Consumer Reports Article: Paying down your mortage = not really a good thing...

[Tobra]

Originally Posted by Paul T

That's just nuts - everyone should max their 401k contributions, company match or no, IMO. You can't beat tax deferred growth...

It is not nuts, it is wrong. You can not beat tax deferred growth, unless it is tax free

[Zef]

Originally Posted by KC911

Different strokes... I don't think I've known anyone who's payed off their mortgage have any regrets whatsoever. No debts = No stress + LOTs of disposable income (for investing, enjoying life, etc.) when times are good, and in a worst case scenario (job loss, economy tanks, etc.) No debts = NO STRESS and the world doesn't come to an end . Leverage has a price...

Yup...no more mortgage for me....the extra money is now for family travel and vacations...And no regrets at all...!

[Mo_Gearhead]

QUOTE: "If you execute the above plan and, instead of making the minimum payment you pay extra on principle....then guess what your ROI is on the extra principle money you paid in? Yup, you guessed it. 0%."
______________

Unless you plan to stay in the house. Then you have to factor in ALL that interest money you DID NOT PAY to a bank/financial institution.

If you are young, may change jobs, move, etc. ...run the numbers. If you are later in life/stable/settled ...pay that baby off ...sooner!

[Jims5543]

Guess how much I saved in Interest paying off my 30 year mortgage in 8 years? About 100K

Now I can go about depositing that much in a high yield account every 3-4 years.

Sorry, I just do not agree. I bought a simple home and paid it off. Now I have the freedom, to set myself up for retirement with out the hassle of dealing with a mortgage. I have no real bills other than an Audi lease that is up in 5 months. (<----- huge mistake, I learned my lesson, I will only buy cars cash from now on and they will be affordable) Once the Audi is gone I have ZERO debt and couldn't care less about credit ratings. I do not need to borrow money, if I cannot afford it I am not buying it.

[turbo6bar]

Originally Posted by legion

Wow, that's a pretty elitist statement.

Of course, those of us in "flyover country" didn't get suckered into paying $900,000 for a 800 sq. ft. house. We put 20% down and got 30 year or *gasp* 15 year mortgages. We did stupid stuff like spending 25% (or less) of our income on housing. Now our tax dollars are going to be tapped to bail out the geniuses on the coasts. (Like it always is.)

I'm getting lazy with the proper use of green text. The schools I wanted to attend were in GA, AL, MS, and TN. None were elite schools, and I would have been more than proud to attend any if I had to do it over again. Schools in flyover land present good value and are a way to escape the debt parade.

Originally Posted by the

From what I've seen, there are really only 2 groups of people who don't pay off their mortgages:

2) The wheeler dealers who don't pay it off (but could), and then use that money for other, real money making purposes. Most of these that I know tend to be small business owners that need the money for the business. So the money is helping to sustain a real business, and is making money.

I guess I don't fit your profile. I like paid-off property with a line of credit attached. The LOC costs little to maintain. Interest rates are competitive, and you can use the funds to buy "investment" real estate. Sellers take notice when one brings wheelbarrow full o' cash.

[fxeditor]

Originally Posted by MRM

You spent two bucks on supper? Man, you must have been rich . . .

Originally Posted by dmoolenaar

Don't forget the local happy hour. $2.00 draft and all you can eat taco bar.

I think his "dinner" was free! The 2 bucks was for the beer. A smart choice particularly if you bring a big bag and snag a bunch of taquitos for later!

[KFC911]

Wayne, just think of them as Imortgages. Of course you are correct in the technical analysis, but just like the Iphone, the "intangables" of being debt free is a beautiful thing for "most" of us at this point in our lives. I've seen the merry-go-round abruptly stop for too many people in recent years. Plus, Supe agrees with you

ps: Just kidding Supe, I agree with you on a lot of different stuff

[911Rob]

sorry I didn't read the entire article; I tried twice but couldn't get through it?
Now the thread has gotten away on me and I haven't read all the posts either.
Thirdly, its a Wayne thread/post, so I'm likely gonna catch some heat for not reading the thread to this point if I say something stupid - who me?

Anyway, I'd just like to say that there is GOOD debt and there is BAD debt. People need to learn the difference.

Also, I would never take out a mortgage for longer than a 20 year amortization, but preferably 10 or 15. This is the biggest cons by the banks today.

I sat in a debt free situation for a few years, but I just felt like I was outa the game and too scared to go up to bat, for fear I'd swing the darn thing and miss; again. No swingy, No hitty. I'm back in the game, swinging.

[KFC911]

Originally Posted by 911Rob

...Anyway, I'd just like to say that there is GOOD debt and there is BAD debt. People need to learn the difference...

Agreed. You and Wayne et al that are leveraging debt for you business are in a different league than most of us. I'm in the infancy stages of dabbling with what Turbo6bar is suggesting (i.e. paid off property(s) with a LOC for investment purposes), but I simply don't want my primary residence to be "leveraged and in play". I get the feeling that you "thrive" on the game itself (and are VERY good at it), but some of us just prefer to travel a different path.

[Joeaksa]

Originally Posted by cgarr

This may be true but I sleep a lot better knowing mine is paid off, something no amount of money can buy.. and I am close to retirement too..

