Do you folks have any insight about how many people laid off in their 50s still have a mortgage? I see about 50/50 in the group I work in but curious how people in their 50s handle layoffs when they have a mortgage and no income.
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To pay off or not pay off a mortgage is a personal decision and an emotional one.
If you have a low interest rate (<4%)
It makes sense to invest rather than pay off the mortgage.
If you park it in cash, you are still getting over 4% interest. If you invest half in a money market fund and half in a conservative portfolio (60/40 stock index to bond index) your returns could be higher.
Rushing to pay off your mortgage might not be the best strategy.
If you have high interest rate loan that outstrips your investing returns then pay it off early. It’s smart investing.
Just remember this. Cash is king. Having a pile of liquid assets is always better than an illiquid asset like a house. You don’t want to ever “have” to sell your house.
That being said, I invested and ALSO I paid off 2 houses by living frugally and investing in the stock market (just index funds) and just consistently paying more
A $400,000 30 year loan will be paid off in 14 years if you pay an extra $500 per month.
I just pretended my mortgage was $2000 instead of $1500
Never missed it.
Fools are everywhere… keep your mortgage people and if you need any help my company ’mortgage for fools’ can help you out
What a bunch of foolish advice, keep a mortgage for as long as possible, your credit rating depends on this
Are you even knowledgeable in this area to even post your comment? Paid mortgage over 15 years ago with no car payment for 20 years. Both of our credit rating is still over 820
your credit rating depends on this
What's a "credit rating"? :-)
Seriously, why would you need credit?
I am 53 and my spouse is 59. No mortgage and no debt. Saved for kids college and both kids came out of college without any loans . We tell kids to save for the future and don’t do unnecessary spending. Luckily they are following so far.
What a bunch of foolish advice, keep a mortgage for as long as possible, your credit rating depends on this
You’ll see tons of advice to not pay off your mortgage. The idea is you could invest that money elsewhere and make more than the interest you would pay. I didn’t follow that advice. I had a 30 year loan and paid it off in 15. If you lose your job, you could pay the minimum. But I was fortunate to be able to pay extra over the duration. It feels good to be debt free. Young ‘uns, I’d recommend you do the same.
From the minute I got my mortgage, my goal was to pay it off early. I always paid it like a 15 year and paid it off 4 years early as a 15. I know some benefit from taxes on interest, but I sleep better at night knowing my home is paid off - especially since property tax doesn't cease...
Like others have said: live below your means. Focus on necessities, not luxuries. I have a 17-year-old well maintained German car...driving the wheels off it. I have an iPhone 12 - not getting a new one until it's not supported or the battery goes. I have zero credit card debt. If I don't have the cash, I probably can't afford it (yes, there are emergency situations but buying a $3k purse is not an emergency). My advice to younger people: Budget. Stick to the budget. Save like your life depends on it, because it does.
I don't understand the "ask your spouse" if you need money for the mortgage, assuming this is for a house that you both live in. Maybe you should rethink your marital agreement. In today's tech world, you need to expect that you will be laid off at some point. I was laid off at 50, yes, we still had a mortgage. It took me 1 year to find employment again. And then I was laid off again 10 years later. Even though both of us always worked, our budget (mortgage) was built for 1 income, so if one person got laid off, it wasn't too bad. We always lived beneath our means and we still paid for our 2 kids college degrees, cars are paid for, no credit card debt, that gave us a nice nest egg. We were not super high income earners either. We took vacations, but not super expensive vacations. To the younger people, I would advise them not to spend every cent you make, don't waste money, live beneath your means and put some money away. Plan for the worst.
I'm about to retire, and I have a number of substantial mortgages. But I have a LOT of assets (mainly income producing property) and the mortgages are very tax advantageous. I also live in a place that has very, very low interest rates. So, I'm comfortable with them.
But the advice here is all good - live well within your means. I love German car and I have 3 of them, but they are 22, 20 and 8 years old, but I see many people in their 20's buying top-line BMW M3's. Mad.
I was planning on it, but a serious family medical issue changed all that. Its easy to second guess people when you don’t know their personal situation.
40 ish, house is mine. Perhaps not a big one by IT income standards. But it suffices and feels liberating not to care that much about losing the house.
In hindsight the better gamble I took , with how Cisco turned out.
