🧘 Peace of Mind

FIRE BTC #40 - Why paying off your mortgage early makes you poorer

“Paying off my mortgage gives me peace of mind.”

I hear this all the time, and it sounds reasonable on the surface. Who doesn’t want to sleep better at night?

But that so-called peace of mind is one of the most expensive emotional decisions you can make. You’re trading growth, flexibility, and freedom to placate your emotions. Feelings over facts.

Mortgage debt is the friendliest debt you’ll ever have: fixed, predictable, and slowly melting away thanks to the inherent debasement built into the fiat financial system.

Paying it off early just makes you poorer—and poorer isn’t safer.

This week, we’re breaking down why the “sleep better at night” argument falls apart under scrutiny and why having a mortgage should make you feel more secure, not less.

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🏠 Good debt

People often talk about paying off their mortgage for the peace of mind it brings, as if having a mortgage is a constant source of stress. Perhaps it feels that way because they haven’t actually thought it through. They imagine it as being chained to a monthly payment and believe that eliminating the debt will set them free.

But that’s a feeling, not reality. A 30-year fixed mortgage is one of the most favorable financial tools available to everyday people. Paying it off early is like digging a hole with a shovel when you’ve got a backhoe sitting in the yard.

A mortgage offers something almost no other debt does: fixed terms for decades. Your monthly payment doesn’t change. It’s a predictable obligation you can plan around.

Time works in your favor. Inflation quietly chips away at the real cost of your payment—and the loan principal—every year. What may feel like a big expense today will feel smaller in the future as your income/assets rise and the dollar loses purchasing power. The system is designed to debase currency, and a fixed-rate mortgage lets you use that flaw to your advantage.

It’s also one of the safest forms of leverage. Unlike margin loans or other types of debt, your mortgage can’t be called in because housing prices dip. You don’t wake up to a margin call. You keep the house and the same monthly payment, regardless of market volatility.

People who pay off their mortgage for peace of mind are ignoring these realities. They see debt and assume danger. But a mortgage is a smart form of leverage that enables much faster growth in your wealth.

If you are going to buy a home, taking on mortgage debt gives you more flexibility, not less. Instead of sinking all your capital into an illiquid asset, you can also buy assets like bitcoin that compound in value much faster than the interest rate you’re paying.

🔍 The hidden cost of “peace of mind”

When someone says, “I know it’s not optimal, but it helps me sleep at night,” I know they are less concerned about the math than their emotional comfort. But let’s look at the math anyway, because the cost of that comfort is huge.

Paying extra on your mortgage gives you a guaranteed return equal to your interest rate. If your rate is 5%, every extra dollar you throw at the loan “earns” 5%. That sounds fine if you don’t compare it to what you could earn elsewhere.

An example: You have $100,000.

• Option 1: Pay it toward the mortgage at 5% “return.”

• Option 2: Invest it in the S&P 500 (historical average ~10%).

• Option 3: Buy bitcoin (using a conservative 20% annual growth rate—far below historical returns).

After 10 years:

• Mortgage: ~$163,000

• S&P 500: ~$259,000

• Bitcoin: ~$619,000

That so-called peace of mind could cost you $156K vs. stocks or over half a million vs. bitcoin in just a decade.

That gap is massive. “Peace of mind” may feel good, but it can cost you hundreds of thousands of dollars over time.

And that’s before adjusting for cost of living increases or the growth in the money supply. Broad money (M2) has grown at 7% annually over the last 10 years. By that measure, your 5% guaranteed return is actually a guaranteed loss of 2% per year in real terms. Ouch.

But prepaying your mortgage doesn’t just stunt growth—it also kills flexibility.

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📈 More liquid assets = better security

People think paying off their mortgage eliminates risk. It doesn’t. It just trades one risk for another: the risk of being illiquid.

When you dump extra money into your house, that wealth gets cemented into the walls. If life happens—a job loss or an unexpected medical expense—you can’t peel off a piece of your siding to pay for it. You’d have to refinance or sell, often at the worst possible time. That’s a much more fragile position than having a larger liquid asset base in addition to the equity in your home that can be sold incrementally as needed.

If you’re losing sleep at night having a mortgage payment, it’s time for a mental reframe to focus on flexibility.

Keeping the mortgage and investing the difference gives you two huge advantages:

1. A bigger total savings portfolio that compounds over time.

2. Liquid reserves you can tap if something goes wrong.

Think of your savings portfolio as both your future retirement and your safety net today. Your liquid assets provide a coverage ratio relative to your fixed expenses, like your mortgage.

Lose your job? Your assets can be sold incrementally to cover months (if not years) of mortgage payments while you figure out your next move. And in the normal case, those same investments are growing, leaving you wealthier and more independent.

Not having a mortgage is leaving a lot of opportunity on the table.

This is what FIRE and Bitcoin are all about: freedom and optionality. You don’t get that by locking up capital in bricks for your feels. You get it by keeping your wealth liquid, working for you, and outpacing the debt that the fiat financial system is designed to erode away.

So next time you hear someone say, “I just want the peace of mind of being debt-free,” remember: poorer isn’t safer.

Take a little mortgage melatonin, and you’ll sleep more soundly.

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That’s it for this week — thanks for reading!

Until next time,

Trey ✌️