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07-12-2007, 12:38 PM
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#21
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Moderator Emeritus
Join Date: Dec 2005
Posts: 10,125
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Congratulations. We are aiming for November.
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07-12-2007, 12:43 PM
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#22
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Thinks s/he gets paid by the post
Join Date: Feb 2005
Posts: 2,032
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Congrats Bow Tie.
I'm only 6 months into my 30 year mortgage, and I'm already dreaming of the day I pay it off.
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07-12-2007, 05:48 PM
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#23
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,474
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Quote:
Originally Posted by saluki9
Congrats Bow Tie.
I'm only 6 months into my 30 year mortgage, and I'm already dreaming of the day I pay it off.
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Ouch! But that day can come faster than you think possible, if you keep striving for it and challenge yourself to conserve money for it. I never would have imagined that I could pay mine off in four years. You'll get there one day and wonder how anyone could ever pay P&I or rent.
It's even more wonderful than I ever dreamed. It's a taste of freedom.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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07-12-2007, 07:35 PM
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#24
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Thinks s/he gets paid by the post
Join Date: Feb 2005
Posts: 2,032
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Quote:
Originally Posted by Want2retire
Ouch! But that day can come faster than you think possible, if you keep striving for it and challenge yourself to conserve money for it. I never would have imagined that I could pay mine off in four years. You'll get there one day and wonder how anyone could ever pay P&I or rent.
It's even more wonderful than I ever dreamed. It's a taste of freedom.
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I know that I won't be paying this one off in 4 years. What I would like to do is get it down from it's current level (over 400K) to a more manageable one like I had on my previous condo.
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07-13-2007, 08:22 AM
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#25
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
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Quote:
Originally Posted by bow-tie
It was painful to write a check that big, but damn it feels good to be a little closer to being FI.
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I know there is an emotional side to this debate for many, but I just don't get it.
How does moving money from one investment to another get you any closer to FI?
If you hit a bad stretch, you can pay the mortgage and your grocery bill from the money in your account. If you pay off the mortgage, no mortgage payment, but you can't eat your house.
Personally, I feel better with the money in a liquid account. Hey, if it makes you feel better, fine. I'm just not so certain you should be counting this as moving you closer to FI.
-ERD50 ( with a mort fixed at 5% for 5 years - then we will see)
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07-13-2007, 09:19 AM
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#26
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Easy.
Few retirements succeed because someone arbed a point of gain from a few hundred thousand bucks.
But a lot of them fail because people had to dump their investments in a down market to make the mortgage payment.
A zero debt investor can invest more aggressively as volatility is fairly irrelevant. A zero debt investor can almost forget about large, low returning bond holdings because they dont need the steady income or volatility reduction. A zero debt investor can reduce their budget to ridiculously low levels vs a debt loaded one.
And you can live in the investment as long as you like. That 'liquidity' has no intrinsic value.
In short, someone arbing their mortgage is taking on a certain level of risk. By eliminating that risk, a investor can take on other, more controllable risks that net as much or more financially.
Although its also possible for a zero debt investor to take on LESS risk if they choose, as they dont have to keep producing the mortgage check every month, they can get by with a lower return, lower volatility, lower risk strategy.
The emotional component of not having your primary residence 'at risk' to investment variances is just a bonus baby.
For working accumulators, you oughta have a mortgage. For people able to get sub 5% loans, you oughta consider keeping it. If you're already a 100% equity investor and feel comfortable with a high level of risk, maybe you've got a pension or other income source that can comfortably pay the mortgage...keep it.
Otherwise holding a mortgage for an ER seems to be a series of creating problems and then trying to solve them.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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07-13-2007, 09:29 AM
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#27
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 2,155
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Quote:
Originally Posted by ERD50
I know there is an emotional side to this debate for many, but I just don't get it.
How does moving money from one investment to another get you any closer to FI?
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I agree. Especially when considering moving money from one HIGH yield investment to a LOWER yield investment.
But the intangile emotional factor is so powerful that the negative turns positive, at least in one's mind.
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07-13-2007, 09:39 AM
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#28
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Full time employment: Posting here.
Join Date: Jun 2004
Location: Calgary
Posts: 805
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Congratulations! We paid ours off in 2001 but for us it was a "no-brainer" since the mortgage interest is not tax deductible in Canada.
__________________
I can only be nice to one person today! Today is not your day...tomorrow doesn't look good either.
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07-13-2007, 09:46 AM
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#29
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Full time employment: Posting here.
Join Date: Mar 2005
Location: Punta Gorda, FL
Posts: 828
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Paid mine off in 2005 and don't regret it. I've got 9 more weeks of being a wage slave and then I'm free. Being free of the mortgage payment means I dont have to withdraw as much to make ends meet. The value of my home is only around 10% to 15% of my net worth anyway. I may still downsize in the future, but no more mortgages for me.
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07-13-2007, 10:06 AM
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#30
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gone traveling
Join Date: May 2006
Posts: 1,036
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Quote:
Originally Posted by cute fuzzy bunny
Few retirements succeed because someone arbed a point of gain from a few hundred thousand bucks.
But a lot of them fail because people had to dump their investments in a down market to make the mortgage payment.
Otherwise holding a mortgage for an ER seems to be a series of creating problems and then trying to solve them.
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This would also be the strong argument against renting in retirement.
