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.

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[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).


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[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.

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[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 TapatalkWas 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%.

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[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).


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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.

[blackthorn]

Depending on where your finances float, pay down(off) the highest interest debt first, then the second and so on. If you do not have strong self control---a pair of scissors for use on your credit card(s) is your best friend. I retired (for the last time) in 2006, debt free. We live a good life on our combined pensions and have not (so far) had to touch our investments. In fact, Covid has caused us to increase our savings substantially! Debt free rules!

[reddog81]

Too many unknowns to give any worthwhile advice. What's the rate on mortgage? How much other debt does he have? What are the rates on the other debt? How much extra are we talking about paying down - $50 a month, $500 a month, pay off the whole thing?

How does a mortgage lose value during inflation? If he's has a 3% rate and inflation is 7% per year than your coming out ahead paying with next years money that's less valuable versus todays money. If inflation goes to 100%, your mortgage payment will stay the same, but in theory your income should double. Unless a person is on a fixed income, which I'm assuming he's not since he's a "coworker". If inflation takes off, banks will raise rates, housing prices will go up, buying a house will become harder, but none of that is relevant because he already has a house and mortgage. Additionally the house should be going up in value. Having a low interest loan on an appreciating asset just means you are using the banks money to acquire something that should be worth substantially more in the long run, while paying the bank a low interest rate.

Precious metals can tank as a easily as any stock. Gold and silver are not what I would consider cheap right now. and the fees to buy and sell are substantial.

[sundog]

...Best feeling ever is not having a home mortgage.

Yessir! And run your own escrow account with regular periodic deposits for property tax and insurance, never worry about laying out a wad for those two things - it's already there. Sleep well friends.

[country gent]

Look at it this way on a long term mortgage loan an extra dollar in the beginning payments can make 50-100 over the life of the loan this changes as the loan matures. Most loans the first few years on a 700.00 payment the principle is 35-50 dollars the rest is interest. Its a pretty good return on a few dollars now

[MT Gianni]

A while back my brother and I came into an inheritance. We paid off our house and out our previous house payments into paying off our debt + adding to the 401K. he kept his in investments and added more. The market bounced and he still owes on his house.
If you pay off your house and play with your old payments you can be at a wash or losing funds. If you pay it off and reinvest it you are far ahead. Also if you don't have a car payment now, save for when you will by setting it aside, even at terrible rates.

[GregLaROCHE]

Don’t forget that if you have a mortgage on your home, there is a good chance it will be yours in 20-30 years. If you rent your home, you would have been giving all that money over the years and end up with nothing. If you are responsible and hardworking, a mortgage on a home can be a good move. Especially, now that interest rates are still low.

[BamaNapper]

Before you slam me, I am also a debt-free kind of guy. I hate debt and avoid it like the plague. But...

Cut a deal for home equity. Assume 100K at 3.5% which is still possible with no loan fees if you're backing it up with a ton of equity. That's a 30-yr payment of $450, or $5400 per year. Pay it off after a year. Your payoff is 98K, leaving you $3400 out of pocket. The math works out, you paid about 3.5% to hold their money for a year. The question is whether you can realize a gain of more than $3400 with their money during that time. Nobody knows the future, but the equities market tends to rise along with inflation. Assuming 10% inflation, it wouldn't be out of line to get 10% return on equities. That would be $10K return on the 100K, which leaves you $6600 to the good after the $3400 out of pocket. There is indeed an argument to be made for holding debt during inflation.

The flip side is to invest monthly what you would have paid in loan payments. You'd put in $5400 total, and assuming you still get 10% return you will have a balance of about $5700. You'll net $300 at the end of the year (I had to put it into a spreadsheet to get the balance).

If you can get the 10% return (just matching the inflation rate), it sure looks like you come out money ahead by being in debt. The gamble is whether you're lucky/wise enough to invest where and when you can get the return.

[ShooterAZ]

Paying off the mortgage is the way to go IMO. Once I got paid mine off, I saved and invested what I had been previously been paying on it. It adds up quick!

[reddog81]

Paying off the mortgage is the way to go IMO. Once I got paid mine off, I saved and invested what I had been previously been paying on it. It adds up quick!

I pay my mortgage and invest. The mortgage rate is under 3%. As long as my investments do better than 3% it doesn't make any sense to pay off the mortgage. I put more into investments every month than I pay towards principle on my house. My house is currently worth twice what I paid for it and my investments are worth quite a bit more than my house. Paying extra might make a person feel better but it's not necessarily the best financial move.

[rancher1913]

Before you slam me, I am also a debt-free kind of guy. I hate debt and avoid it like the plague. But...

Cut a deal for home equity. Assume 100K at 3.5% which is still possible with no loan fees if you're backing it up with a ton of equity. That's a 30-yr payment of $450, or $5400 per year. Pay it off after a year. Your payoff is 98K, leaving you $3400 out of pocket. The math works out, you paid about 3.5% to hold their money for a year. The question is whether you can realize a gain of more than $3400 with their money during that time. Nobody knows the future, but the equities market tends to rise along with inflation. Assuming 10% inflation, it wouldn't be out of line to get 10% return on equities. That would be $10K return on the 100K, which leaves you $6600 to the good after the $3400 out of pocket. There is indeed an argument to be made for holding debt during inflation.

