When I go to pay my bills and set money aside each month, I think about how my decisions will affect me not only now but in the future. I may not enjoy sending an extra $300 to my mortgage company now, but I know my "future self" will thank me.
I recently read about a Harris Interactive survey about people's best financial decisions. The survey was conducted for Northwestern Mutual, according to a recent MarketWatch article. Forty percent of people who were 55 or older said paying off their mortgages was their best financial decision.
Closing in on retirement
At the age of 40, I still have many more working years ahead of me. I still like to imagine what my life will be like at the age of 55. I know I won't be retired at 55, but I'll be winding down my career. I can totally understand why people who are 55 or older would feel that paying off their mortgage was their best financial decision. Since we refinanced to a 15-year mortgage just recently, our mortgage is set to be paid off by the time I'm 55.
Making it a habit to save
Forty percent of the people age 55 or older surveyed also said that saving money at an early age was another one of their best financial decisions. Fifty-three percent of the younger crowd between the ages of 25 and 54 said starting to save early was a top priority. I follow the 10-percent rule, which means I put aside 10 percent of any money I receive whether it's a tax return, paycheck or gift.
Getting the right mortgage length
Although so many older people are glad they paid off their mortgages, younger people didn't say it was a priority for them. If I had taken out of 30-year mortgage at the age of 25, I wouldn't be concerned about paying extra on my mortgage. However, I knew at the age of 40, I didn't have time for a 30-year mortgage if I wanted to be free of a mortgage by age 55.
Saving enough for retirement
Another financial decision that made respondents proud was buying real estate at good prices and investing heavily in retirement accounts. Even though we purchased our home at the top of the housing bubble, we felt our best move was buying a home we could afford. Maybe we could have gotten more "bang for our buck" if the real estate market had been different, but we still purchased a home we could afford. Because we don't have too high of a mortgage payment, we can also afford to save for retirement.
In another 15 years, I plan to make my last payment to my mortgage company. I don't know how much money I'll have set aside for retirement, but hope that it will be sufficient. I am certain I'll be telling my children that the best financial decisions I made included paying off my mortgage and saving early. Sometimes the most basic financial moves yield the best results. That will be as true 15 years from now as it is today.
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