Story by Dana George
Financial guru Suze Orman never fails to entertain me. I may not agree with every piece of advice she offers, but Orman always makes me think. On a recent episode of Orman’s podcast Women & Money, a listener asked about her mortgage. She’s carrying a low-interest rate of 3% and wondered if she should focus on putting an extra $10,000 a year toward the mortgage to pay it off early or invest that money instead.
I was sure of what Orman’s answer would be. Like every other expert opinion I’ve recently read, Orman would recommend that the listener invest the money instead of paying off a mortgage with such a low interest rate. After all, if she invested in a financial product earning as little as 4% to 5% a year, she’d still be ahead.
I could not have been more wrong. In this case, Orman suggested that the woman take a different approach.
Orman’s mortgage advice
Orman prefaced her advice by admitting that the question was a little tricky for her to answer, primarily because there are so many unknowns. For example:
- Orman knows the listener has 26 years left on her mortgage, but she doesn’t know how long the listener intends to work.
- Orman doesn’t know anything about the woman’s investment skills. Will she invest in a way that provides her with a return of 3% or will her investments bring in much more? Is she a nervous investor who will sell when the going gets tough?
- Orman doesn’t know if the listener will stay in the home for 30 years or move away much sooner.
“But let me tell you what I do know something about,” Orman said. “I know that nothing makes a woman, in particular, feel more secure than owning her own home outright.”
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