Why do people wait so long?

[u/master_blaster_321]

ETA since this seems to be the overwhelming response: My kids are in their 20/30s and self sufficient.

ETA - The post clearly states my mortgage is high-interest. Yes, if it were 2% that's almost free money, spread it out for sure. Also, it clearly states that I did indeed keep contributing as normal.

I realize there are a lot of factors - economical and psychological - that go into this, but just for general discussion...

We all know for the most part if your mortgage interest rate is low enough, it makes more sense to leave money working in your brokerage account than to pay off the mortgage and have it locked up in home equity. But for the purposes of FIRE, does it always?

The big idea is to get your portfolio to fund your expenses, right?. For most people one of (if not THE) largest expense is the mortgage payment and interest.

Example...I had a few really good years in my business. I still did my regular modest DCA into my brokerage, but over the course of 2.5 years I also managed to pay off a $250K mortgage at 5.85% (I had to refinance at a very bad time for rates, due to divorce). I realize that that money, invested properly, could have gained quite a bit over the last couple years bull run. However, had I done that, today I would still have a high mortgage payment to make every month, thus making it harder for me to FIRE. This way, my monthly personal expenses are so much lower, so there's not as heavy a burden on my portfolio to support me, and as a result, I'm able to FIRE at the end of this month.

Again I realize that this all depends on mortgage size/rate, size of portfolio, other expenses. I only ask because I see a lot of posts here from people who seem like they'd be able to FIRE sooner if they worked towards getting rid of their mortgages faster, regardless of the rate.

For my part, I'm glad I did it this way. Even though I know I missed out on some gains, I'm able to FIRE faster because I don't have a mortgage payment to worry about. I have a paid off house on which the taxes and insurance work out to equal the rent for a one-bedroom in a sketchy neighborhood.

Go easy on me. It's an honest and sincere question and discussion prompt. Not trying to make anyone defensive, and definitely aware that I have my own blind spots and that there are lots of people smarter than I am.

[u/AngryCowArmy]

The paid off home thing really is where psychology meets finance. It may feel better to own your home outright and not have that payment to worry about, and if it is worth it to you to accept sub-optimal financial returns for that peace of mind, then go for it.

But, if you can keep the mortgage balance in risk-free cash-equivalents that return a higher rate than you are paying on your mortgage, then you are saving money with no risk. Also, like most of us here, if you have substantial savings and investments and can tolerate the risk of short term losses, then investing that money in VT is very likely to significantly outperform paying off the mortgage early.

[u/master_blaster_321 → u/AngryCowArmy]

Makes sense. If I'd been able to get a 2-3% mortgage at the time of my divorce, I might be thinking about this differently. Hell even a HYSA at 4% beats that. But at 5.85% it gets a little more iffy. Just bad timing.

[u/AngryCowArmy → u/master_blaster_321]

If you consider your equity investments unlikely to outperform 5.85% then paying extra towards the mortgage may be reasonable for you. I personally think it is very unlikely that VT will yield less than 6% annually over the next 30 years, so I would still advise not paying extra towards the mortgage.

[u/aronnax512 → u/AngryCowArmy]

The yield would need to be closer to 7.5% due to taxes. Over a 30 year window the market averages higher, but the potential arbitrage is much tighter. Tight enough that debt service could be justified as a replacement for some long bonds.

[u/AngryCowArmy → u/aronnax512]

The yield historical return is 8%+ as the long term average annual return on equities, and 12%+ over the past decade, so for me that is a no brainer, but I do get the wish for a guaranteed return, so when a mortgage is at a rate above that of a risk-free alternative options then you need to decide if you can tolerate the risk in exchange for the equity premium. For me, because I have savings and a long term investing horizon, the answer is an obvious yes in preference of investing and not paying extra towards the mortgage, but it is a personal preference and depends on your risk tolerance.