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I've been wrestling with this question in terms of how it affects paying off my mortgage. At my current projections, I will have four years left on my mortgage when I reach FIRE.

I dump a lot of money in my mortgage. It is probably stupid, but here is my rational:

1) Any fixed and forced withdrawal requires a huge capital base to support it. Lets suppose the mortgage is $800 a month. This is $9600 a year or at a 4% SWR is 240,000 dollars in equity to support it, assuming no taxes. If you assume 25% taxes then you are looking at 320,000 of capital base to pay for this mortage.

A 30 year mortgage at 5.5% costs $800 a month to pay for a $142,000 house. So you have to have $320,000 in equity to pay for $142,000 of assets. This seems a bit wacked. (Of course, the converse is that at the end of the 30 year period you still have your equity building bigger and bigger). However, if you go through a down market- you can not reduce your mortgage payment and you are forced to withdraw out of your equity base.

2) The house can be downsized and free up cash (or reverse mortgages in emergency old age scenario)

3) If I fail to FIRE, I still want to survive. My wife could work, and I could stay home and do contract work. Having no mortgage would really, really, really help this plan along. I could take a job doing whatever I wanted (still need to work though).


This possible freedom seems worth it... but there is a real cost to it. It is going to take me a couple extra years to FIRE, assuming the markets have anything like the historic 10% growth, compared to the mortgage.

So at the moment, the mortgage is still being paid down quickly (it is a 10 year mortgage with 6 years left).. obviously we could switch to a 30 and get a lot of free cash flow for the stock market, but at this point in time it doesn't make sense to me. Please feel free to convince me otherwise.
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