mortgage

[redriverhunter]

Had an interesting conversation with my co worker today. He and I were debating on what to do with his mortgage. My school of thought is take the extra cash and pay it down. His is he should put his money somewhere and let it grow because his mortgage is only going to loose value due to inflation. I then asked him where he going to put his money to grow. stocks are an options but, can he survive any paper loose at 55 or so. We talked about precious metals but, the premium it is pretty pricey. humms what do you think would be the way to go?

[ryanmattes]

During inflation is the best time to pay down debt, if you can afford to do it. Inflation means $1 has less purchasing power on the open market, say $0.50-$0.75 compared to the previous dollar, but the mortgage has a locked-in total dollar value (which is also worth less during inflation), so it still pays off $1 of that loan. Pay down those dollars when they're worth less, rather than when they're worth more, and then you can rest easy knowing that you only paid $0.50-$0.75 on the dollar you borrowed.

It's one of the few ways to get higher value out of your money when inflation is high, other than investing in something that will yield higher than holding your cash until the value improves. The tricky part is being able to afford it when rates are high.

Sent from my Pixel 5a using Tapatalk

[Winger Ed.]

I'm big on being debt free.
If you keep a mortgage, add up all the remaining payments, then subtract the principal.
That's how much you're paying to rent someone else's money.

If the mortgage interest rate is low, you might make out by keeping it and investing what you'd pay off.
But the investment's return will need to catch up and pass your total interest payments in the same or a shorter amount of time.

[Alstep]

I'm big on being debt free.
If you keep a mortgage, add up all the remaining payments, then subtract the principal.
That's how much you're paying to rent someone else's money.

If the mortgage interest rate is low, you might make out by keeping it and investing what you'd pay off.
But the investment's return will need to catch up and pass your total interest payments in the same or a shorter amount of time.

Good advise here. Get that debt payed off!

[flyingmonkey35]

Precious metals are useless. The brokage fees on selling them can be almost as much as any capital gain that can occur on it.

Also you can’t just walk up to car dealership and buy a car with a few gold coins.

Stocks are scary. Even my own 401k. Is not secure We could easily have another great recsseion.


Pay off your mortgage. After that find out how much money you need to live on. + 10%. Then you can invest or buy shiny things.
A bank can’t repo a paid off house( although they may give it a try).


Sent from my iPhone using Tapatalk

[dverna]

If his mortgage is at 3%, paying off the mortgage may not be smart. I have been averaging 6%+ for years on other investments.

Inflation kills savings in cash but it makes assets worth more.

[Bmi48219]

During inflation is the best time to pay down debt, if you can afford to do it. Inflation means $1 has less purchasing power on the open market, say $0.50-$0.75 compared to the previous dollar, but the mortgage has a locked-in total dollar value (which is also worth less during inflation), so it still pays off $1 of that loan. Pay down those dollars when they're worth less, rather than when they're worth more, and then you can rest easy knowing that you only paid $0.50-$0.75 on the dollar you borrowed.

Debt bites as does credit. If it takes borrowing $$ to own a home at least you could look forward to a small tax break and hopefully see your home appreciate in value.
The demand for and price of homes has skyrocketed in the past year. But certainly a lot of the price boom is due to inflation. As far as a bank mortgage goes, I would give the banks what they deserve and continue to pay with inflated $$, keeping in mind you’re paying both the principle and interest with money that isn’t worth what it was when you took the loan.
A bigger concern to me is the real estate market is headed for a crash. Paying off a 300 K mortgage only to realize a year later you can’t get 200K for the home is depressing.

[skeettx]

Pay off the debt and set up an account to pay insurance and taxes

Mike

[cwtebay]

My student debt was substantial. I was given a 2.7% interest rate by consolidating, minus 0.5% by doing auto payment, minus another 0.5% for payments made consistently for 18 months. As soon as I struck the deal I maxed out every possible loan available. I would be an idiot to ever pay them off.
Cash shrinks, fixed rate debt does not. Pay off today's money with tomorrow's inflated money.

Sent from my Pixel 5 using Tapatalk

[GregLaROCHE]

It’s a good feeling to have no debt and a couple of bucks the bank, but if you have low interest fixed rate mortgage, it’s probably better to keep it because inflation is on its way back again.

[Handloader109]

My student debt was substantial. I was given a 2.7% interest rate by consolidating, minus 0.5% by doing auto payment, minus another 0.5% for payments made consistently for 18 months. As soon as I struck the deal I maxed out every possible loan available. I would be an idiot to ever pay them off.
Cash shrinks, fixed rate debt does not. Pay off today's money with tomorrow's inflated money.