The flip side is to invest monthly what you would have paid in loan payments. You'd put in $5400 total, and assuming you still get 10% return you will have a balance of about $5700. You'll net $300 at the end of the year (I had to put it into a spreadsheet to get the balance).

If you can get the 10% return (just matching the inflation rate), it sure looks like you come out money ahead by being in debt. The gamble is whether you're lucky/wise enough to invest where and when you can get the return.

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.

[elmacgyver0]

When you have debt, someone else owns your stuff.
If the crap does hit the fan, you have nothing.
My vehicles are 20+ years old, I own them debt free.
I own my home debt free.
All I pay are the property taxes.
Property taxes suck but nothing I can do about that.
Perhaps I'm stupid, but it does give peace of mind.

[FISH4BUGS]

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.

[Tazman1602]

My thought —— no debt….IF you can do that. At one point wife and I had a mortgage, car payments, CC, etc. Took us 20 years to pay off mortgage and cars and we now have a policy…if we don’t have cash we do without. We’ve bought silver over the years but dang, even that is a bit high now.

There was a day when I paid attention to individual stocks, but I *think* mutual funds perform better these days, not entirely certain of that. Anyway like I said, I truly believe debt is the major family killer these days…

Art

[lightman]

After having a paid off home for a few years we are moving and taking on a mortgage again. I talked with our financial advisor, who is also a good friend, about taking enough money out of our retirement funds to buy the house free and clear. His argument was not to spend money thats making between 7 and 19% when you can borrow money for less than 5%. And yes, that 7 to 19% is real, and has averaged 9% annually since inception. Our loan will be a fixed 4.75%. It does feel good to be debt free!

[reddog81]

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.

That scenario only makes sense if you ignore decades of historical market performance and instead base your financial decisions on unfounded speculation.

[M-Tecs]

I have a mortgage that I could pay off. It's at 2 1/8%. My investments have been averaging two to three times that on bad years. For me is makes zero sense to pay it off.

[cwtebay]

One thing that I will never forget.
Had a long term client who would come in and pay his (substantial) bill in cash the first week of the month. I noticed after a time that he always paid in 20's and 100's - never newer than 1978. I made a point to be the one to accept his payment one month. I told him that I couldn't be the only one that noticed, and that I was concerned for his safety because he obviously had a large bankroll somewhere on his small property. He asked if I didn't want his cash than just say so and moved on.
My point is, he was paying 2008 bills with 1978 dollars. That was roughly a $4:$1 conversion had he purchased something with it.
I never deposited any of his bills, sold them through a dealer for a stupid mark up.
He also once paid me off with 7 - $500 bills (and usual sundry $20's) I asked him if he was sure that's what he wanted and spoke of numesmatic value to which he replied with, "ain't that cash?". I saved one for each member of my family.
He also paid in a combination of bills plus a $1000 note in 2020.
I have told him all of this over the years, he still does the same. Great client in every conceivable way - perhaps I am missing his insight.
(BTW- my grandfather gave me a $500 bill - cashed it in for an engagement ring, best investment I've ever made)


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[cwtebay]

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 TapatalkDon't foresee that happening.
I don't think I will lose any one of my many (owned corporation) jobs, my house (s) are free and clear for years, my vehicles were paid for with cash, my credit card debt is zero at the end of every month (another interest free loan plus the airline miles to see my wife's family). I have a life insurance policy to more than cover any residual debt (that covers disability).
I also make sure that we grow or raise or hunt for 80% of my 7 member family's grocery needs, my kids are expected to contribute their own gas and "extra" money, my wife has a wonderful position that is PRN.
I have had a paying job since changing irrigation pipe starting at 5 years old and haven't been without at least one job since.
I work 95-100 hours a week on average and we find time to be a family every day (have yet to figure out what the heck business folks have beefing about "jes kint seem to make it" and are working 40 hours a week).
When we have extra, we buy another piece of land. We add to our kids' education funds, build our businesses or improve our land and life.
I was born and raised broke, don't intend to go out that way.
And I sleep wonderfully at night with all of that.

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[dverna]

Don't foresee that happening.
I don't think I will lose any one of my many (owned corporation) jobs, my house (s) are free and clear for years, my vehicles were paid for with cash, my credit card debt is zero at the end of every month (another interest free loan plus the airline miles to see my wife's family). I have a life insurance policy to more than cover any residual debt (that covers disability).
I also make sure that we grow or raise or hunt for 80% of my 7 member family's grocery needs, my kids are expected to contribute their own gas and "extra" money, my wife has a wonderful position that is PRN.
I have had a paying job since changing irrigation pipe starting at 5 years old and haven't been without at least one job since.
I work 95-100 hours a week on average and we find time to be a family every day (have yet to figure out what the heck business folks have beefing about "jes kint seem to make it" and are working 40 hours a week).
When we have extra, we buy another piece of land. We add to our kids' education funds, build our businesses or improve our land and life.
I was born and raised broke, don't intend to go out that way.
And I sleep wonderfully at night with all of that.

