You can keep “risk free”* USD treasuries on your personal balance sheet as assets versus “paying down” the cash into the mortgage. *(here “risk free” assumes US government doesn’t default, in which case there would likely be larger issues to worry about!)

Also this could get better over the next few months, if 30 year treasury rates could continue to rise. If rates go higher there is a possibility that the % yield on the 20yr treasury (or maybe even the 10yr treasury) could “beat” your own mortgage %. If so it would worth be waiting for rates to go up and ladder in slowly over the next year or two.

Predicting rate direction and speed of rate increases is notoriously difficult (otherwise we’d all be rich!). However  if US treasury rates do go up over the next 18 months, at some point getting (maybe) 0.5% to 1% in treasuries “risk free” over your mortgage  is potentially possible. According to the CME group interest rate predictions there is about a 50%/50% chance of a FED funds rate rise by this about time next year (select “July 2014″)

Anyway this is an interesting idea that hasn’t been possible for the last few years due to ultra low US government bond rates.

Having some fixed rate secured debt such as a mortgage can be seen as a way of preserving your purchasing power over time. For example your $2000 monthly payment on your $400,000 4.5% 30 year mortgage will still be same today as it will be in 30 years. However due to inflation in 2042 that $2000 will be able to purchase significantly less goods and services.

A mortgage can be “good” long term debt if you can comfortably afford it. It does not logically follow that because there will always be inflation you should try and get into as much mortgage debt as possible!

If you have any debt, then inflation is good for you as a debt holder, but bad for the bank as the lender. You could also see your mortgage as a way to combat the steadily decreasing purchasing power of your US dollars.

This normally works over long periods of time like a 30 year mortgage.

But can apply the same principal on a smaller time frame? Using the float my mortgage method you can borrow money for a short term period to pay your mortgage. As long you borrow the money at a lower rate than the inflation rate – you will be ahead of inflation.

Assume you get a 2% loan for 1 year, and you believe the annual inflation rate is 3%. In actual dollars it will look like lost 2% on the loan. But your actual inflation adjusted spending power is positive 1% (that is the inflation rate minus loan rate). If the loan rate is lower than the inflation rate you are ahead.

The government stated Consumer Price Index (CPI) is a generally accepted way of measuring inflation for consumers. For example on Aug 15th 2012 the CPI had increased 1.4% in the last 12 months. Some people believe that these government inflation numbers are really unstated and do not explain people’s perception of eroding middle class spending. No matter who you believe, the real world experience is that consumer prices are rising and your dollars buy less and less each year you hold on to them.

The Float My Mortgage method pays your mortgage payments now today with other peoples money, but does not actually pay them until 1 year or more later! This is the “floating” part of the Float My Mortgage method that combats inflation.

This inflation benefit is difficult to define exactly, because it is hard to know the “real” inflation rate. For this reason we never include the inflation rate in your Float My Mortgage savings. However “floating” your mortgage payments to combat inflation is still a real world benefit for the Float My Mortgage method.

Wouldn’t it be great if you could find a way to pay your mortgage today with someone else’s money but still have the same mortage payment money available to invest for a year or more ? You’d only have to pay your mortgage payments a year or more later, leaving you the money to invest today. Think about how much investment opportunity that could provide you.

What if you could get a loan to do that at 2% or less for up to 2 years ? That interest rate is less than most people’s mortgage, so you could save significant mortgage interest by overpaying now, without having to actually pay up until many months later.

While you were waiting you could just use the money to put in a 1% savings account. That’s not much, but it reduces the 2% loan rate!  That’s also likely to be way lower than your mortgage rate right now!

You would be saving big on lifetime mortgage interest by overpaying many months earlier – without using your own money.

Using the 1% savings account and the “loan” is the basic Float My Mortgage method. Sign up for a free membership to see a 15min video that explains how this works in much more detail. A paid membership gives you the full process with manual, videos and spreadsheets.

If you wanted to try and make more return you could add the money to other investments you already own – other than a 1% savings account. This is an optional part of the method if you are comfortable with the increased risk. It is absolutely not required to run the basic Float My Mortgage method. This is the “super charged” version of the method to invest your mortgage payments.

Most people don’t consider the possiblity of “floating” your mortgage payments with a short term loan of 1 year or more. This returns your lost investment opportunity for that time, because you can short term invest your money that was previously going to mortgage payments. You still pay the mortgage payments to your mortgage provider today, but don’t have to actually pay out of pocket for them until later. This means you are free to invest, assumming that you do this is relatively conservative investments with a good chance of returning your principal.

This video gives a quick overview of investment opportunity cost with your mortage:

Returning your investment opportunity is one of the benefits of the Float My Mortgage method. Sign up for a free membership to see a 15min video that explains how this works in much more detail.