Sent from my Pixel 5 using Tapatalk

Was substantial? Sounds like you have a pet for life. It will bite you in the hiney.
Lose your job, lose your car, house etc.
Pay off your mortgage, car and credit cards, sleep well at night.
Don't forget, any deduction on taxes for mortgages is that, a reduction of about 25% of what you already paid out. Don't pay it out and you save 100%.

Sent from my SM-G892A using Tapatalk

[beemer]

I paid my house off as quickly as possible. I have watched people twist and turn with percentage points, loans and mortgages trying to save a few bucks. If you pay off your mortgage your house, money and peace of mind are yours also.

A good many years ago my daughter was buying a car, being young she needed me to sign for her. Not being my bank they wanted some info on me. I couldn't get it though his thick skull, I didn't inherit my house, I wasn't given my house, I wasn't renting my house, I built it myself and paid off the mortgage. His mouth fell open, then he approved the loan. Sort of funny, he couldn't get his head around it.

[farmbif]

I'm with winger ed here, many years ago someone I trusted told me something like the word mortgage came from latin or something that originally meant "life sentence". well once you get that mortgage monkey off your back its like the sunshine can finally come through and more possibilities in life are open to you.

[NSB]

Everyone wants to be debt free, but sometimes it isn’t a good idea to do so. A few years back I bought a new car, a Honda Pilot. I went to the bank to take the money out of some investments I have to pay for the car. My financial advisor ran the numbers for me on withdrawing my own money out of my investments vs. borrowing the money at the dealer at .9% interest. I would have lost forty-eight hundred if I’d used my own money vs paying Honda six-hundred-fifty dollars using their money. Turned out to be a no-brainer. If you’re earning good money on your investments and can borrow at low interest, borrow the money. Sometimes “debt free” isn’t as good as it looks. I guess it just depends on your own personal investments and finances.

[Rich/WIS]

Prefer to be debt free but that is not always possible, particularly where home mortgages are concerned. Other than a house, or perhaps a new car it is doable but some people go way beyond that. Many can't tell the difference between want and need, and coupled with the "gotta have it now" mentality extend themselves more than is prudent. When times are good this is not an issue, but if the economy takes a down turn they find themselves in trouble.

[rancher1913]

we only use others money when its free, used to be 0% interest loans were around, probably not so much now.

several money managers are telling people to pull all the equity out of their home and invest because they can make so much money. the money guy makes a lot of money the homeowner takes all the risk, soon the market will crash again and they will be left underwater in a home that the bank will take. pay of your debts before its to late.

as for not being able to buy a car with gold, many dealers around here will take it. the long reach excavator cleaning out my lakes even takes it as payment. if it gets bad, I expect a lot of stores will take it again. if it gets that bad I know that if you come to me wanting to buy a cow you better have gold or your going to starve

[pmer]

The Dave Ramsey show has good advise. Pay off debt and you'll be a millionaire before you know it. We're working on the mortgage to get it paid off.

[MaryB]

Precious metals are useless. The brokage fees on selling them can be almost as much as any capital gain that can occur on it.

Also you can’t just walk up to car dealership and buy a car with a few gold coins.

Stocks are scary. Even my own 401k. Is not secure We could easily have another great recsseion.


Pay off your mortgage. After that find out how much money you need to live on. + 10%. Then you can invest or buy shiny things.
A bank can’t repo a paid off house( although they may give it a try).


Sent from my iPhone using Tapatalk

What broker??? I just list it n eBay... Since I bought low I can sell at spot and still make a tidy profit...

[gwpercle]

Invest in Primers ... the price has been on a steady gain since 2000 and pricing shows no signs of coming down ! Primers are a better investment than Gold !
Gary

[JonB_in_Glencoe]

There are two schools of thought.

Being debt-free is one.

Using borrowed money is another.

When I'm giving advice, I generally speak about my debt-free-ness. But if your co-worker is of the other school of thought, it's really useless to have the conversation.

Yes, there are a few rare instances were using borrowed money is advantageous, but usually there is a better alternative. NSB mentions the new car loan, which is a good plan if you "have" to have a new car. I never bought a new car, and never will. I hate paying interest and avoid it if at all possible.

I bought my current house in 1993 and paid it off in 1997...Best feeling ever is not having a home mortgage.