My coworkers and I started talking about retirement at lunch. I said my retirement depended on the type of house I want to live in after my mortgage on the rental house is gone. I mentioned that I was planning to use all of my cash reserves in order to pay off my mortgage by the end of the year. One lady said that she couldn't imagine doing that. What if something happened, she said. She would rather keep her cash and take an extra year to pay off the mortgage. That would be torture to me. I couldn't stand having that money in the bank while I was paying interest on a mortgage. Plus, if something did happen and I had to use the money for other things then the bank could foreclose even if I owed only a little. I don't want the bank to have that option. Her argument was, what if I got sick and couldn't work anymore. Maybe I don't understand what the risk is. If I got sick now then I would be covered by my work's disability insurance. I would get 60% or whatever that percentage is of my salary. The bank would take my house and I would lose the equity. I would owe lots of bills, the ones that insurance doesn't cover and who knows what else. If I got sick and couldn't work after my mortgage is paid then the bank couldn't take my house. I don't know what would happen with the bills but maybe I would have to sell the house to pay the bills.
To me it seems safer to not have a mortgage. I certainly hope I don't find out what would happen. What I plan on happening is that my next paycheck after I pay off the mortgage will go to replenish my emergency fund. And the next paycheck after that...and so on until I have enough extra money and decide to part ways with my job. It doesn't seem that risky to me but maybe I am blinded by the sight of the finish line.