I’ve Made a Huge Mistake

“I’ve made a huge mistake.” -Gob

I’m a big fan of Arrested Development. Especially the character of Gob played by Will Arnett. When he would do something especially boneheaded, his catchphrase was, “I’ve made a huge mistake.” I wondered this past week if I had a Gob moment.

Against the advice of several people that are more successful and wealthier than me, I paid off my mortgage.*

(*I realize the incredible amount of privilege I have even being able to do this, let alone second guess it after the fact. The irony is not lost on me.)

Let me jump into the Wayback Machine and set this situation up better. A few years ago when interest rates were historically low, I was trying to decide if I should pay off my mortgage from the money I’d managed to stockpile into savings or do a REFI to a lower rate.

I sought the advice of several people in my life that have been extraordinary successful in real estate and finance. The advice was unanimous: cash is king and these rates are amazing. Without a doubt, do the REFI.

Their logic, which I still believe is sound and “correct” was that if I was able to get an interest rate below 3%, then I would be better off in the long run if I deployed that capitol in other ways. For example, put it in the stock market and make money on my money. Or I could keep it in cash an be on the lookout for a real estate opportunity.

At the time I thought, “That’s solid advice, they’ve done this more than me. I’m going to listen to these highly successful people.”

At that exact moment, the Seattle real estate market was on fire. There were bidding wars on virtually every house that I would be competing for, so I took my savings and decided to put it in the stock market.

I bought shares of Apple, Google, Amazon and Tesla. I know it’s not terribly diversified, but the tech stocks were rocking and rolling.

For a while, things were going great. I was making good money in the market. The tech stocks were doing well. I think 3 of the 4 did stock splits. The strategy was working.

Then, as we all know, things changed dramatically when the Federal Reserve decided that it was time to raise interest rates. The Fed went on a relentless march of rate raising month after month and all of my stock positions took a nose dive. Then Elon Musk purchased Twitter, and all of the sudden Tesla stock fell off a cliff.

I looked at my balance sheet and all I saw was red. It was painful. The big losses really bummed me out.

So a few months back, I started thinking about why I wanted to pay off my mortgage and realized it was more than just dollars and cents for me.

While I felt like I understood the smart play, I came to realize that there are some emotional and psychological reasons for me to pay things off. I’m a single, divorced man in my 50s. I do not have any kids, and as Don always says, “Nobody is coming to save you.” 

I’ve been paying either rent or a mortgage (sometimes both when we were in radio and living in other markets) since I was 17 years old. The prospect of not having a mortgage payment on the first of every month had an amazing pull on my psyche for the security it seems to offer. The more I thought about it, the more it seemed like a good idea to just pay it off. All I needed was for these stocks to make a big rebound.

So I did a bunch of math, and then set some alerts on my computer of when I should sell these stocks. Apple came back first, and I sold my position. Then Amazon and Google made a rally. I would sell all my shares and put the proceeds into a separate account. 

Tesla, on the other hand, was a different story. It had been really battered by interest rates and the reaction to Elon’s antics at the helm of Twitter. I was sure I’d have to wait for months and months before Tesla would be even close to the price I needed it to be. I was hoping if I stayed patient, it might happen by the end of the year or maybe Spring of 2024.

Surprisingly to me, in the span of a month from the middle of May to the Middle of June, Tesla stock increased by almost $95 per share. It was an astonishing move.

One morning I woke up, and all the alerts I had set were going off. I had not yet had my morning coffee and wasn’t even fully awake yet, but I double checked all my post it notes.  I entered the info into my stock platform, paused for a second, then I hit the “send” button. 

It filled almost immediately. I had the money back in my account.

As soon as the transfer showed up in my checking account, I requested the payoff number of my mortgage and headed down to my local BECU branch to initiate one of the largest wire transfers of my life. After quadruple-checking all the bank numbers, my banker sent the wire.

That was it. My mortgage was paid in full.

It felt like a weight had been lifted off my shoulders. I felt a real shift in how secure things seemed. I knew as long as I could pay my taxes and HOA dues, that I have “my place.” It felt right… for me.

I know from a strictly logical, maximum ROI viewpoint that this move was a “wrong,” I hope that it proves to be the right choice for me in the long term.

What do you think, did I make a huge mistake? Let me know in the comments below.

Ron has been a part of just about every kind of real estate transaction you can think of. He understands that finding the perfect place for you and your family is crucial. Schedule Your Sit Don with Ron today!

12 thoughts on “I’ve Made a Huge Mistake

  1. We paid off our mortgage just before we retired. I wanted the secure feeling I will always have a roof over my head as long as we pay the taxes. Both my parents (divorced) did not have that luxury. It’s a powerful feeling to know that you will always have a place to live.

  2. I don’t remember the exact circumstances any more, but we did pay off our mortgage 8 or 10 years ago and really, after doing the stock thing as well vs. just owning your own place, there is an emotional value that is huge, never mind the ‘numbers’! Now to do the same thing with my car ‘mortgage’…..

  3. A certain amount of financial “Freedom” can be a valuable commodity in your life….don’t look back but face the future with a comfortable grin!

  4. We built a weekend house on Whidbey 10 years ago, paying cash for the lot, and then the build of a double car garage with a studio on top. It worked for us, we were outside in the summer. Covid saw us spending more time out here because it was safer, so we spent 2 6 months stints living in 349 sq. ft. and didn’t kill each other. We were still paying for our Lynnwood mortgage, all those utilities: water, garbage, cable. etc. We decided to quit breaking our backs to pay over $6000 for a house we only lived in for 5 months a year. The thought of not having a mortgage was very intriguing. So we fixed up, sold out, and are now going to build an addition with that money and travel. Was the right decision for us.

    1. Wow, what a great story! I’m not quite ready to move out to the tiny house just yet, but sounds like you’ve got some big plans out there. Best of luck and keep us updated on your journey!

  5. We paid ours off a year into the pandemic by using half of my 401k since it was part of the pandemic special circumstances package thing. Spouse could not work so income was cut in half. Paying it off gave us that money back every month and spouse and I decided he should stay early retired.
    We are the happiest we’ve ever been with that stress payment no longer in the budget.
    Give it time to settle in, I’m sure you’ll know you did the right thing!

    1. That is a great strategy and glad to hear it worked out! COVID hit us all hard, but sounds like you made the best of it. Thanks for reading.

  6. Enough with the “privilege” crap. YOU worked for decades. You followed the rules. You and Don were ousted from the radio business and you both reached down and adjusted your big boy pants and pulled your lives back together. Your “privilege” was to work hard, never give up and put your heart and soul into everthing you do. STOP please with kissing the asses of the snivelers and whiners who think you should feel bad for living your life.

    NO, I listened to you and Don for all the time you were at KIRO and I watched the day you wept at the loss of a friend, the piles of stuff you sent to disasters, and money you raised for different causes and I loved you both for it. But I do no not love anything about this “privilege” garbage. YOU earned it all. It is GREAT to reap the rewards that this great nation allows us because we can do anything and earn our rewards. NOW CARRY ON and stop jumping on the bandwagons of garbage.

  7. We just made our final payment last month on our mortgage. I’m 58, close to retirement with a plan in place for a comfortable living for both of us, and part of that is staying in our current home. The feeling hasn’t really resonated yet, but the on-set gratification of not having a mortgage is freaking AWESOME! Yes, some interest deductions I’m not able to make anymore, but we own our home, flat out. What a great feeling after 30 years..

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DISCLAIMER: Ron Upshaw, Managing Broker License #22027577 & Don O’Neill, Broker License #95294 are brokers with Kelly Right Real Estate

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