Same here and I do both. Pay enough on the principal on my morgage to equal a 15 year note, and invest towards retirement.

[Rot 911]

Originally Posted by Joeaksa

Same here and I do both. Pay enough on the principal on my morgage to equal a 15 year note, and invest towards retirement.

That is exactly what I am doing. I have yet to hear from anyone wishing they hadn't paid their mortgage off early.

[Tobra]

Originally Posted by Kurt V

That is exactly what I am doing. I have yet to hear from anyone wishing they hadn't paid their mortgage off early.

you never will, good theory in article, bad in practice

[cgarr]

They did not factor in the cost of Norvasc, Coreg, Benicar, Altace, Lasix, Cozaar, Avapro, Hyzaar, Micardis, Lopressor and don’t forget the Maalox. Technically it may be the right thing to do but I always look at the quality of life, I still need to have fun..

[einreb]

Originally Posted by Wayne at Pelican Parts

Okay, I tried. There is so much incorrect information in this thread, that I don't even know where to begin. My advice is to read the opinions of everyone here, but then do your own independent research, and if you have questions, talk to a non-commission based financial planner.

-Wayne

I suspect that typical porsche DIY guy demographic doesnt like to carry a payment.

Most folks here that work to pay down a mortgage will likely admit that it might not be the 'best or most sophisticated financial move', but they have paid it down because it gives them peace of mind. There is value in that.

[island911]

Simply: When inflation rate vastly out-paces an effective interest rate, there is good potential gain in dragging-out repayment. ---you just need to know which way the inflation/deflation rate will go.

[911Rob]

Originally Posted by KC911

Agreed. You and Wayne et al that are leveraging debt for you business are in a different league than most of us. I'm in the infancy stages of dabbling with what Turbo6bar is suggesting (i.e. paid off property(s) with a LOC for investment purposes), but I simply don't want my primary residence to be "leveraged and in play". I get the feeling that you "thrive" on the game itself (and are VERY good at it), but some of us just prefer to travel a different path.

Hey Keith,
Thanks for the compliment. I do thrive at the game, but I also kick myself in the arse when I read posts like Jim's above ^; 41, debt free, etc. So I dunno buddy, different strokes for different folks? I'm on a run right now, no looking back, but I'm gonna re-evaluate soon?

Good news is that since I came outa hiding, I've vastly improved my retirement portfolio and lifestyle; changed up the toys, took some trips, etc. I would've never spent savings to do those things.

I'm thinking about having some kind of part-time work for the next 20 years; I can't just sit and enjoy, my bad as Livi says. (my new quote; my bad)

I can also add that when I jumped outa the debt free status, there was DEFINATE risk involved, huge. I'm intrigued by the fact that there is a very high percentage of businessmen that made their fortunes at an age much older than I; maybe some of our best works is still ahead? This last million was way toooo easy to make?, but I don't want to get caught in the kitchen with my pants down either?

Cheers!

[Jims5543]

Originally Posted by 911Rob

Hey Keith,
Thanks for the compliment. I do thrive at the game, but I also kick myself in the arse when I read posts like Jim's above ^; 41, debt free, etc. So I dunno buddy, different strokes for different folks? I'm on a run right now, no looking back, but I'm gonna re-evaluate soon?

Funny, I look at you and wish I took bigger chances over the last few years.

The grass is indeed always greener.


I am happy with my decisions, I do not have the attachments to take big risks and go a very conservative route. The vacation home still gives me anxiety to this day because it took me out of my comfort zone.

[anthony 911]

Originally Posted by Jim Cesiro

Guess how much I saved in Interest paying off my 30 year mortgage in 8 years? About 100K

Now I can go about depositing that much in a high yield account every 3-4 years.

Sorry, I just do not agree. I bought a simple home and paid it off. Now I have the freedom, to set myself up for retirement with out the hassle of dealing with a mortgage. I have no real bills other than an Audi lease that is up in 5 months. (<----- huge mistake, I learned my lesson, I will only buy cars cash from now on and they will be affordable) Once the Audi is gone I have ZERO debt and couldn't care less about credit ratings. I do not need to borrow money, if I cannot afford it I am not buying it.

yes that is the right way

[911Rob]

Originally Posted by Jim Cesiro

Funny, I look at you and wish I took bigger chances over the last few years.
The grass is indeed always greener.
I am happy with my decisions, I do not have the attachments to take big risks and go a very conservative route. The vacation home still gives me anxiety to this day because it took me out of my comfort zone.

Yeah, funny 'eh? You did the right thing buddy and good on ya!

After reading this thread and thinking more on it, I went downstairs and talked to my Vice-President (wife) and told her I thought we should liquidate some of the assets and pay off all the debt, that I'd feel way better. Gonna cost me a few points, but I think it would be the best bet at this time, for me.

Then I can head out to the cabin this summer with no worries

[Jim Sims]

"If you can lock in a fixed rate now, chances are very high that inflation will increase in the near future, and you will have locked in a "deal of the decade"."

Unless a law is passed permitting the loan value/payments to be indexed for inflation. Never underestimate the power of special interests with a lot of money and a lot of money at risk. I seem to recall this occurred somewhere during a inflation cycle in the recent past? Israel?