I’ve done something terrible. Please remove my WIS badge.

[lmcgbaj]

I’ve sold quite a few watches from my collection lately with the intention to buy a new piece.

I recently got my mortgage statement and I am very close to paying it all off.

So I dumped all the cash towards the mortgage and saved almost 2 years’ worth of payments.

I am 2 years away from being done.

I know this is definitely not the WIS thing to do but I feel great. Really great.

I still have a few pieces left that I enjoy wearing plus being mortgage free will eventually allow me to buy more pieces for the collection.

Sorry for the crazy talk.

I'm not suggesting anyone does such an irrational thing but just sharing my madness.

[wantonebad]

We may all be watch idiot savants here, but we're grownups too! good on ya for making the sound financial move!!!

[The Joker]

[Wesley Crusher]

Originally Posted by The Joker

[GerardoG]

Originally Posted by The Joker

[Foneguy]

Originally Posted by The Joker

[Watchvirgin]

Amazing feeling!! Congrats on a great decision.

[rle737ng]

As unsatisfying as that decision was, it was the right thing to do. Just think, now you can funnel ALL those monthly mortgage payments into your next Rolex!

[locutus49]

We paid off ours years ago, when all the financial advisors on TV and the radio said it was a bad move as your house is "dead equity." But we ran the numbers and it IS a smart move, and is a huge psychological weight off of you. You will feel free.

The only negative is you get the twice a year real estate tax bill sent to your house, instead of it being buried in the mortgage payment

[vitalsignsrn]

Good for you! :-)

[cop414]

Excellent decision, you have your priorities straight. Kudos to you!

[T. Ferguson]

Most of us got ourselves in the position to be able to afford niceties like a Rolex or three by being fiscally and financially prudent. I'm not an attorney but I don't expect an indictment to be handed down in this case.

Good for you!

[dysondiver]

wise move ,,, better than rolex gold.

[Kingair]

Originally Posted by dysondiver

wise move ,,, better than rolex gold.

X 2

But Rolex gold is nice . . . .

[Eklipz]

You did the smart thing

[themast]

Well, I guess you had a very short mortgage.

If it was a long one (>10-15 years) you had already paid all the interests, so I think at this point it did not really make a big difference.

Anyway, I understand you just wanted to get off the hook...

[77T]

The only time I advise people to keep the mortgage is when their interest rate is half the % rate that they can earn in an alternative investment of the cash.

The after-tax rate of return can be as high as 20% if they consider the lost tax advantages of the mortgage payments + the gain on the investment.

But when a mortgage approaches it's final 4-5 years, the inversion makes payoff a better choice. Good on ya for doing the smart thing

[themast]

Originally Posted by 77T

The only time I advise people to keep the mortgage is when their interest rate is half the % rate that they can earn in an alternative investment of the cash.

The after-tax rate of return can be as high as 20% if they consider the lost tax advantages of the mortgage payments + the gain on the investment.

But when a mortgage approaches it's final 4-5 years, the inversion makes payoff a better choice. Good on ya for doing the smart thing

I would like to understand this a bit more.

My reasoning is: once the mortgage approaches 4-5 years at that point it makes sense to keep paying the mortgage (which has very little interest) and perhaps invest the money somewhere else rather than payoff the mortgage.

I think one has to consider the actual interest left to be paid rather than the mortgage rate.

[T. Ferguson]

Originally Posted by themast

I would like to understand this a bit more.

My reasoning is: once the mortgage approaches 4-5 years at that point it makes sense to keep paying the mortgage (which has very little interest) and perhaps invest the money somewhere else rather than payoff the mortgage.

I think one has to consider the actual interest left to be paid rather than the mortgage rate.

How can you ignore the interest rate and at the same time say invest the money elsewhere?

I understand what you are saying though, dollar-wise it will not cost a lot to keep making the payments. And near the end of a mortgage, the tax advantages are probably not that significant seeing as only the interest portion of payments are deductible. Still, even at the end of a mortgage you are still paying an interest rate on the outstanding balance. The interest is small because the loan is small. So if you have the idea why not just keep the payments since the interest is so small, then what's the big benefit in investing that money elsewhere - that won't amount to much either.

If immediate liquidity is not important (and it doesn't appear to be to the OP since the funds were being saved to buy a Rolex), then there are cash flow advantages from getting out from under the payments sooner. Not to mention sleeping better.

[themast]

Originally Posted by T. Ferguson

How can you ignore the interest rate and at the same time say invest the money elsewhere?

I understand what you are saying though, dollar-wise it will not cost a lot to keep making the payments. And near the end of a mortgage, the tax advantages are probably not that significant seeing as only the interest portion of payments are deductible. Still, even at the end of a mortgage you are still paying an interest rate on the outstanding balance. The interest is small because the loan is small. So if you have the idea why not just keep the payments since the interest is so small, then what's the big benefit in investing that money elsewhere - that won't amount to much either.

If immediate liquidity is not important (and it doesn't appear to be to the OP since the funds were being saved to buy a Rolex), then there are cash flow advantages from getting out from under the payments sooner. Not to mention sleeping better.

