My Mortgage Feels Like Credit Card Debt
I have been working for over 14 years. For more than 10 years, I did not own a house. In fact, I have worked abroad for substantial periods and the companies I worked for took care of the “housing”. While we were having our rent paid for, we had great disposable income. In fact, one of the biggest regrets is not ing property when we were younger and missing the great bull market.
At the same time, both Mrs Credit Card and myself have never had any credit card debt. We always paid our credit card bills in full on our American Express Gold Card.
Two years ago, we bought our first house. We were pleased with our purchase. But along with that came a mortgage payment. Our mortgage payment was about close to 30% of our monthly income. I guess it was a little stretch but it was ok. One of the effects of having this mortgage was that all of a sudden, our disposble income declined dramtically. The upside is that we had invested in a property, an asset which is supposed to keep up with inflation historically. Our interest payments were tax deductible as well.
Despite that, I still do not feel good about the mortgage. It feels like a heavy burden. Though I have never had any credit card debt, I think having a mortgage is very much like having credit card debt. You always wonder when it will go away. And while you may eliminate your credit card debt in a few years, with a mortgage, we are talking many years.
You see tons of articles and websites giving advice on how to reduce credit card debt. Taking advantage of 0% APR Credit Cards, paying off the card with the highest interest, or paying off the card with the lowest balance, having a systematic payment plan. There are even many calculators to check how long you would take to reduce your credit card debt.
But when it comes to your mortgage, I do not see many post on whether you should have a systematic plan to eliminate your mortgage. Yes, there are mortgage calculators that tell you how your mortgage period can be reduced if you pay extra every month towards principal reduction. But, very few actually advice that. One rational is that the extra money could be reinvested for your retirement instead. Unlike a typical credit card debt where the interest is probably double digits, a typical mortgage rate these days is only about 5% to 7%.
But like I said, having a mortgage is like having credit card debt to me. So I will be investigating whether I should put extra money into my mortgage every month. Doing so involves me cutting back on my monthly expenditure.
What do you think about your mortgage? Does it feel like credit card debt to you? Share your thoughts with us.