Weekly Roundup: Paying off our mortgage vs. Saving our money

by Kristina on April 1, 2011 · 0 comments

Happy Friday DINKS! As we all start to receive our tax refunds subsequent to efiling we must ask ourselves should we save our tax refund, or should we use it to pay off debt? This is a major financial question that is always hanging over the heads of investors, homeowners, and financial planners.

Whenever people have a lump sum of cash and are deciding how it fits into their financial plan, or when they have extra money each month and are deciding what to do with it, we always have to ask ourselves…Should we save it, or should we pay off our mortgage?

Making a lump sum payment on our mortgage, or investing the lump sum of money is a question that definitely comes up on a daily basis in the financial services industry.  My individual advice to clients always depends on their personal financial situation.

Adding an annual lump sum payment to our mortgage, doubling up our mortgage payments, and choosing an accelerated bi weekly payment frequency for our mortgage, can definitely help us pay off our mortgage sooner. But what’s the rush? Why are people always in a hurry to pay off their most valuable asset and their biggest debt?

If we use our tax refund to make a lump sum payment on our mortgage then that’s it, the money is gone. Sure, it will help pay off our mortgage quicker; but it won’t be available for us to spend in case of an emergency.

Saving our tax refund is by far the smarter idea, in my opinion.  However, this may not apply to everyone.  I would rather save my tax refund and know that it is safe and sound in my Rainy Day Savings Account.  I would hate my financial self if I have an emergency in three or four months and I had to dip into my other savings.

However, on the other hand if we have a new mortgage the majority of our payments are going towards paying interest.  Therefore, a lump sum payment onto the capital can really help lower our amortization and pay off our mortgage quicker.

Would you rather pay off your mortgage or invest your lump sum? Here are some posts about saving and paying off our mortgage from around the web:

  • Financial Samurai discusses why he is in no hurry to pay off his mortgage in the post “Why I won’t pay off my mortgage until I retire.”
  • Clever Dude boasts about his recent financial accomplishment in the post “We finally paid off our second mortgage 9 years early.”
  • Money Crush shows the progress of paying off her mortgage in the post “Mortgage Payoff Progress and Quarterly Goals Update.”

Like DINKS? Subscribe!

Screen_shot_2017-04-25_at_1.36.57_pm

Subscribe to get the latest DINKS Finance content by email.

Powered by ConvertKit



{ 0 comments… add one now }

Leave a Comment

This blog is kept spam free by WP-SpamFree.

Previous post:

Next post: