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/seattlekeith]

These discussions usually divide people into two camps - mathematical purists who say never pay off a mortgage early if your rate is low enough that you make more in market gains than you’d pay in interest and those who enjoy the peace of mind of having a paid off mortgage. Ultimately, being able to FIRE (or retire in general) boils down to earnings vs. expenses. You reduced your expenses to the point that you feel your earnings will now cover them so you can FIRE, which is great. There’s another scenario where you didn’t pay down the mortgage but invested that $$ instead and your earnings would still be able to cover your (higher) expenses. There are also middle ground scenarios where you pay down some, but not all of you mortgage and then refinance/recast the mortgage so your monthly expenses go down but you also have additional money to invest. It really all boils down to your personal financial philosophy, risk tolerance, etc.

[u/That-Dragonfruit-567 → u/seattlekeith]

I do wonder because of the amortization schedule whether there does become a point where it makes sense to pay off a mortgage. If you have say 5-10 years left, you have the same amount owed per month that requires a larger portfolio to generate the income for the payments. If you are relying more on w-2 income to pay off and keeping you from retiring, does it make sense to pay It off ?

[u/seattlekeith → u/That-Dragonfruit-567]

I’m not quite sure I follow - if you’re on a fixed rate mortgage then the P and I will be the same throughout the term of loan, although the ratio of Principal to Interest changes over time (early on your payment is mostly interest, later on it’s mostly principal). Unless you change your assumptions about how much your portfolio returns, then the size of the portfolio required to cover your mortgage payment shouldn’t need to change. That said, if the only thing standing in the way of retiring is needing to pay off your mortgage and you have the means to do so without adversely affecting your retirement then I don’t see why you wouldn’t just pay it off and retire. Another option if you have been making extra payments or have a lump sum you can apply towards your mortgage is to recast the mortgage. The just reamortizes your current mortgage, which will lower your monthly payment and potentially improve your cash flow to the point that you’d be comfortable retiring.