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07-13-2007, 10:13 AM
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#31
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Pretty much, but it'd depend on where you owned/rented. I guess comparing owning one of those $190k homes that hasnt appreciated in 20 years would be a bad decision, but renting an apartment for $200 a month in thailand wouldnt be so bad.
Its pretty tough to pull a reverse mortgage out of your apartment as an emergency 'save' if your retirement gets screwed up later in life.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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07-13-2007, 10:37 AM
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#32
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Full time employment: Posting here.
Join Date: Mar 2004
Posts: 688
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Quote:
Originally Posted by ERD50
I know there is an emotional side to this debate for many, but I just don't get it.
How does moving money from one investment to another get you any closer to FI?
If you hit a bad stretch, you can pay the mortgage and your grocery bill from the money in your account. If you pay off the mortgage, no mortgage payment, but you can't eat your house.
Personally, I feel better with the money in a liquid account. Hey, if it makes you feel better, fine. I'm just not so certain you should be counting this as moving you closer to FI.
-ERD50 ( with a mort fixed at 5% for 5 years - then we will see)
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I think we're doing well in maxing out our savings to hit FI. Even with our mortgage, we managed to save some decent coin. Granted, keeping the mortgage and increasing the savings makes sense, but we struck a balance with the longer-term savings and working to axe the house pmt. It may work only in my mind, but that's the one that counts. We were also getting to the point where we were not going to be able to itemize anymore. So the mortgage interest wasn't tax deductible.
I'm trying to balance the emotional lift of being complete debt free and the true rational-numbers-driven arbitrage of keeping the mortgage and maximizing the savings. I like the results.
__________________
Diggin' my way to financial freedom, one buck-at-a-time
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07-16-2007, 07:55 AM
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#33
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Thinks s/he gets paid by the post
Join Date: Jul 2007
Posts: 2,487
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Good on ya mate...paid off the mortgage 12 years ago. Still have that house, built another without a mortgage. Don't owe anything to anyone, except this months credit card charges. I know that in many cases it does not make the most financia sense, but makes a lot of emotional sense, and sure does help to keep insomnia at bay...
R
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07-16-2007, 08:16 AM
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#34
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Moderator Emeritus
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
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Way to go. Paid mine off last year and never looked back. You sound like the type to take the former monthly payments and invest them, so you are good to go.
The numbers are what they are and favor payoff for some and not for others. But the nonfinancial incentives are strong, as noted above. Not to mention that when you sell, the proceeds are all yours. Feels good.
I'd stress CFB's point - if things take a bad turn in your financial life unexpectedly, even a HELOC can turn into a serious burden. Dipping in to your newly enhanced personal savings (plumped up by redirecting your old mortgage payments) is hard enough but at least you won't have the bank's piece to fret about.
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.
As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
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07-16-2007, 07:34 PM
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#35
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Thinks s/he gets paid by the post
Join Date: Jul 2004
Posts: 1,558
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Yes - weighing the emotional versus other aspects of the decision are personal issues for most - I side on the the 'no mortgage' side, primarily because for the most part, paying for the roof over your head is the largest expense in your lifestyle - if you can minimize that, your overall capital needs for an ER lifestyle go down. With that in mind, I re-fi'd two years to a 10 year fixed and pre-pay more principal every month. I want to be in the position to where I could sell my house and go buy somewhere else less expensive for cash (I live in northern Calif).
Bow-tie, congratulations - that is indeed a great achievement to me. The savings will now really pile-up and ER will come that much sooner....
__________________
Deserat aka Bridget
“We sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm.”
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07-16-2007, 08:28 PM
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#36
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,733
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While I currently have a mortgage, (4.875% was to good to pass up.) One of my happiest financial moments was paying off my mortgage in my mid 30s. At this point I knew that I was well on the way of become FIRE.
Congratulations!!
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07-16-2007, 08:37 PM
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#37
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
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Quote:
Originally Posted by deserat
I side on the the 'no mortgage' side, primarily because for the most part, paying for the roof over your head is the largest expense in your lifestyle - if you can minimize that, your overall capital needs for an ER lifestyle go down.
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The problem I have with that statement is that it ignores the other side of the equation. Yes, your capital 'needs' went down, but your capital went down too - to pay off the mortgage.
Robbing Peter to pay Paul?
-ERD50
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07-22-2007, 04:29 PM
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#38
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Thinks s/he gets paid by the post
Join Date: Sep 2006
Posts: 1,396
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Quote:
Originally Posted by Calgary_Girl
Congratulations! We paid ours off in 2001 but for us it was a "no-brainer" since the mortgage interest is not tax deductible in Canada.
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I live in the U.S., and my mortgage interest is not tax deductible either. And I'm not alone.
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07-23-2007, 01:14 PM
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#39
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Full time employment: Posting here.
Join Date: Jun 2004
Location: Calgary
Posts: 805
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Quote:
Originally Posted by JustCurious
I live in the U.S., and my mortgage interest is not tax deductible either. And I'm not alone.
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Really? Are there some cases where it's not deductible?
__________________
I can only be nice to one person today! Today is not your day...tomorrow doesn't look good either.
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07-23-2007, 01:25 PM
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#40
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,566
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Mine isn't deductible either, only because I can't use itemized deductions--no kids, tiny mortgage, low taxes, etc. Been on the standard deduction for a couple of years. Congrats--I hope to be joining you in just a few short weeks, Bow-Tie!
Sarah
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way
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