As I mentioned yesterday, our stock-based retirement portfolio is looking a little rough around the edges these days (and I’m sure it’s even worse now than it was yesterday – but I’m not looking). Times like these are when I’m glad that we’re focusing on paying off our mortgage as quickly as possible, in addition to funding our IRAs and our HSA (since both are equities-based, they’re a bit ulcer-inducing at the moment). People who oppose paying down a fixed rate mortgage (ours is at 6%) point out that you can make much better gains in the stock market, especially after you consider the tax-deductibility of mortgage interest. But our mortgage interest is relatively low, and the only other income tax deduction we had last year was charitable contributions (HSA and IRA contributions are deducted separately – we had both of those as well). The end result was that it was better for us to take the standard deduction. So our mortgage interest isn’t really even a tax deduction for us, since we get about the same tax benefit from the standard deduction (this year we might be able to deduct interest, since we’ve been able to give more to various charities. I don’t know the final numbers yet, but it’s going to be very close between the two options, so mortgage interest deduction isn’t really saving my family much money at all).
Since our stock market assets are tanking by the day, I’m happy that we’ve also been putting extra money towards our mortgage and into some basic online savings accounts (while they’re not paying much in interest, at least they’re not losing money). Since we’re still in our "starter house" and planning to stay, we really don’t care what the value of the house is. To us, it has immeasurable value, since it’s a home for our family. We bought a house in a less-expensive neighborhood in a somewhat expensive city, so while our home didn’t appreciate like some during the early part of this decade, it also hasn’t dropped in value the way some bigger homes have. But as I said, the current value of our home isn’t important to us, since we don’t intend to sell. The mortgage payment is well within our means (one of the best things about staying in the first house you buy), and we love living here. What is important to us is the principal balance on the mortgage statement we get every month. We love seeing that number go down. So while we will continue to max out our IRAs and HSA, we’ll also continue to put extra money towards our mortgage every month. Because no matter what the stock market does, an extra principal payment on our mortgage always translates into a lower number on the next month’s statement. And that provides a bit of balance when the IRA balances also seem to be getting lower each month.
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