mortgage

[rancher1913]

My 95 year old mother just passed away and left her three children some money. She was always wanting to pay off my mortgage while she was alive, but I refused because her money was for her care. She said she lived through the depression and the ones that survived were the ones without mortgages.
With the inheritance, I am paying off the mortgage (thanks mother - the discharge came in today), putting some money into the house for needed repairs, and buying some silver. What money is left over is being turned into CASH....to keep in the safe.
You don't need to pay super high premiums on silver...yes, the Eagles are expensive.....but you can purchase maple leafs or Kruggerands. Same silver....from a sovereign government Another option is 10 oz. Germania silver bars.
You will be glad to be debt free. When everything falls apart, that will be the key to survival.

right now the wisdom is to buy gold, its a cheeper deal if that makes sense. the local dealer has a lot of people selling him silver and buying gold, few months ago it was the opposite

[FISH4BUGS]

right now the wisdom is to buy gold, its a cheeper deal if that makes sense. the local dealer has a lot of people selling him silver and buying gold, few months ago it was the opposite

I agree that gold is also good. my logic for buying silver over gold (I DO have some gold however) is that if it ever got down to the SHTF scenario, it would be easier to break an ounce of silver rather than break an ounce of gold.
Here, Mr grocer, can you break an ounce of gold?

[FISH4BUGS]

dont take this as a personal attack but this was the kind of advice I was talking about that MIGHT get you killed financially, I say MIGHT because nobody can predict the future but sooner or later we WILL have a crash and if you get caught with a mortgage and complete loss of your investments you are SOL. everybody has their own level of risk but for me the lost income on investments is a small price to pay for piece of mind knowing I have a roof over my head.

Yup....right on the money. As long as the market keeps heading up, you are good....but when it tanks (and you know it will at some point) you will be in the world of hurt.
Bankruptcy is no fun.

[dverna]

The fear of markets "tanking" are a bit exaggerated. It is unlikely we will ever see a 30% drop in the market.

If you are growing at 6-8% a year (on average), it does not take many years to do better in the market over the long haul. Last year I made 12-20% on different portfolios (different risks).

For people living hand to mouth, having their home paid off is a huge comfort and that has "value". Especially if they are older and/or have jobs that are not secure. The prospect of no income is real for them.

IMO if someone has an extra $300/mo they are better off putting it into the market than paying off a 3% mortgage early. But that takes discipline. Too many folks will look at their portfolio as a way to pay for vacations, a boat, RV, a new gun every few months, etc etc....silly things that do not add real value and security. Paying off the mortgage takes that temptation away.

People who build wealth can be lucky but most are disciplined and work both hard and smart.

[FISH4BUGS]

The fear of markets "tanking" are a bit exaggerated. It is unlikely we will ever see a 30% drop in the market.

I don't know where you were in 2008-2009, but where I was, the Dow didn't reach its lowest point, which was 54% below its peak, until March 6, 2009
Everyone has a different level of risk tolerance.
Yours may be, but mine is NOT in the stock market.

[ShooterAZ]

Take 2001 and 9/11 as another complete tank. My 401K was cut in half by that one.

[rancher1913]

and non of those come close to the depression, took like 20 years for the stock market to recover and thousands upon thousands of investors lost everything including their homes. its been almost a hundred years and soon the fleecing will happen again.

[GhostHawk]

I had 3 uncles and an Aunt who were all pretty well off. They all played in the market. They made some, and they lost some.

One uncle explained to me that every so often the truly big money boys would all get together. They would sell a stock, or series of stocks short. Dumping billions into the market. People would get scared, start selling. The stocks would go down like an elevator. And when they felt they had made enough. They cashed in, then buy the same stocks back at the now dirt low price. And ride it back up. That would take longer, maybe a week or 2.

They would make money BOTH ways, down and up.

And there was not a dang thing the average investor could do except to not sell. Don't panic.

That is NOT where I want to put my money. I'd rather have it under the bed.

I have 300k making me 5% interest in a contract for deed land sale.
Now that is virtually risk free. As if they don't make payments on schedule I keep both money and land.

I would love to find someplace I could put another 200k at 4-5% interest, but it all has risks, big ones.

[MUSTANG]

Our Houses, Property, Vehicles, and everything else is paid off. No balances on credit cards - paid off as soon as the bill arrives. No money goes to the bankers; it's ours to spend when/where we want. We are blessed more so than most of America because of this.

Our RISK? The local/State/Federal governments confiscation of our property/holdings through regulation and taxation. The Federal Government and Federal Reserve making the money worthless through inflation. The Federal Government repudiating debt and personal money accounts by issuing what i call "The Blue Dollar" and replacing the "Green Back" at a 1:1,000 or 1:10,000 or 1:100,000 or ....; Not much we can do about that.

[Winger Ed.]

Along with the peace of mind with being debt free-
When We paid off our house, I considered it a long term investment by itself.
Sure, it didn't have cash flow, but it did go up in value over time.

When I cashed it in:
Not only had I lived there rent free from '96 till 2017, but it sold for 3 times what I had paid/invested in it.
With that, we were able to pay cash for the house on the lake we retired to.

Would the same money made more put somewhere else?
Maybe, but probably not, and the temptation to be spending off it along the way would be there too.

[Huskerguy]

I don't have enough information. What is the house interest rate, how long is the loan 15 or 30 years, how many years are left? What other debts does this person have? Pay down the highest interest debt first if he has any. Small ones first as well. If it is simply a choice between paying the house off and investing, I rece try told my son to do both. Pay the house principal, don't just make extra payments. The interest compounds and really adds up, thus my questions at the beginning if this.

