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My Mortgage Feels Like Credit Card Debt

06/21/2007

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.

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4 Comments
pidgeon92
June 21, 2007 @ 12:32 pm

I feel the same way you do. Fortunately, the house we bought 9 years ago was inexpensive (we are not in a really nice suburb, but we like it), and I started paying extra on the mortgage within about two years. I was fortunate to receive a sum of money a few years back, and I immediately used that to pay off the mortgage. We are completely debt free (except for those pesky taxes) and very happy about it.

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Cindy
June 23, 2007 @ 3:59 am

You are very lucky that you did not have to pay rent for many years! Most of us do not have that opportunity.

Much like you, I pay my off my credit card dept every month. However, life always throws us curves, and eight years ago the nuclear plant my husband worked at, shut down. We had to make a decision if my husband wanted to re-locate or change careers.

If we had not had to relocate, our house would be paid for today!!! It was a beautiful house that we both loved. The house that we live in right now is also beautiful, and we love it, but have a 30 year mortgage on. We pay the mortgage down and will have it paid off in the next 10 years – but mind you, our other house WOULD BE paid off right now!

I do not look at our home as a credit card debt. Credit card debts are NOT investments. Would I like to have my home paid off? YOU BET! Is my home worth my investment? YOU BET!

It’s up to you to decide what makes you happier. To pay down your mortgage – go out several times a week – drive a great car – have a great boat – ???????? – or whatever trips your trigger. Bottom line – your home is an investment. Not a revolving charge on your credit card. Decide how you want to pay for it and what you are willing (or not willing) to give up along the way. Find your balance. Me—I want the damn house paid off. But I’m not giving up my life along the way!!!

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June 25, 2007 @ 8:23 pm

They are supposed to feel the same thats what the credit card companies want. They want you to be paying on your 15k credit card debt for about as long as your goiing to be paying on your 100k mortgage. This is how these companies make billions every year.

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July 12, 2007 @ 4:48 am

Well, I think debt is debt. Yes, debt for a house is better than debt for stuff bought on a credit card because the value of the house will presumably go up and the value of the stuff will almost surely go down. But owing money is owing money.

Whether you owe $190,000 on a house and $10,000 in credit cards or $100,000 on a house and $100,000 in credit cards – you’re still in debt $200,000.

I want to be debt free. I am paying off my credit cards, car, HELOQ, etc. before I start to tackle paying off the home mortgage – but the mortgage debt weighs on me just as the credit cards do. And I’ll get to it once the others are paid off.

The borrower is slave to the lender. I don’t want to be a slave to anyone. I want financial freedom, and a big part of that is being debt free.

I have a feeling that going to sleep in a paid for house just might feel a little better.

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