Quote:
Originally Posted by nik-
Yeah, there's the feel good aspect for sure. When my mortgage rate dropped 2% I left the payment the same. I was used to it and it was nice to see the principal going down faster. I wouldn't be putting extra cash on it though.
You're putting that extra cash to shrink something instead of putting it into something that grows (and at a higher rate). Seeing a saving or investment account grow is just as nice psychologically as reducing your mortgage imo. Even if rates were even, which they're not.
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That's the thing...people are so hellbent on paying down their mortgage at all costs, even if their money can do better elsewhere. It's as much financial literacy as it is preference imo. People are terrified when they see their monthly statement, as they tend to look at the six figure debt rather than the monthly payment.
While the increased monthly cash flow could/should be utilized in growing your assets, some people will buy the RV trailer they've always wanted instead, financed at 6.9%. At least setting your payments higher creates structure for those that don't have the discipline.