I am in the process of interviewing brokers for my little nest egg and the consensus is we haven't seen the worst of this yet. Stock multiples are still high so they have a ways to go down yet. Bonds should make a comeback after getting killed.

I go by the rule of 72. Divide 72 by the return on your money equals when the money doubles. So a 10% return gives a double if the money in 7.2 years. At his age, he has 2 to three cycles. Living in borrowed money is a lie. I have some investment property and could borrow extra money but instead I have everything paid off and live within my means and not chasing saving $20 on taxes by spending $100.

Pay the house down AND invest, do both and use any raises to increase this.

[Wag]

My career for the last 35+ years is in finance. I've made more than my share of mistakes during that time but I've learned a lot in the process. A short list:

Cash is king. If you're paying down debt but you have no savings account, it's very likely to bite you in the hiney sooner or later. Pay down your debts, sure, but put half that money into accessible cash. Accumulate it until you have about three to six months of available, accessible cash. Yeah, you'll save money paying down the mortgage but once the banker has that cash, you can't get it back without huge expense and time and inconvenience. Also, if you were to lose the house because you have no cash, ALL of the cash you put into the house is gone, baby. You may get a bit back but not much and not enough.

Interest is evil if you pay it, it's your friend if you collect it. Another way to say it, is, people who understand interest collect it. People who don't understand interest pay it. So, use credit cards if you like the convenience of them but pay them off every month like clockwork. Ergo, don't buy things with a credit card that you couldn't pay cash for if you went over to the bank to get the money to buy stuff.

Everything else is paper discussion. Calculating the value of money versus inflation is not a bad conversation. Calculating the value of money saved by paying down your house is valuable as a motivator. Do those things absolutely. But pay attention to cash and work to minimize interest paid on things you buy.

The rest will likely fall into place with you regardless of the paper calculations. And for that, you can educate yourself and you can find investment advisors.

--Wag--

[Wag]

Should have mentioned, if you're already retired, then cash is even MORE the king. Protect it. If you spend too much chasing massive returns like a 25-year old, you could be in big trouble very fast.

Social security has been going down hill for many years and should be insolvent in the next 10 or so years. Stay safe out there, my friends.

--Wag--

[owejia]

Debt free is good. Making a living for yourself and the banker is not so good. Best investment around here is land, should have bought more when I was young.

[georgerkahn]

You made some great points, Wag -- thank you. Fwiw, about 30 years back our car died and we had pretty much zilch (two little kids, one with a medical ($$$) condition) to use to obtain a replacement. I got lucky seeing a dealer's newspaper ad with a too-good-to-be-true price on a RamCharger, and although he really kicked up a storm, dealer honoured the price -- and we again got wheels.
Germane to this thread, after I paid off the vehicle, I "continued" making the same, exact payment -- now to a new share draft (aka "checking") account I opened at a different bank. Yup -- every month I continued to make the "payment".
Guess what -- when the RamCharger got irreparable I saw a F150 Ford advertised. Even with super lo-ball trade-in allowance subtracted from sticker price -- I was able to execute purchase of a (brand new to me) three-year old truck in pretty fair condition for... $376.00! (I even left five dollars in the share draft account).
I have continued doing this practice, and have since gone through four, plus the '16 Tacoma (purchased brand spanking new) I now have -- without paying a penny's worth of interest!
To be quite frank, I raised my "car payment account" monthly from the original for the RamCharger $275.00/month to $300.00; then $350.00; and have kept it at $400/month for past six years or so... Definitely not the brightest bulb in the fixture -- 'specially re finances -- I do boast this as a (rare ) bit of brilliance on my behalf. Maybe... Maybe not -- but it sure worked/works for me!
geo

[MrWolf]

Along with Wag's suggestions I would take out a line of credit on your primary residence. Do this now, when you do not need it. Very hard to get credit whe. You lost your job, health, etc. Having that line there and knowing it is available in case of an emergency can make all the difference.
Ron

[farmbif]

for most people like myself credit and debt leads to stress and struggle that quite often lead to relationship problems and more. if you need credit to fund successful business expansion that is another thing all together but personal debt to fund purchase of consumer products can become troublesome.
having a free and clear deed to house and property is a matter of personal security. for me sorting the differences between wants and needs and many years of working 2 jobs plus my own business finally got me mortgage free.
I'll never forget some teacher in school was teaching about finances and told us the root meaning of the word mortgage was life sentence or something like that

[JonB_in_Glencoe]

The fear of markets "tanking" are a bit exaggerated. It is unlikely we will ever see a 30% drop in the market.

>>>SNIP

Looking in the rear view mirror, My mutual funds lost about 25% in the calendar year of 2022.

[JonB_in_Glencoe]

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?

I think it's always good to pay off a mortgage as swiftly as possible...even with the hindsight of 2009 housing bubble bust. I paid of my Mortgage in 1997 and that is the primary reason I was able to retire early (I was 51).

[Rapier]

The mortgage loan interest is loaded in the front half, with 98% of payments in the first 10 years going to interest. If you make just a payment, plus the next single principal payment, you can pay an entire 30 year mortgage off in 12 to 15 years. There is no better investment that to no longer pay anyone to live in your residence or your property.
Then if you want to really invest intelligently, a free and clear home is a great leverage item to borrow money on if the right opportunity comes along.
If you can not watch the stock market every second of every day, stay out of the stock market.