Paying off the mortgage

We paid off our mortgage this week. I confess, I shed a tear. It has been a long journey.

I have some angst about sharing, wondering if it’s too personal a topic, but this is a retirement blog after all, and paying off a mortgage is a big decision for retirees and aspiring retirees. In case you are wondering, you can start late or go slow and still get to the finish line.

As an Army family, we rented or lived in apartments furnished by the military. We saved some money on a tour of duty in Egypt and used that for a down payment on our first house. By that time, I was in my late 30s, and Dale was in his 40s. We’d been married 13 years.  

Dale and I moved more than 20 times for jobs. There would be five more houses in our future, including the one we live in now. Two houses ago, we lived in Texas, I had a good job and we were planning to stay there. We made extra payments on the house and were close to paying it off when my company “encouraged” me to transfer to California.

Even though I’m a California native, and Dale loves this state as much as I do, we did not want to go. Already well past 50, this was the opposite direction of travel if solvency is your goal. But I didn’t have a lot of options, so we said OK, let’s do this thing. We had two ground rules. We won’t live like college students, and we won’t touch the retirement money.

My work location was in the Bay Area, specifically Silicon Valley, which is ridiculously expensive. But we wanted a house, so we made a decision to live further out, where still, we could barely afford a starter home. We bought a house we could never pay off in our lifetime, assuming we would eventually move again. Thankfully, my income was sufficient to make the payments.

To get back and forth from the hinterlands to work, I rode a commuter bus for two or more hours a day, depending on traffic. But it was pretty nice, saving me money and stress, and I am forever grateful for the bus, the 121.

Once I decided it was time to retire, we wanted to stay in California but in a less expensive area. We found the spot where we live now and bought the home while I was still working. It was easier to get a loan while I had a job. However, I found it exceedingly stressful to owe money on two homes.

Plan A was to sell the Bay Area house as soon as I retired and use the equity to pay off the retirement house. However, we didn’t get as much for the house as we had hoped, and that meant we didn’t have enough to pay off the new house. Instead, we went to Plan B and used the equity to recast the loan … the bank applied proceeds from the old house to the principal on the new house and adjusted the payments accordingly. At least we wouldn’t start retirement with a huge monthly bite.

The first year of retirement was stressful enough, so we didn’t mess with anything, even though we could have dipped into our savings to pay off the mortgage. We were still finding our retirement legs. This year, feeling more comfortable with the new normal, I talked with our accountant and our financial planner, and they both agreed. Pay it off.

Although I am excited, I did grumble about always being the sensible ones. Why not do something crazy with the money? But, of course, being sensible is the key to our whole lives.

We’re not superstars of the retire young and achieve financial independence movement. We both came from low-income families and both served in the military, which helped to pay for education and jump start our lives. And then we kept our heads down. Sure, we had fun and took some nice vacations along the way, but it was mostly work, save … work, save. I’ll be 64 this year, and Dale just turned 70.

This is not a financial blog. Everyone has to figure it out, but reading how other people manage retirement finances hopefully contributes to the body of knowledge that will help you make good decisions. In my quest to learn, I read advice from many professionals recommending you pay off the mortgage before you retire. If we could have, we would have.

While ours is not a textbook approach to retirement finances, it worked out fine and feels pretty awesome.