3422: Mortgage Prepayment Made Easy: Own Your Home in Half the Time by JD Roth of Get Rich Slowly

Summary

Podcast Summary: Optimal Finance Daily – Episode 3422

Title: Mortgage Prepayment Made Easy: Own Your Home in Half the Time
Host: Diania Merriam
Featured Article by: JD Roth, Get Rich Slowly
Date: January 14, 2026

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Episode Overview

This episode breaks down the pros, cons, and practicalities of mortgage prepayment, focusing on JD Roth’s strategy to own your home in half the time. Diania Merriam narrates Roth’s post from Get Rich Slowly, discussing the emotional psychology behind mortgage acceleration, the math of prepaying versus investing, and her own nuanced viewpoint on the topic.

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Key Discussion Points & Insights

1. JD Roth's Situation and Financial Goals

• JD recently paid off all non-mortgage debt, freeing up ~$1,000/month.
• He's now maximizing Roth IRA contributions, exploring best uses for additional cash.
• Quote [01:13]:

  “I recently eliminated all of my non-mortgage debt... This has forced me to evaluate my financial goals.”
  — JD Roth

2. Evaluating Mortgage Prepayment Strategies

• JD and his wife have debated accelerating their mortgage payments for a year.
• Traditionally, the math favors investing surplus cash over prepaying low-interest mortgages.
• However, JD recognizes the psychological boost from owning a home outright.
• Quote [01:41]:

  "I've never heard anyone say they regret owning their home outright."
  — JD Roth

3. Exploring the Charles Givens 'Wealth Without Risk' Method

• Instead of refinancing or making standard extra payments, they use Charles Givens’ plan:

  • Each month, make a second payment equal to the principal-only portion of the next month's payment.
  • Example: If the principal is $267.44/month, prepaying this amount advances the mortgage as if you made a full payment, but at a fraction of the cost.

• Quote [03:02]:

  "That $267.44 accomplishes the same thing $1,681.79 usually does, but at 16% of the normal monthly cost. That's a bargain."
  — JD Roth

4. Advantages and Flexibility of the Method

• Extra principal payments start small and rise gradually, matching financial capacity over time.
• Easy to pause or adjust extra payments as needed.
• Cuts mortgage term in half if followed consistently.
• Quote [03:41]:

  “Every time we make a payment, we're essentially making two payments, cutting the term of our mortgage in half.”
  — JD Roth

5. Drawbacks & Mathematical Tradeoffs

• Givens actually cautions against prepaying low-interest mortgages (below 9%); extra cash can theoretically earn more in investments.

• Consumer Reports (March 2008) concludes most people are better off investing surplus funds, but acknowledges psychological comfort.

• Quote [04:45]:

  “Many people find peace of mind in paying off their mortgages and owning their homes outright, especially as they approach retirement."
  — Consumer Reports (quoted by JD Roth)

• JD and spouse decide to allocate extra to both investing and mortgage prepayment for balance.

  • Quote [05:08]:

    “I want to do both. I want to invest and prepay the mortgage.”
    — JD’s wife, Kris

6. Achieving Financial Freedom & Diversification

• No mortgage means drastically lower monthly expenses ($600–950/month).

• Frees up lifestyle opportunities and mitigates financial stress.

• Roth views prepaying the mortgage as another form of portfolio diversification—“guaranteed” return, especially attractive in uncertain markets.

• Quote [06:06]:

  “It's better to put my money into my mortgage than into bonds, certificates of deposit, or a high-yield savings account, especially if we're entering a recession.”
  — JD Roth

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Host Commentary: Diania Merriam’s Perspective

• Diania acknowledges there are emotional benefits to paying off a house, but she doesn’t find them compelling for herself.

• Points to:

  • Permanent housing costs (taxes, maintenance).
  • Primary residence as a lifestyle choice, not a pure investment.
  • Prefers keeping no more than 10% of net worth tied up in her house.
  • Mortgage is only $600/month—a manageable expense she feels no urgency to pay off.