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You remind me of my dad.

Too many folks do not want to work to get ahead. I have a buddy that thinks $20k is a lot of money and he is entitled to retire at 55. I do not see things working out well for him. Always seems to have cigarettes, pint of booze and 6 pack (or more) and a bit of weed per day. Told him he has a $8-9000 a year of bad habits.

[rancher1913]

After having a paid off home for a few years we are moving and taking on a mortgage again. I talked with our financial advisor, who is also a good friend, about taking enough money out of our retirement funds to buy the house free and clear. His argument was not to spend money thats making between 7 and 19% when you can borrow money for less than 5%. And yes, that 7 to 19% is real, and has averaged 9% annually since inception. Our loan will be a fixed 4.75%. It does feel good to be debt free!

if you are comfortable than you do you. this advice sounds really good on paper and could be a home run but it could also be gone tomorrow. all I can say is the best investors all do the opposite of the common advice.

[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.

[Randy Bohannon]

You will never outright own your home, stop paying your taxes and find out.

[Winger Ed.]

If you can not watch the stock market every second of every day, stay out of the stock market.

I've done that during certain cycles of it, and done very well.
It's an ulcer factory too.

One person asked me one time when I spend a few hours a day doing it, "Oh,,, you're playing the stock market"?

I told them, "No, you play the lottery. You invest in the stock market.
If you 'play' the stock market, you are guaranteed to loose your ass".

[Wag]

Keep that savings goal in mind. Make the payments to the savings account until you have the cash you need to survive without an income for six months, give or take.

Once you get there, split that monthly payment and pay toward the principal on your house AND to your savings account. At some point, you'll have enough to pay off the house and retain a substantial cash balance. Cash is king, but too much is not right thinking, either.

Savings includes the stock market. Again, edumacate yourself and learn how to do it. I'm in the stock websites a dozen times a day. Stressful? Of course. I like to follow the Buffet advice: "When everyone else is selling, buy. When everyone else is buying, sell." Works as a guide. You'll eventually learn what companies are well-managed. You'll learn that the tide raises and lowers all boats so when the tide goes out, the great boats with cash and earnings are on a fire sale. And you'll have the money in your cash account to buy some of it.

You can keep money in the stock market and it's still savings because it's liquid but it's risky, too. Cash under your mattress is risky, though, because of inflation.

It's confusing. But definitely start with cash. It's the old saying, "Be prepared." Cash helps with that a great deal.

While you're amassing cash, get some learning. Easy to do these days. Best investment you'll ever make is in your own education. That doesn't have to come from a school.

--Wag--

[Handloader109]

Cash is king.... and yes, pay off that mortgage. As fast as possible. Every penny you pay in any interest is true hard cash leaving your pocket. ANY supposed return by investing is smoke till you actually have it in hand as cash. Just look at the stock market over last year plus. Same goes for any investing. There is a time and place for borrowing, but very few. House is number one and a car is a zero. I've paid cash for the last 3 vehicles I've bought. Two were well used, one was a couple of years old. And for those of you that think you were really paying zero interest or now, 1% on that new car are very wrong. Buy a slightly used vehicle, or a well used vehicle for cash. The money you save is not insignificant.
And you know what the best feeling in the world is as far as finance is? Waking up and realizing you owe NO ONE a dime. Yeah, taxes... but miniscule when compared to everything else.

[MaryB]

Keep that savings goal in mind. Make the payments to the savings account until you have the cash you need to survive without an income for six months, give or take.

Once you get there, split that monthly payment and pay toward the principal on your house AND to your savings account. At some point, you'll have enough to pay off the house and retain a substantial cash balance. Cash is king, but too much is not right thinking, either.

Savings includes the stock market. Again, edumacate yourself and learn how to do it. I'm in the stock websites a dozen times a day. Stressful? Of course. I like to follow the Buffet advice: "When everyone else is selling, buy. When everyone else is buying, sell." Works as a guide. You'll eventually learn what companies are well-managed. You'll learn that the tide raises and lowers all boats so when the tide goes out, the great boats with cash and earnings are on a fire sale. And you'll have the money in your cash account to buy some of it.

You can keep money in the stock market and it's still savings because it's liquid but it's risky, too. Cash under your mattress is risky, though, because of inflation.

It's confusing. But definitely start with cash. It's the old saying, "Be prepared." Cash helps with that a great deal.

While you're amassing cash, get some learning. Easy to do these days. Best investment you'll ever make is in your own education. That doesn't have to come from a school.

--Wag--

I split between cash and gold/silver in a form that is instantly recognizable. Mostly US government coins... easily convertible to cash or used outright as barter. Made the down payment on my new(used but new to me) 2017 Ford Escape with gold coins. Enough to hold it wile while i moved some cash around to pay cash for the rest. I live debt free. I have a few credit cards that I pay off every month. One is a cashback card that I use for groceries, why not get 3% back!