What I do it comparing the % of the loan vs expected % of an investment. If the risk adjusted return of the investment is more than the loan, I prioritize the investment. Of course after paying the required down payment of the loan. I wrote a piece about it: https://10yeartarget.com/why-i-dont-want-to-pay-off-my-mortgage/
10 Year Target
There are several points in your article that are simplified to the point they are misleading — I’m hoping to help clarify a few points to both help you understand why that is the case and so that your readers wont take decisions on misleading information.
For example, your statement, “You see, I like to say that not having to pay 4% in interest is equal to receive 4% in returns” is incorrect. A mortgage (or student loans or other personal loans) accrues compound interest which is more complicated than the simple interest that you’re alluding to.
Also, you said: “So if you paid off the mortgage you have $4,000 more the next year because you don’t pay interest any more. And that is 4% of the $100,000. But instead of paying back the mortgage you can instead use the $100,000 and buy index funds.” That is also incorrect. Your mortgage monthly payment is determined by (1) your loan amount (2) your interest rate (3) your loan term. A $100,000 mortgage at 4% and 30 years = a monthly loan payment of $477/month = ~$5,700 per year. A 30 year mortgage will also pay over $62,000 in interest if follow the schedule for 30 years. If the loan term is diminished to 25 years, then = monthly loan payment of $527/month = ~$6,300 per year and nearly $52,000 in interest if follow the schedule for 25 years.
The decision about whether or not you should put an extra dollar towards your loans must be evaluated relative to the interest you would save. I also do believe that it is not always optimal to put an extra dollar towards loans, and I have both written on the topic and created a financial tool to help people determine the answer for themselves. I have found that it is a matter of optimizing the value of your money towards interest saved AND it’s a matter of figuring out the minimum return you need in the market. For example, I ran the numbers in my tool with a hypothetical example. If someone has around $2000 of disposable income, if they divert their funds then they would need to get at least a 5.03% in the market in one optimal scenario — BUT this number should actually be higher because the person will need to account for taxes.
I would be happy to talk through this with you more and answer any questions