If you ask a financial advisor whether you should pay off a 3.5% mortgage early or invest in the S&P 500 (which historically returns 8-10%), they will look at you like you failed 3rd-grade math.
"Don't pay it off!" they'll scream. "It's cheap money! Leverage is your friend! Inflation is eating your debt!"
Mathematically, they are 100% correct.
Yet, last month, I wired the final $142,000 to my bank. I am now 38 years old, and I own my home free and clear. I ignored the math, and I have zero regrets.
Here is the breakdown of why I did it, the exact numbers involved, and the one factor the spreadsheets always miss: risk.
The Scenario: The Golden Handcuffs
Here were my numbers back in 2018 when I started this aggressive journey:
🏠 The Mortgage Stats
Original Loan: $320,000
Interest Rate: 3.5% (30-year fixed)
Monthly P&I Payment: $1,437
Remaining Term: 26 years
Total Interest Remaining: ~$138,000
I had a good job. I had savings. But that $1,437 monthly payment felt like a weight. It meant I had to keep my high-stress job. It meant I couldn't take a sabbatical. It meant every decision was filtered through "can I make the mortgage?"
The Mathematical Argument (Why I Was "Wrong")
Let's look at the opportunity cost. If I had taken the extra $2,000/month I threw at the principal and invested it instead:
| Strategy | Return Rate | 10-Year Outcome |
|---|---|---|
| Pay Off Mortgage | 3.5% (Guaranteed) | Saved ~$45,000 in interest |
| Invest in S&P 500 | 8% (Historical Avg) | Gained ~$110,000 in profit |
| Difference | - | I "lost" ~$65,000 |
On paper, I set $65,000 on fire. By paying off cheap debt, I missed out on market gains. This is what the FIRE (Financial Independence, Retire Early) community calls "sub-optimal."
Run Your Own Investment Scenarios →The Psychological Argument (Why I Was Right)
Spreadsheets don't have anxiety. Spreadsheets don't get laid off. Spreadsheets don't have health crises.
Here is the "Return on Investment" that math can't calculate:
1. The "F*** You" Factor
When you have no mortgage, your monthly burn rate collapses. My mandatory expenses dropped from $3,500/month to $1,800/month (taxes, insurance, utilities, food).
This means I can survive on a part-time job. I can quit a toxic boss tomorrow. I can start a business (which I did). That flexibility is worth more to me than a theoretical 8% return.
2. Risk Mitigation
In 2020, when the world shut down, I didn't panic about losing my house. I knew that even if my income went to zero, I could pay my property taxes by delivering pizzas if necessary.
Investing the money carries market risk. Paying off debt carries zero risk. It is a guaranteed 3.5% return.
3. Cash Flow Freedom
Now that the mortgage is gone, that $1,437/month (plus the extra principal) is fully freed up. I am now investing 100% of that money.
I'm dollar-cost averaging into the market heavily NOW, with a paid-off house as my safety net.
How I Did It (The Strategy)
I didn't win the lottery. I didn't inherit money. I used the "Snowball on Steroids" method.
Step 1: Refinance to a 15-Year (Or Pretend To)
I kept my 30-year loan for flexibility but paid it like a 15-year loan. This automatically knocked 15 years off the term.
Step 2: The "Found Money" Rule
Every bonus, tax refund, and side hustle check went 100% to the principal. I pretended this money didn't exist.
Step 3: Bi-Weekly Payments
I switched to paying every two weeks instead of monthly. This results in 26 half-payments per year, which equals 13 full payments. That one extra payment a year shaves ~4-5 years off a 30-year mortgage alone.
Calculate Extra Payment Impact →The Moment It Hit Zero
Clicking "Submit" on that final transfer was anti-climactic. No confetti fell from the ceiling. The bank app just said "Balance: $0.00."
But the next morning? I woke up different.
The grass felt greener (literally, it's my grass now, not the bank's). The coffee tasted better. The background hum of "you owe money" that had been in my brain since college was silent.
When You Should NOT Pay It Off Early
Despite my raving, this strategy isn't for everyone. Do NOT prepay your mortgage if:
- You have high-interest debt: If you have credit card debt at 20%, pay that first. Paying a 3% mortgage while holding 20% debt is financial suicide.
- You have no emergency fund: House equity is illiquid. You can't eat your shingles. Keep 3-6 months of cash liquid before attacking the mortgage.
- You aren't getting your employer match: Always take the free money (401k match) before paying down cheap debt.
The Verdict: 10/10 Would Do Again
I might be $65,000 "poorer" on paper than if I had perfectly timed the S&P 500 over the last 7 years.
But I sleep 8 hours a night. I took a lower-paying job I love. I travel more.
Personal finance is 20% head knowledge and 80% behavior. For me, the behavior of eliminating debt unlocked a life that maximizing investment returns never could.
If you are torn between the math and the peace of mind, choose the peace of mind. You can always invest later. You can't buy back the years of stress.
Want to see how much time you can save? Use our Mortgage Payoff Calculator to see what adding just $100 a month does to your payoff date.