Consolidating and paying off debt as soon as possible is and has been sound advice for increasing the distance your pay check will go.  But is termination of all debt good or even possible for most Americans?  If you can live without debt, your pay check can go further and your savings may grow faster but perhaps not always.

There is both good and bad debt.  Good debt is debt taken for capital goods and debt wherein you can write off the interest in other words the debt is Tax-Efficient.  Bad debt then is debt that is not tax efficient, debt spent on consumables, everyday expenses, etc; debt that cannot be paid in full at the end of the month.  There is good debt and better debt but how you arrive at better debt is how the debt is structured and how it is used.  One example is buying a home.  Assuming you have used good sense and are not buying more house than you can afford, changing this good debt to better debt is based on how your mortgage is set up.  This factor is always important but now during this window of very low mortgage rates how you set the mortgage up will affect you for a very long time, most likely for life.  The good news is this can be fixed

Common wisdom has always been to pay of you home as soon as possible if possible pay cash or take a 15 year mortgage.  If you can’t afford to pay cash or take a 15 year mortgage get a 30 year and then make extra principal payment, but pay it off as quickly as possible.

Common wisdom is questionable at best and just plain wrong for most.  In fact Paying off Your Mortgage is a Mistake and perhaps the worst thing financially you could do!

Money paid in interest does not have to be money thrown away and do you care how rich a financial institution gets as long as you are making more than you are paying.  Using other people money can be very profitable when used right, something financial institutions discovered long ago.

For a white paper why Paying off your Mortgage is a Mistake, please email me (Hubert McMinn) at This e-mail address is being protected from spambots. You need JavaScript enabled to view it. list as subject: Wealth Transfer: Mortgage.