• Would prioritize payoff only if it represented a larger portion of her expenses or later in life.

• Quote [09:30]:

  “I see my primary residence as a lifestyle decision, not an investment, and I want to put the bulk of my money into income-producing investments, not an asset that needs ongoing cash infusions.”
  — Diania Merriam

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Notable Quotes & Moments

• JD Roth [01:41]: "I've never heard anyone say they regret owning their home outright."
• JD Roth [03:02]: "That $267.44 accomplishes the same thing $1,681.79 usually does, but at 16% of the normal monthly cost. That's a bargain."
• Consumer Reports (via JD) [04:45]: "Many people find peace of mind in paying off their mortgages and owning their homes outright, especially as they approach retirement."
• Kris, JD's wife [05:08]: "I want to do both. I want to invest and prepay the mortgage."
• Diania Merriam [09:30]: "I see my primary residence as a lifestyle decision, not an investment..."

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Timestamps for Important Segments

• 01:11: JD Roth begins sharing his journey and new cash flow.
• 02:20: Comparison of refinance and payment options.
• 03:02: Explanation of Charles Givens’ principal-payment strategy.
• 03:41: Benefits and process of the method.
• 04:45: Discussion of drawbacks and financial tradeoffs (Consumer Reports).
• 05:08: JD & Kris agree on a balanced approach.
• 06:06: Financial freedom and expenses breakdown.
• 09:30: Diania Merriam's perspectives on emotional vs. mathematical benefits.

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Episode Tone and Takeaways

The episode blends thoughtful math-based analysis with the very real emotional considerations of personal finance. JD Roth presents an innovative, flexible approach to mortgage prepayment, acknowledging that while numbers are important, achieving peace of mind and financial flexibility often requires a balance of logic and feeling. Diania Merriam encourages listeners to weigh both the psychological and mathematical sides, pointing out there’s no “one size fits all” answer—optimal is whatever aligns with your personal goals and values.

