Mortgage Strategy: Pay Down or Save and Invest?

Considering moving in 5-7 years, Butters Bot 2 wonders if it's better to pay off the mortgage early or save and invest the extra cash.

### Mortgage Payoff vs. Saving for Home Maintenance and Moving
* 💰  If you're planning to move in 5-7 years and are already feeling the financial strain of home repairs, it may be wise to prioritize **saving and investing** over aggressively paying down your mortgage.
* 🏡  Home repairs and maintenance costs can add up quickly, and unexpected moving expenses can also strain your finances, making **liquidity a valuable asset**.
* 💸 " Right now **yields on cash are so strong**. I don't think it's crazy for someone who I knew had a 5 to seven time frame your future self who's thinking about moving.
* 🔑  Cash reserves are a foundational element of financial stability, providing a **buffer for unforeseen expenses and emergencies**.
* 💼 " Liquidity is your friend because things happen even in new homes.
* 💡  In the financial order of operations, cash is prioritized for its role in providing **security and flexibility**, even if it earns **lower returns** than other investments.
* 💼 " Cash is like the air we breathe. We all take it for granted until we go **underwater**.
* 📈  Having cash reserves can also be a contrarian wealth-building strategy, as it allows you to **take advantage of opportunities** when others are financially strained.

[Music] um, Butters bot 2 has a question for you. He says, I just moved into a new home, and the repair and maintenance costs are already adding up. Oh, imagine that, welcome to. I was initially ambitious about trying to pay down the mortgage ASAP, but now I'm rethinking the strategy. If I am moving out of my house in 5 to 7 even years, does it make sense to pay down the mortgage early, or should I just save and invest the extra cash? This is a loaded question, Bo. I'll let you because he's actually confusing, not confusing, but when you think about the financial order of operations, he's got two different things being squeezed here. The ability to pay for unforeseen things that are coming down your path, that's a step one and for that's a cash reserves issue. And if you're finding, Hey, I was going to be a debt crusader and pay this thing off, but man, these repairs and maintenance are squeezing me that you maybe didn't have enough on the

foundational side of emergency reserves, and then the part of paying down the debt early. That's actually a step eight abundance goal or prepaid expenses. What would you add or clarification? Yeah, so you said, I'm planning on moving in 5 to S years. Uh, what you have learned now is now that you have bought a home, man repairs and maintenance are kind of expensive, and there's a lot of costs that I had not planned for that are there. You know what else has a lot of costs that you might not plan for that might catch you off guard that you might be like, Holy cow, I didn't need to do that. Moving, right? So, whenever someone tells me, Hey, I'm thinking about moving. I know this isn't the house I'm going to stay in. Should I build up cash or should I aggressively pay down the mortgage? Well, it's obvious you got to consider the interest rate, but right now yields on cash are so strong. I don't think it's crazy for someone who I knew had a 5 to

seven time frame your future self who's thinking about moving and then has to get the walls painted and has to get the sheetrock you know fixed from the kids and has to do this and do this and has to have the pictures taken and all the cost so say then you got to hire the movers you got it it might not be the craziest thing in the world planning for a move to have more liquidity available to you for all of those things as opposed to just paying off and satisfying that debt because when you put the debt or when you put the money into the house yes it saves you on interest expense yes it allows you to build up Equity but the only time you get to access that is when you close on selling your current home or take debt or you go out and and do a cash out refy or something like that but you don't want to be doing that if you're about to buy another home and you want to have a new mortgage and that sort of thing so

in my experience, building cash for someone who's planning for a move often is more prudent and provides more options and flexibility then satisfying debt leading up to the move. So, I'd start thinking through it in that realm and liquidity when home owner all asset ownership. Liquidity is your friend because things happen even in new homes. Things happen and having cash to be able to pay for that is certainly a valuable thing to have on your side. As an echo, there's a reason cash gets two steps in the financial order of operations. You know, cash is like the air we breathe. We all take it for granted until we go underwater. And when it rains, it pours. You know, I've given you guys the visual that I used to talk about is that all the bad things that can happen in life are extroverts and they stand on the street corner smoking cigarettes and talking trash to anybody who walks by. But it really goes back to when it rains, it pours. Is that not only will you lose your job, your portfolio will

be down your house. You'll no longer be able to sell it. All these things will happen at once, and the only thing that's going to get you through that is how much cash do you have in reserves to protect you. So don't overlook that. I know as US Financial mutants, we look at cash and we think it's trash, and we don't think it has an important part. It is serving a very important role in your wealth-building journey. And here's another cool thing about it: if you have cash when nobody else has cash, it also is a contrarian wealth Builder. Don't overlook that. That's something I've tried to describe when I talk about it a lot in millionaire mission in my own Journey. I've watched how C, even though we all tell you how horrible or C trashy it is, it doesn't earn much. And then all of a sudden, you read my book where I'm like, wait a minute, when you get to step eight, you might want to keep a little bit extra just because you

having cash when no one else does pretty cool things happen if you're one of those people that's prepared

Should I Pay Down My Mortgage or Invest if I'm Moving in 5-7 Years?

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It's important to prioritize building up cash reserves for unforeseen repair and maintenance costs when owning a home.

If the plan is to move out in 5 to 7 years, considering the strong yields on cash, it may make more sense to save and invest the extra cash rather than paying down the mortgage early.

The decision should also take into account the interest rate on the mortgage.

The Importance of Building Cash Before Moving

Building liquidity is crucial for covering the costs of moving, such as painting, repairs, and hiring movers, providing more options and flexibility than paying off debt.

Having cash on hand as a homeowner offers valuable support for unexpected expenses that may arise, serving as a crucial asset in the financial order of operations.

The Importance of Cash Reserves in Wealth Building

Cash reserves play a crucial role in protecting against unexpected financial hardships.

Additionally, having cash when others don't can be a contrarian wealth building strategy.

Despite being often overlooked, cash reserves are emphasized in the financial strategies for building wealth.

The Benefits of Being Financially Prepared

Being financially prepared allows for unique opportunities when others are not.

It provides a sense of security and the ability to take advantage of special situations.

Financial preparedness can lead to a more relaxed and confident mindset in the face of unexpected events.