Suzee Orman Says “Pay off Your Mortgage, Boomers” – But I’m Not Sure

Suze  Orman has a new book that she’s promoting on Oprah’s website: Suze Orman’s 2009 Action Plan.  You can get a copy of Suze’s book on Oprah’s website, through January 15.  I’ve been reading the book online and I came across a comment by Suzee stating that, “If you intend to live in your home forever, then I recommend you focus on paying off the mortgage.” (p. 49) She does qualify this statement by saying that if you are getting a match on your 401(k), you should put as much as possible into that retirement plan instead.

That sounded like a good idea to me. I even thought about where we would get the cash to start putting more money into paying down the principal.  Then I read Julie Rains’ post “Rethinking The Early Mortgage Payoff” in  WiseBread and I began to wonder.  Julie suggests a list of other things you could do with your money, including funding a 401(k), or adding to a Health Savings Account.

Jonathan Clements in the Wall Street Journal article Why You should Pay Off Your Mortgage says that carrying mortgage debt into retirement can wreak “financial havoc.”  He takes the reader through three scenarios of mortgage repayment, to review the tax effects of paying off a mortgage.  Read this one carefully; it’s complicated but worth the read.

And two more articles:

GotoRetirement has a good discussion on this issue:  http://gotoretirement.com/2008/12/striving-for-a-mortgage-free-life/

And HomeFinanceFreedom has a list of reasons to pay off your mortgage: http://homefinancefreedom.blogspot.com/2007/10/homeownership-cost-cliches-housing.html

Bottom Line: Read carefully and study your personal situation.  Talk to your tax adviser andyour financial adver before you decide to pay off that mortgage.

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