Don't Drag That Mortgage With You Into Old Age

Pamela McMahon told King: "You always want to take great care of all of your friends and your family and everybody, and you do. We didn't keep our eye on the ball. We made mistakes."

While tragic, McMahon's plight is an example of what happens when you live too large. As I wrote in my first book, "Spend Well, Live Rich," Big Mama believed in a simple principle: It's not how much you make that matters, but how you make do with what you have. If you don't have much, you scrimp and save to make sure it stretches far enough. If you earn a good living, you scrimp and save to make sure it lasts long enough.

If you always spend more money than you earn, you can't possibly earn enough.

McMahon's biggest mistake was taking on such a large mortgage in his senior years. How much longer did McMahon think he could work and earn the millions it would take to satisfy that debt and his living expenses, even without an injury? Clearly he didn't have enough savings as a backup.

Some investment advisers keep trying to convince baby boomers and the rest of us that we are smarter than the Depression-era generation. Don't pay off your mortgage, they say. Invest that cash, they urge. But they're just trying to sell you something.

The fact is, the wisdom of Big Mama's generation about mortgages was right. They understood the risks. If you pay off your mortgage before you retire, you have more financial flexibility. You have a better chance to withstand a major illness or injury, a downturn in the economy or a drop in the stock market.

Of course you need to save and invest, too. You don't want to be in the position of having all your money tied up in your home. If you do, you'll have to sell the home or borrow against it.

Don't listen to the knuckleheads who say keep a mortgage forever. Look forward to the day when you can celebrate the retiring of that debt.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.

· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

· By e-mail:singletarym@washpost.com.

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