Financial success is often not defined by a number in a bank account or a net worth target. More often, it looks like sleeping well at night because you know you’ve made the best decision for your family.
One conversation that comes up often is whether to pay off the mortgage early or put that extra money into investments. On paper, the math may suggest investing wins. If your mortgage costs 5% and your investments earn 11% over time, that creates a net interest gain of 6%.
But real financial decisions are not made on math alone.
I met with two couples about a week apart who had a very similar goal: they wanted the house paid off sooner rather than later, or at least reduced enough to feel more comfortable with what they owed.
We’ll call them W&C and M&H, ages range from 35 to 40. Both families have steady cash flow and produce a monthly surplus. Both have kids from a year old to 6 years old. W&C have about $300,000 left on their mortgage, and M&H have about $165,000 left. Each family earns between $175,000 and $275,000 per year.
They also share something more important than income or mortgage balance. In each family, the husband has faced medical challenges in the past. The diagnoses are different, but those experiences have shaped how they view money and what success means to them.
Both families already have solid financial plans. Based on their cash flow, living expenses, and investments, they are on track if they continue living and investing the way they are now through about age 65.
So the key financial decision is not simply, “Where can I get the highest return?” The more important question is, “What helps my family feel secure no matter what happens?”
For these families, paying down the mortgage creates peace of mind. It lowers monthly obligations. It reduces the amount of life insurance they may need. And it helps them self-insure by lowering the lifestyle cost their family would need to cover if life takes an unexpected turn.
That does not mean investing is wrong. In fact, both families will continue investing heavily in the market and other hard assets. But this is a good reminder that the best financial decision is not always the one that produces the biggest number on paper. Sometimes, it is the one that helps your family feel safest and most at peace.
There are usually three ways to build financial success: live well below your means and invest the difference, pay off debt early and then invest what used to go toward those payments, or create an unusually high income. Most people cannot control the third option nearly as much as they would like. So, we focus on what we can control: our spending, our debt, and where we direct our surplus.
That is where good financial planning really starts.
If you’re trying to decide between paying down debt, investing more, or simply making the best use of your surplus, the right answer is not always the same for every family. A good plan helps you make decisions that not only work on paper but also fit your life and give you peace of mind. If that’s a conversation you’d like to have, I’d be glad to help.
- Peyton
P.S. - Here are a few things I am reading/watching/listening to:
- Build A 7%+ Yielding Dividend Machine For Stress-Free Retirement Income