It would appear he wants those of us with paid for houses to apologize and admit we are stupid and inferior.
When the finger points at the moon, the fool looks at the finger.
You should understand that some of the folks involved in this debate have read fairly clear executive summaries of scientific documents and subsequently proclaimed that they said exactly the opposite of what the document actually said.
The problem here is some folks have made an emotional decision based on a simplistic perspective that tells them they'll make more money. By poking holes in that decision, you make them uncomfortable with their logic and their only reasonable reactions are to admit that they're wrong or to tell you that you've made an emotional decision.
If you have a ridiculously cheap rate, a reliable income stream to pay the debt, and/or you dont mind taking on a lot more risk to possibly gain a slightly higher return, and dont mind lower survivability in a long term down market...you oughta keep the debt.
I paid off my 6.25% mortgage 7 years ago with appreciated company stock that subsequently dropped 80% in value. Since that decision, the rates on fixed income have never exceeded the prevailing mortgage rate. My portfolio risk was nearly zero since I never had to sell shares to pay the bills.
Oh yeah, and it feels good too. Yet, my decision was based 110% on the characteristics of my total financial picture. Not on looking at the mortgage rate on one hand and the long term rate of return on equities on the other, forgetting to risk adjust, and deciding I could make more money. Thats a bush league mistake.
Nords' case is a perfect example of when keeping a mortgage makes sense. He regularly does the paperwork to refinance to the lowest available rate. He has a solid income that pays the bills. He's willing to take on significant equity risk in exchange for higher long term results. He doesnt hold a lot of cash or bonds paying below mortgage rates.
A high risk strategy, but if you've got the balls for it, a reasonable one.
Someone with 200k in debt who then structures a 50/50 or 60/40 port to reduce their volatility, then sets aside 5 years of cash to survive downturns and has nothing but their portfolio to rely on to make payments? Thats someone who has created a problem and then applied fourteen rolls of duct tape to it to solve the problems and taken on a lot of unnecessary risk.
I should also at this time point out (again) that in 2003 when I could get a 3.98% 5 year fixed/adjustable mortgage, I posed a question as to whether I should take it and invest the proceeds. 100% of the respondents here said they would not do it. Too risky. Cash was paying squat, bonds were getting killed by the rate drops, and stocks had been languishing for more than 2 years. Too risky.
So when times are good, folks are brave, everyone elses choices are emotional. Times are bad, people are cautious...even 3.98% isnt worth the risk.
Dang it! Perspective!
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