Step 12: Pay Off Your Mortgage
Phase 3: Build a Legacy · Step 12 of 12
Own your home outright.
In short
Pay off your mortgage early, whatever the interest rate. Yes, the math may favor investing instead. But a paid-off house means a much smaller number to cover every month, more peace and a far cheaper retirement.
Why this comes last
The other long-term goals need their head start first. But this one matters most in retirement. If you live on 4% a year of your savings, a $2,000 monthly mortgage payment takes $600,000 of investments to cover. Paying off a $300,000 loan costs half that.
How to do it
- Agree together on how much of each month's surplus goes to principal, and how much you keep for life: car replacement, trips, repairs.
- Near month end, check the surplus in Household Savings and send that share as an extra principal payment.
- Add raises and windfalls when you can.
- Keep Steps 9 to 11 going alongside it.
- Aim to be mortgage-free before you retire.
Example Family: Alex and Jordan
Their mortgage started at $320,000 (see Buying a House). Each month they check the surplus and send an agreed share to principal, keeping some for car replacement and vacations. Every extra dollar shortens the loan, and the goal is no payment by the time they retire.
Examples are hypothetical.
You're done when
Your mortgage balance is $0.
Your next step
For education only. Not individual financial, tax or legal advice.