The way I see it it does not matter what the original interest rate was ( I assuming fix rate). All it matters is how much more interest one has to pay.
If that is less than alternative investments than it makes more sense to keep the mortgage and toward the end that is likely the case.

[srvrf]

Congrats! We've kept our mortgage rather than totally pay it off because the interest is so low (2.6% @ 15 years from an initial 6.25% at 30 years) and it allows us to keep some of our assets more liquid. But maybe you can start putting that payment amount towards your watch fund!

[lmcgbaj]

Originally Posted by wantonebad

We may all be watch idiot savants here, but we're grownups too! good on ya for making the sound financial move!!!

Very true. Thanks.

Originally Posted by The Joker

Maybe I deserve that. ;)

Originally Posted by Watchvirgin

Amazing feeling!! Congrats on a great decision.

It feels great. Thanks.

Originally Posted by rle737ng

As unsatisfying as that decision was, it was the right thing to do. Just think, now you can funnel ALL those monthly mortgage payments into your next Rolex!

That is true. Smart thinking. ;)

Originally Posted by locutus49

We paid off ours years ago, when all the financial advisors on TV and the radio said it was a bad move as your house is "dead equity." But we ran the numbers and it IS a smart move, and is a huge psychological weight off of you. You will feel free.



The only negative is you get the twice a year real estate tax bill sent to your house, instead of it being buried in the mortgage payment

I never had the municipal taxes part of the payment so I'm used to it. I still get a few of those from different properties.

Originally Posted by vitalsignsrn

Good for you! :-)

Thank you :)

Originally Posted by cop414

Excellent decision, you have your priorities straight. Kudos to you!

Thank you.

Originally Posted by T. Ferguson

Most of us got ourselves in the position to be able to afford niceties like a Rolex or three by being fiscally and financially prudent. I'm not an attorney but I don't expect an indictment to be handed down in this case.

Good for you!

Thank you sir.

Originally Posted by dysondiver

wise move ,,, better than rolex gold.

A smurf would be nice though. ;)

Originally Posted by Eklipz

You did the smart thing

Thanks.

Originally Posted by themast

Well, I guess you had a very short mortgage.

If it was a long one (>10-15 years) you had already paid all the interests, so I think at this point it did not really make a big difference.

Anyway, I understand you just wanted to get off the hook...

Like most of us, I don't like having debt so I was doubling payments and doing the extra 10% every year. The initial amount was large but now 7 years later it is small. Two AC Pateks worth. ;)

Originally Posted by 77T

The only time I advise people to keep the mortgage is when their interest rate is half the % rate that they can earn in an alternative investment of the cash.

The after-tax rate of return can be as high as 20% if they consider the lost tax advantages of the mortgage payments + the gain on the investment.

But when a mortgage approaches it's final 4-5 years, the inversion makes payoff a better choice. Good on ya for doing the smart thing

In Canada, we cannot deduct the mortgage interest on our primary property so there is no advantage to having a mortgage. We have a few investment properties and for those the interest is tax deductible. For those I am not in a rush to pay them off. I can deduct the interest from the revenue.

Originally Posted by srvrf

Congrats! We've kept our mortgage rather than totally pay it off because the interest is so low (2.6% @ 15 years from an initial 6.25% at 30 years) and it allows us to keep some of our assets more liquid. But maybe you can start putting that payment amount towards your watch fund!

I agree the interest very low. I just don't want to have the payments anymore and since I was close I figured I'll speed it up. ;)

[JohnBaker3]

Originally Posted by lmcgbaj

I know this is definitely not the WIS thing to do but I feel great. Really great.

You think you feel good now, wait till you pay it off !!

I was a "debt slave" for over 40 years; I figured out that I could never retire until all my debt was paid off....talk about motivation !!

You are on the right road sir; enjoying our watches, with no debt, is icing on the cake!

[lmcgbaj]

Originally Posted by JohnBaker3

You think you feel good now, wait till you pay it off !!



I was a "debt slave" for over 40 years; I figured out that I could never retire until all my debt was paid off....talk about motivation !!



You are on the right road sir; enjoying our watches, with no debt, is icing on the cake!

Very true. Thanks. :)

[GradyPhilpott]

If at all possible, it is my opinion that it is better to be debt free.

I must admit though that I don't know a damn thing about money.

[pacific17]

Congrats! And good decision!

[GB-man]

Good on you for making the right choice. Doesn't matter what the opportunity cost of capital was in this case, as OP was going to buy luxury goods with the funds.

You will be in a position to comfortably buy an even better watch when it's all said and done!

[lmcgbaj]

Originally Posted by GB-man

Good on you for making the right choice. Doesn't matter what the opportunity cost of capital was in this case, as OP was going to buy luxury goods with the funds.

You will be in a position to comfortably buy an even better watch when it's all said and done!

Thanks. I hope so. :)

[ELITEVIDEOGAMES]

That's the best move! I didn't even allow myself to start collecting until I was completely debt free. Once you get there the real fun starts! Best of luck to a fast payoff

[BomB#Frog]

After your mortgage is paid off think of all the extra $$$ you'll have to spend on watches.