If You Had an extra $1000 per month to invest

[MRM]

Sammy is one of the few who has a personal pipeline to the truth. I'm sold. I was going to put my last year's Keogh into Visa's IPO but I'm going to do as Sammy says.

[gatotom]

I would do the most logical thing, buy that sailboat I have always wanted, not that I need it but I would enjoy it......it would be my retirement.

Kids are all out of the house, house is almost paid for, at my age hookers and drugs really don't mean that much...not that I would turn them away but there are more things in life than hookers and drugs.

[on2wheels52]

I guess I just hate payments. Paid off house #2 a year after (paid off) house #1 sold ten years ago. Plowed the extra money into stocks. Did some oil drilling ventures early this year, I think future investing will be back in the market.
Jim

[FrayAdjacent911]

Heck, if we went to the Fair Tax model, I'd actually HAVE an extra $1000 a month in my pocket.

[Rot 911]

I appreciate all the suggestions guys! Keep them coming.

[id10t]

Pay off the debt we've accumulated by having the wife be an at home involved with the kids mommy. We figured our other option was for her to work, but a good chunk of her pay would've basically gone to childcare costs, and why pay someone else to "raise" your kids?

After debt payed off, I'd have to diversify - some things for quick cash value (more guns... esp. the homeland defense style...), some in relatively easy to access savings, some to retirement for me, put more in for the kids (dirt broke but they are started...) , etc.

[berettafan]

don't know housing in your area but where i live $1k/mo would cover the shortage on two decent 3br/1.5ba rental houses w/ 20yr notes.

would do this ONLY if the market was not at tops and ONLY on certain age/location/build quality houses (what i would call blue chip first time homebuyer stuff that i expect to stay liquid).

[aigel]

I already have a 993. My leftover money goes to the mortgage, a college fund and if I get any more, the 993 biturbo fund.

Liquidity is important, but if you have decent equity in your house, you can get a HELOC for free with plenty of money for emergencies. Just takes discipline to make 993 biturbo purchases a non emergency ...

George

[LeeH]

Originally Posted by Kurt V

What would you do? Assume mortgage interest rate is 6.25% for 30 years.

How many years left on the current mortgage?

[Rot 911]

Originally Posted by LeeH

How many years left on the current mortgage?

29 years. I'll probably be dead before the mortgage is paid off.

[KFC911]

I like financial flexibility to the point that I'm willing to give up (real estate) leverage and "potential returns" in favor of being debt free. What the future holds (job loss, etc.), I have no idea, but sleep well knowing that I don't owe squat and will be just fine regardless. Having no debt equates to "lots of financial options", not to mention "peace of mind" .

[Rick Lee]

I don't think being "debt free" is all that it's cracked up to be. If you have no mortgage on your house, you still have taxes and insurance, which amount to over $1k per month on my semi-retired parents' modest house in Hunterdon Co., NJ. If you have a mortgage with a lender's title insur. policy, they will go to bat for you if neighbors or the county mess with you. It's rare, but it does happen. And it's not like paying down mortgage debt is gonna be quick and painless. It's still years, maybe 10 at minimum. Remember the old saying, "If you owe the bank a $300k, you may have a problem. If you owe the bank $1 million, THEY have a problem." I'd rather use someone else's money for stuff like that.

[turbo6bar]

I don't think the "debt to wealth" method is all it's cracked up to be, either.

Kurt V, if you don't have a creative ways to invest that money (small business, rental property, etc), then splitting the $1000 between principal pay down and simple low load index funds would not be a bad strategy. As mentioned above, you can access the equity via HELOC.

Foremost, I'd max out every tax-deferred or tax-advantaged account and then sock away the rest in another form.

jurgen

[KFC911]

Originally Posted by Rick Lee

I don't think being "debt free" is all that it's cracked up to be....

Remember the old saying, "If you owe the bank a $300k, you may have a problem. If you owe the bank $1 million, THEY have a problem." I'd rather use someone else's money for stuff like that.

I'm "old school"...I can't even comprehend that "owining someone else a LARGE amount" is "their" problem. I could not sleep at night with that approach to life...

ps: "Debt free" = "Financial Freedom" to do wtf I want to...I sleep well at night
pps: I've never, EVER heard anyone from the "debt free camp" complain, but you are right, it isn't necessarily easy to get to that point.

[tc-sacto]

Why would one pay down the mortgage? If he is in the 25% tax bracket, his true cost of interest is 6.25%-25%tax = 4.68%. Certainly you can invest the money at an after-tax rate of greater than that.

Since 1926 50%stock / 50%bond portfolio has averaged 8%-25%tax = 6%
Since 1970 50%stock / 50% bond portfolio has averaged 10%-25%tax = 7.5%
(as measured by the S&P 500 and Long term Gov Bond)

Both series aren't even aggressive, but moderate portfolios.

P.S. Over 29 years the house, (assuming $300,000 would cost roughly $650,000. The $1,000 after tax, at 6%, would be wourth $934,539: you'd be ahead aprox. $284,539)

[KFC911]

I do not like to owe anyone for anything unless I ABSOLUTELY have too...that's just the way I was brought up. Without mortgage payments (I also own two SFH rentals in addition to my primary residence), I'm well on my way to having (as PWD puts it) "screw you money". I'm not rich (and never gonna be), but I don't have to dance to anyone else's tune either. I do know one thing...in order to reach this point, I was more financially prudent along the way than many of my peers (it was NOT easy). I just like the "financial freedom"...I realize it's not for everyone.

[sammyg2]

Debt free with a limited income only buys you a certain amount of freedom.
Having a manageble amount of debt with a huge pile O'disposable income will buy you all kinds of freedom.

With wealth comes freedom, but also responsibily and commitment.

Some folks prefer less wealth and less commitment, some folks prefer the opposite.
Whatever you are comfortable with is what you should do. It all boils down to priortities. Are you willing to accept the extra risk, responsibility, and commitment it takes to obtain wealth?
Are you more comfortable with less of the above? it's a personal choice.
My priority was set in my early 20's.
I didn't mind my job that much but absolutely shuddered at the thought of doing it for 40 years. I wanted to amass enough wealth that I could retire early and live comfortably and I was willing to do what it would take to get there. I now work only because I want to. If it stops being fun I walk.

Real freedom is knowing that you can walk away from your job at any time without a financial burden, and your boss knows it too.

[KFC911]

Originally Posted by tc-sacto

Why would one pay down the mortgage?

Since I get paid once a month, it's like hitting the lottery 12 times a year

[KFC911]

Originally Posted by sammyg2

...Real freedom is knowing that you can walk away from your job at any time without a financial burden, and your boss knows it too.

[pwd72s]

Originally Posted by Kurt V

29 years. I'll probably be dead before the mortgage is paid off.

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Do the math...with an extra $500 per moon applied to principle, I'm betting it would be paid off a lot faster than you imagine...