Only someone who doesn’t know how risk works intentionally has a mortgage on their home.
Only someone who doesn’t know how money works or know about tax benefits does not have a mortgage.
I am 57 with a paid off house and no other debt. We haven’t had a mortgage on our property for 20 years. We take the equity and buy the next primary residence with cash. We have one home.
I was laid off and decided to retire. My spouse retired 8 years ago. I can’t imagine having to find a job in this market.
My best advice to everyone out there is to save and invest like your life depends on it while you are young. You don’t know what the future will bring. You may want / need to work until 70, but you will find it may not be up to you and is an uphill battle to find employment and even harder to replace your income if you are let go at 50+.
Have a scarcity mindset. Cook meals at home, buy clothes at the thrift store, skip extravagant vacations, do at-home hair cuts for the entire family, buy used cars and keep them 20 years, shop at discount grocery stores like Lidl and Aldi, paint your own walls, be your own handyman, mow your own lawn, etc, etc. Do this while making $250k+ TC. It will not last forever.
I believe OP is hinting at a problem that many are facing. Even those with the best plans can have their finances take a nosedive because of things like divorce or healthcare costs.
I'm 50+ and still have a mortgage, but not much is left on it. You have to plan ahead knowing that your career is in its twilight, and buying a big expensive house or the big toys is not the way to go. Thankfully, I relocated to a lower cost-of-living area to live out the rest of my career so everything I own is paid off. Have money put away so if you are laid off, you can survive and keep up with your bills. Once everything is paid off, ask yourself...how much money do I really need? Do I need to stay in this high pressure job? Strategic planning and common sense go a long way...
In my group, I think there is even a worse problem; 50+ year old employees who are still renting. At least with a mortgage you have some leverage and some equity to exploit. I work with a number of people over 45 who are renting and are likely doomed to forever-rent. What will these people do at age 60? No tech company will want them around. If you are under 40 and still renting, do whatever you have to in order to escape this doom loop; by time you are 55 it is too late.
i downvoted you for suggesting to ask kids or spouse to help pay bills if you can't find a job.
but i do agree with you about americans not being able to live within their means.
we had low interest rates for a long time, up until 2016 and then they fell again.
low interest rates bring cheap money, corporations and institutions begin to spend spend spend and so do consumers. borrowing at low interest rates because hey it's only 1% interest, who cares?
americans are enticed to buy the latest and greatest. peer pressure. wanting to be accepted, to fit in with their peers. so it's a buy buy buy consume consume society. iphone 16? you only use your phone for calls, texts, and the occasional app or website? but everyone else has an iphone 16 and you still have your old iphone 12, you must upgrade to blend in. everyone buying fancy teslas, bmw's, and mercedes? you must upgrade from your honda or toyota to blend in.
the last recession taught people to enjoy living frugal for a short time. then the consumer spending drums began to beat once again and everyone had to play the game. too many americans drowning in debt. just like analysts speculate on the stock market, consumers speculate about their spending. who cares if i cannot afford this $1000 item, i can make payments. so what if it's more money, my job will "probably" give me a raise next year. who cares if this house cost me $200K+ more than i intended to spend and i had to take out a high interest loan, i'll refinance next year because interest rates will "probably" be under 3% then.
more americans should learn that it's ok if you don't have the latest and greatest. it's a lot easier to survive in america when you only have manageable debt, or a emergency rainy day fund for those unexpected circumstances that never fail turn up in our lives.
If you can't find a job soon and have bills piling up, you can ask your spouse or adult children to help you pay the bills. If that option is not available, then sell your house and move into a smaller place. Besides, if you find a job in another state, and take the job, you would have to sell the house anyway.
Recession is coming to USA soon. Most tech jobs are going to India, Vietnam, etc. The problem is American's simply don't know how to live within their means and start saving money when they are young. They have no self control on materialistic goods. Just heard today that Americans have $17.8 Trillion in debt (mortgage, auto loan, student loan, credit card debt, personal loans) and these are not even the "phantom debt" (like buy now and pay later) which no one knows the actual amount but perhaps over $75 Billion going to $700 Billion by 2028.
Please watch on Bloomberg: " Is the American Consumer Tapped Out? " and " How Central Banks Won the Battle But Lost the War "
Mortgages are a tool of The Matrix. Don't be duped.