They Call It “Personal” Finance For A Reason

I recently wrote an article for Debt Roundup in which I questioned the wisdom of paying off your mortgage early and it generated a number of thoughtful comments by readers on both sides of the argument.

Some people recognize that mortgage rates are at historic lows and they would rather put their money elsewhere in the hopes of gaining a better return on their investment. If your mortgage interest rate is only four percent and you can earn ten percent in the stock market you will be more than doubling your rate of return.

On the other hand, others were quick to point out that investing in the stock market does not guarantee profits and you could just as easily lose money.  Paying down your mortgage balance provides a guaranteed return and helps you build equity in your home, which also protects you from losing your home should you fall upon hard times.

So which side is right?

They both are of course!

You see, in the world of personal finance what works for one person may be completely wrong for somebody else.  Our money mindset determines our financial priorities and insecurities.  That mindset is formed over our entire lifetime and every experience we have helps contribute to it.

It goes back to when we were just kids and watched our parents and other adults managing their money and dealing with issues and crises.  We watched how they treated money and likely adopted many of the same habits (both good and bad).

As we grew up we experience more and more situations that help shape our money mindset.  Since no two people ever have the exact same experiences, no two people ever have the exact same money mindset.  This is why financial priorities vary so much and what seems trivial to one may be extremely important to another.

For example, some people can’t stand the thought of being in debt.  They shun credit cards, pay cash whenever possible, and dedicate every extra penny they can find toward paying down debt.  For someone like this, having a mortgage hanging over their head gives them real anxiety and they won’t feel like the home is really their own as long as they still owe money on it. That, of course, is true since the bank owns the home until the mortgage is completely paid off.

Someone with different life experiences may not feel the same urgency to pay off their mortgage and they’d rather put their money toward other goals.

Similarly, someone who has been laid off or witnessed it happen to someone close to them may be more likely to look for alternative ways to secure their financial well being.  I look to myself as an example here as my dad was laid off from his job when I was in college.

My father worked for the telephone company for 35 years until they decided he was too old and too expensive to keep around.  After decades of loyalty they kicked him to the curb without a second thought to save themselves some money. He was never the same after that and struggled financially for the rest of his life.

That was a major event that deeply impacted my family and it has surely affected the way I see employment.  I have a good job that pays well but I always have a burning feeling in the back of my mind reminding me that I could easily be shown the door at any time and without regard for me or my family’s well being.

The fear of being suddenly out of work has inspired me to build other streams of income such as my blog at WealthyTurtle.com.  I figure the best way to protect myself from the loss of any single income stream is to have plenty of others to rely on.

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Money is Personal!

The moral of the story is that there often is no right or wrong answer when it comes to money matters. It really comes down to setting your own priorities and choosing which goals you want to place ahead of others.  But sometimes it can be helpful to question yourself and force yourself to rethink why you have certain money habits.  Then you’ll be able to either confirm that you are still on the right track or realize that your priorities have changed completely.

The only “right” thing about money is you need to spend less than you earn. Period!

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