I was recently amused by an online debate among some financial planners. One planner was wondering how to “deal” with a client who wanted to pay off their mortgage early, given that they could invest their extra money instead.

My amusement came from observing those who believed their calculators or spreadsheets could provide a definitive answer to the question. Was it better to make larger mortgage payments or to invest more?

They seemed to confuse their analytical tools with an ability to know the future.

Most argued that the “correct” answer was to invest more rather than pay down the debt, because their tools showed greater ending wealth by doing so. To them, the spreadsheet was the truth. (Usually, they did did at least concede that an emotional insistence to pay off the mortgage might offer the benefit of greater peace of mind.)

None, however, acknowledged that we cannot know the future. Hence there is always uncertainty about the “best” course financially. It is possible that the path to greatest future wealth is via debt reduction, rather than investing more. No one has been to the future and back; there are no guarantees about it either way.

We do know these things: if the future is like the past, chances are one might end with more wealth by investing. And one might reduce uncertainty and increase financial security by paying the mortgage. But we don’t know if the future will be like the past.

The spreadsheet is not the future.

I wonder if there are more interesting questions worth debating… If you have what you need, what is the point of pursuing more? How do you value the feeling of owning a paid-off home? No spreadsheet—and no planner—can answer these questions for you.

Clients, when you’d like to explore the interesting questions, please email us or call. We’ll talk about it.

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