rk911
Thinks s/he gets paid by the post
Dave Ramsey said it best....Debt is dumb. Cash is king. with a NW of $5.5m I see no reason to carry a mortgage. HNY!
Here is recent youtube video on the subject.
Not paying 6% is the same as earning 6%.
My DW says to pay off entire mortgage and I'll thinking of paying off maybe ½ ($250K or $300K).
No it's not. Not paying X% is just that---an expense you don't have. ...
Nah... not economically.
If you don't have a 6% expense then economically you are ahead by 6%... it's simple math... a negative times a negative is a positive just like -1*-6% = +6%... -6% is the mortgage interest (negative because it is an expense) and -1 is avoiding paying the mortgage interest.
Now the other side of the equation is what is lost on the funds that were used to pay the mortgage interest, and lets's say they were earning 4%... -1*+4% is -4%.
So with those givens if one were to pay off the mortgage then they would be +2%... a 6% benefit from not having mortgage interest plus a 4% detriment from no longer having that interest income.
Did you think about this before posting it?Now do that for your credit card with 18.24% interest rate.
You don't "earn" 18.24% by paying the full balance each month. You just don't get charged any interest if you pay the full balance.
We have had monthly balances of $4000-$5000 every month for the last 20+ years, on cards with rates of 16% to 25%. And have never paid any interest. I guarantee that my $5000/mo did not earn 25%. Nobody would say that. It just was an expense that I didn't have.
The only reason for thinking that paying off a 6% mortgage is equal to making 6% return is to just fool yourself. A return means you have more money than you started with. Avoiding an expense means you keep the same amount of money you started with.
Will do. Thanks!As to number 3, I invite you to read the Golden Period thread on here. So much good info on fixed income.
Precisely why I was thinking to pay only half. Trying not to "time-the-market".Right now it is hard to know what rates will do, so neither bet is a sure thing. Paying half might make sense as a way to hedge your bets. I'm surprised that so many here who rely on the 4% rule and historical averages over 50 to 100 year periods for their investment portfolios are not thinking longer term / historical averages on the 6% mortgage.
I should have dialed you before I got the mortgage! Maybe you would have taken 5%?...if you came to me to write a check, help pay off your mortgage.....and in return you'll pay me 6%.........I tell you what I'm selling some of my portfolio and investing with you. I'd be getting a safe 6%.
I think that's a bit simplistic as there is a lot more to a mortgage than that. e.g. the proportion of interest to principal changes over the course of the mortgage, as you pay down the principle, you owe less interest.There are only two states of a mortgage: 1) You have a mortgage, and 2) you don't have a mortgage.
There is no such thing as having half a mortgage. It is either paid off or not.
I think that's a bit simplistic as there is a lot more to a mortgage than that. e.g. the proportion of interest to principal changes over the course of the mortgage, as you pay down the principle, you owe less interest.
But your payment remains the same.
You still lose your ‘paid off’ house if you do not pay the taxes. So you can never pay it off 100%
A paid off home is no guarantee of anything, though people think it is.
if you mean there are no guarantees in life...maybe. but a paid-for home provides security of a roof over your head. sure, you have property taxes, utilitie, maintenance, upkeep and repairs. but you'd have those things with a mortgage as well. a paid-off home is an addition to net worth. it's an asset. you may choose to not include that in NW calculations but we do. when we paid off our 15-yr fixed, early, I might add, it was a wonderful feeling. that as the last piece of the debt puzzle to disappear before I put in my papers.
maybe...but math was also a factor. with the mortgage paid that freed up nearly $900 per month that we added to the $ we already were investing in a red hot market. at the same time the value of our home kept climbing also adding to our NW. as with anything YMMV.There are two ways to look at a paid off mortgage. One is emotional and one is math. You chose emotional and your punctuation and capitalization skills are off.
That's not sound logic. It's all about opportunity cost. Paying off the mortgage locks your cash into the real estate. If the market goes up 10% per year for ten years, you would optimally put the money into the market at the beginning. if you put it in gradually over time, you don't make as much money. So, not paying off the mortgage means that you are free to invest it other things. The value of the home is irrelevant.maybe...but math was also a factor. with the mortgage paid that freed up nearly $900 per month that we added to the $ we already were investing in a red hot market. at the same time the value of our home kept climbing also adding to our NW. as with anything YMMV.
There are two ways to look at a paid off mortgage. One is emotional and one is math. You picked emotional and your punctuation, spelling and capitalization skills are off, which, frankly, says a lot.
This isn't a college essay, it's an online social forum. No one should be critiqued on their typing, which may well be done on a phone these days.
Lighten up.
This isn't a college essay, it's an online social forum. No one should be critiqued on their typing, which may well be done on a phone these days.
Lighten up.