get a higher return even in an FDIC insured money market account.
My rationalizations, in increasing order of importance:
It may be preventing me from making dumber investment decisions. I've also got a lot in a money market account, and index funds, and tech-centric index funds, and Nvidia in particular, and I fear if I had more money sloshing around free then I'd be tempted to get even more risk-tolerant, possibly at just the wrong time, begging to get hit by a market "correction".
I've got a swath of college tuitions to pay, starting in the near future, and a lot of financial aid applications consider home equity to be inviolate in a way no other investment I could make would be.
It's probably preventing me from making dumber spending decisions - keeping my checking account balance low enough that I have to double-check it before paying the credit card bill seems to have a strong psychological effect on me when I'm tempted to spend frivolously.
It was my wife's idea, and she leaves literally every other investment decision to me. I'd feel like a jerk telling her "we shouldn't pay off our house faster with a fraction of our savings" when she lets me get away with ideas like "we should gamble a bigger fraction of our savings on these guys trying to make god out of silicon".
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