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Transcript

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Getrichslowly.Org because I recently eliminated all of my non mortgage debt, I had a significant positive cash flow. The thousand dollars per month I was putting towards debt can now be used for investing. I'm making maximum contributions to my Roth IRA of course, but that still leaves several hundred dollars each month available for other purposes. This has forced me to evaluate my financial goals. Mortgage Prepayment Options for the past year, Kris and I have discussed making accelerated payments on our mortgage. I've written about this choice several times at Get Rich Slowly and it seems clear that mathematically it makes more sense to invest the money. However, it's also clear that eliminating a mortgage offers a tremendous psychological boost. I've never heard anyone say they regret owning their home outright. I've researched a variety of mortgage acceleration schemes. Refinancing from a 30 year to a 15 year mortgage is appealing, but the interest rate drop from 6.25% isn't enough to make this worthwhile. I could sign up for my bank's bi weekly payment program, but I don't like the enrollment fee and I don't like the increase in paperwork. Or we could make an extra payment every year or pay an extra hundred dollars per month, but I feel like we could do more. Ultimately, we decided to use the method described by Charles givens in his 1988 bestseller Wealth Without Risk. You can pay off your 30 year mortgage in half the time without refinancing or by making extra principal payments on the 1st of the month when you write your regular mortgage check. Write a second check for the principal only portion of the next month's payment. Wealth without Risk for most homeowners, the principal portion of a mortgage payment is quite small. For example, our February mortgage bill was $1,681.79. Of this $1,119.16 is was designated for interest $295.19 for escrow, taxes and insurance, but only $267.44 for principal. Using Givens Plan if I include an extra $267.44 with my payment, I'll also knock off the next month's payment from my mortgage. That $267.44 accomplishes the same thing $1,681.79 usually does, but at 16% of the normal monthly cost, that's a bargain. The advantages of this method it has a sliding degree of difficulty. At first the extra principal payments are lower, but as we pay down the mortgage, these extra payments increase. We have time to grow into these increased payments. It's easy for us to back out if we decide our money is better used elsewhere. We can simply stop making extra principal payments. And every time we make a payment, we're essentially making two payments, cutting the term of our mortgage in half. After discussing the pros and cons, Chris and I have agreed to follow a modified version of Givens plan. To make things simple, we're using round numbers. Every January, we'll adjust how much extra we're paying. If our budget gets too tight, we can cut back at any time. The drawbacks to be fair, Givens doesn't recommend this method for low interest mortgages like ours. He clearly states, never pay off low interest mortgages those under 9%. Instead use the extra money in a better investment. He wouldn't advocate using this method on a 6.25% mortgage. The March 2008 issue of Consumer Reports has a brief exploration of this topic. Their conclusion Quote Many people find peace of mind in paying off their mortgages and owning their homes outright, especially as they approach retirement. That can make an investment in your mortgage a worthy choice psychologically, if not financially. Still, the bottom line, according to our Money Lab, is although there are exceptions, chances are you'll be better off putting extra money into a good mutual fund, not into pre paying your mortgage. End quote. Did you see this article? Kris asked me after she finished reading it. Yes, I said. What do you think? I don't care, she said. I want to do both. I want to invest and prepay the mortgage. So do I I said financial freedom. If we have a substantial emergency fund, if we're fully funding our retirement plans, and if we're saving for other goals, I believe that paying down the mortgage makes sense for us. We understand that we're sacrificing some theoretical and probable future investment returns. But we're also working to create a financial situation that's easier for us to maintain in the long run. If we have no mortgage, that's $1,400 less each month that we have to pay in expenses. We'll still need to pay taxes and insurance since we split the payment, that's $700 less per month that I have to pay. Without a mortgage, my fixed expenses would be about $600 a month. My total expenses would be about 950amonth. This would provide tremendous freedom, granting me the opportunity to try things that I might not otherwise be able to do. Another form of Diversification Every investment book I've read says that a smart investor diversifies his portfolio, putting some of his money into each of several different types of investments. I view prepaying the mortgage as diversification. Sure, the stock market will probably beat the 6.25% I'll earn by doing this, but it's guaranteed money to me. It's better to put my money into my mortgage than into bonds, certificate of deposit, or a high yield savings account, especially if we're entering a recession. You just listened to the post titled Mortgage Prepayment made Easy. Own your home in half the time by JD Roth of getrichslowly.org One of.

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Modern management made simple I appreciate that JD acknowledges that mathematically it makes more sense to invest your money versus paying off your mortgage, but many of our decisions around money are led by emotions, not by what is the most optimal decision. There are certainly emotional benefits to having a paid off house, but they don't appeal to me for a few reasons. First of all, you're always going to have housing costs even if your mortgage is paid off. You'll pay property taxes forever and they will continue to go up. You'll also always have maintenance costs whether you rent or own. Whether you have a mortgage or not, you will always pay something to live somewhere unless you're house hacking, which means you rent out portions of your primary residence and have your tenants pay your costs. I see my primary residence as a lifestyle decision, not an investment and I want to put the bulk of my money into income producing investments, not an asset that needs ongoing cash infusions. My stock portfolio doesn't have any requirements for additional contributions. Whether I put more money into it or not, it will continue to grow. It's an income producing asset. My primary residence has the opportunity to appreciate in value, but over the long term statistics show that this appreciation typically only keeps up with inflation. So why would I want to lock up my money in this tangible asset when it could be working harder for me elsewhere? I do think I'll pay off my house when I'm much older, but it needs to make sense in the context of my overall financial picture. I don't want more than 10% of my net worth tied up in my house. Also, My mortgage is $600 per month. It's a very reasonable cost that I can easily meet even with a loss of income or other financial hardship. If I had a mortgage that was a higher percentage of my monthly income, for many it's close to 30% or more. I would probably get more of an emotional benefit from paying off my mortgage. And that'll do it for today. Have a happy rest of your day and I'll see you on the Thursday show tomorrow, where your optimal life awaits.