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Old 10-17-2008, 10:00 PM   #41
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I was just thinking about the 'Pay off the House threads'. I wonder how many of those in the 'keep a large mortgage' and invest in stocks are feeling now.
I am one of those folks. I'm feeling okay, because I know that the market pays off big time in the long term even though there are huge fluctuations in the short term. The lifetime of a mortgage is 20-30 years. Guess what---20 or 30 years is long term.

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More to the point I wonder how their wives feel! Especially if there homes or under water!
My wives feel just fine about it. (At least until they find out about one another. )
My wife had only one question, "Can we still make the mortgage payments? If we can, what difference does it make if the stock market is down?"

The house being underwater or not has no bearing. The house appreciates or depreciates regardless of whether or not there is a mortgage on it.
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Old 10-17-2008, 10:10 PM   #42
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Aubrey McClendon a formerly very rich and a very sharp gas finder got sold out of his huge position in CHK, the company that he founded because he was carrying his position with debt. The stock is up huge today, but McClendon is not.

Since this can happen to the guy who runs the company, what chance do we have?
He bought the stock on margin. A margin loan can be called at any time, and it will definitely get called if the value of the collateral drops.

A first mortgage cannot be called. Nor can it be called if the value of collateral (the house) drops.

So what happened to him with his CHK stock purchase can't happen if you buy a stock with money from a first mortgage secured on your house.

Note, however, that a HELOC *can* get called and probably *will* be called if the house drops in value. As far as I'm concerned, any callable loan is insanely risky.
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Old 10-18-2008, 09:03 AM   #43
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Rayvt
Your wife is considerably more understanding than mine. If I mortgaged the house and stuck it in the market, lost 40 to 50 % of it, had no clue when it would come back, if it comes back in my life time, she would be pi$$ to say the least. The house to her is a security blanket. In fact, we refer to it as 'her' house. A nest egg that goes from 1M to 600k may not provide the funds to 'pay the mortgage' along with other retired expenses.

Now if you are in your 20's, looking at retiring in you 50's, maybe. However it seems most on hear are closer to retirement than 20 or 30 years.

That's why I also said, 'So, it's not weather you invest in stocks or not, it is what choices you have to spend your money on, and what lets you sleep at night. Each and everyone of us is different. '
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Old 10-18-2008, 11:27 AM   #44
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Rayvt
Your wife is considerably more understanding than mine. If I mortgaged the house and stuck it in the market, lost 40 to 50 % of it, ...
yes, but the OP is asking AFTER the market has already taken a historically large haircut.

I don't have an opinion one way or the other, because we don't have enough info from the OP. And it would still just be my opinion. But I wouldn't automatically rule it out as crazy.

-ERD50
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Old 10-18-2008, 11:31 AM   #45
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Rayvt
Your wife is considerably more understanding than mine. If I mortgaged the house and stuck it in the market, ...
Well, first off, I never mortgaged the house and put that money into the market. The most drastic I ever did was to refinance the house (at a lower rate) and take enough cash-out so that the new payment was the same as the old payment. IIRC, the cash back was around $20k. So we didn't really have much change in our risk exposure, since the payment didn't go up. That 20K was the initial seed that resulted in us being able to retire at age 58.

I got the first taste of my my wife's risk tolerance when we were engaged. I was a private pilot, and I took her up for a ride one weekend. She did the white-knuckled thing as soon as we lifted off, and when we landed, she said, "I'm fine. I just kept telling myself over and over---- if we die, at least we'll go together."
Subsequently, she says, "When we started we had nothing and we survived okay, so the worst thing that can happen is we fall back to where we started. You can't go below nothing."

That was 42 years ago. Since then, she only cares about 2 questions:
1) Can we pay our bills?
and
2) Do we have enough money for a comfortable life?

As long as the answers are "Yes", then everything is fine with her.

She said recently that she believes in division of labor in a marriage. My job is to make & invest the money. Her job is to spend it.

She just wants me to do one thing. Tell her when/if we need to cut back on spending. With the recent market meltdown she told me, "Let me know if I need to stop buying stuff. And let me know if we need to stop going on cruises."
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Old 10-18-2008, 04:08 PM   #46
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Another vote for no. I'd rather be building up cash reserves in your shoes.

I keep my cash in a lockbox. Why have you decided to keep yours in your shoes? I dont get it....
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