Personal finance ignorance among the otherwise intelligent

[Nick12]

Quote:

Originally Posted by Mr. Tightwad If someone enjoys gardening, the activity is called gardening. If they don't like it, its called yard work. I do yard work.

I have always called it mowing the grass ( to include edging the grass around the home and sidewalks ). It was fun for many years while it lasted but I had to do it before 9am or after 6 pm to escape the brutal heat and humidity. Now I pay to have a father and son duo that gets it done weekly. In the past 25 years, I've estimated I have saved approx $25K in DIY. Now it is time to splurge and let someone else do it.

[Nords]

Quote:

Originally Posted by ProspectiveBum I recall that long-time poster Nords, who with his DW had 2 military pensions, was an advocate of this approach.

Thanks, ProspectiveBum! We've done this since 2004 and updated it occasionally here.
https://www.early-retirement.org/for...ets-15237.html

My spouse starts her Reserve pension in November. The Navy's Personnel Command is already warning Reserve retirees that it may take them six months to catch up on the pension-processing backlog. People will be paid everything they've earned, but it may be a few months before they see the first deposit.

No worries, though. Our investments have more than bridged the gap between my pension and hers. Our focus is now shifting to gifting, legacy, and philanthropy.

Quote:

Originally Posted by eleighj416 “Debt Free” is foreign term to the vast majority of people! I am amazed at the number of people who retire while still having a mortgage over their head.

Quote:

Originally Posted by Dtail I will agree that typically having debt in retirement might not be a good idea. We are mortgage free, but with current mortgage rates there are folks on this site who feel they could earn more money in the markets than what they are paying on their mortgage loan.

Quote:

Originally Posted by audreyh1 It is not a requirement to retire with no mortgage. That can be a perfectly rational decision and not something dire “hanging over their head”. If annual retirement cash flow let’s them easily pay the mortgage then it’s a perfectly good option and probably taken because the mortgage rate is super low.

We have the numbers to validate those feels.

We've offset a 30-year fixed-rate mortgage payment against my military pension (which has a cost-of-living adjustment). Initially the mortgage payments (P&I, insurance, and taxes) were a little less than my pension, but after multiple refinancings and COLAs the mortgage payment is now only 75% of my pension.

We'll have our current 30-year mortgage (3.50%) until 2047, when I'm 87 years old.

During the last 17 years, our spreadsheet has tracked the annual compounded after-tax return. We're currently running at about 7%/year and it'll probably stay there for the rest of the mortgage. However the stock market is volatile and during the 2008-09 recession that return briefly dipped negative.

We're essentially borrowing on my future military pension payments using our home as collateral. You can read more details about our asset allocation and our analysis at that link.

Quote:

Originally Posted by chassis There are UHNW people in my circle, very high financial acumen, who have mortgaged their principal dwelling to deploy capital in the market. They can squash the mortgage like a bug if there ever was a need to do so. It's a small piece of their net worth. They aren't retired. Mortgage debt for the sake of deploying capital in the market is a legitimate and low risk strategy if the mortgage is a low percentage of net worth, for retired or not retired people. If a person has a 1% withdrawal rate on their net worth, and the withdrawal rate and net worth account for the mortgage balance and payment, the mortgage is simply a means to and end - capital growth.

Jim Dahle has more thoughts on leveraging net worth with a mortgage even when you're not working. We're currently at the lower end of his optimal debt ratio from Anderson's "Value Of Debt In Retirement":
https://www.whitecoatinvestor.com/us...our-advantage/
https://www.whitecoatinvestor.com/th...ment-a-review/

[Badger]

Quote:

Originally Posted by Nick12 I have always called it mowing the grass ( to include edging the grass around the home and sidewalks ). It was fun for many years while it lasted but I had to do it before 9am or after 6 pm to escape the brutal heat and humidity. Now I pay to have a father and son duo that gets it done weekly. In the past 25 years, I've estimated I have saved approx $25K in DIY. Now it is time to splurge and let someone else do it.

+1

[Markola]

^^^^^ Nords, Thank you for all of those links and content! When you post here, it’s always a treasure trove. That last article is certainly, well, “creative.” Beyond our low-interest mortgage, the book author’s techniques are not for me but I enjoy learning alternative ways of thinking about the “personal finance tool chest.” I also enjoyed how the blog author debunked the different leverage techniques for himself.

Incidentally, I think you live in Hawaii? My little icon is a monk seal lounging on Ke’e Beach on Kauai a few years ago. Wonderful spot. He/she seemed to be retired early. Like me! [emoji2].

[Markola]

Quote:

Originally Posted by MarieIG I would recommend that your friend schedule a zoom conference with an elder care specialist who practices in NJ.

Thank you for all these tangible ideas. I want to ask my friend the question above. My friend is an attorney with a large firm, so I suspect and hope she is already on this trail. When we saw her a week ago, she’d just learned the extent of the disaster back in NJ.

[Nords]

Quote:

Originally Posted by Markola ^^^^^ Nords, Thank you for all of those links and content! When you post here, it’s always a treasure trove. That last article is certainly, well, “creative.” Beyond our low-interest mortgage, the book author’s techniques are not for me but I enjoy learning alternative ways of thinking about the “personal finance tool chest.” I also enjoyed how the blog author debunked the different leverage techniques for himself. Incidentally, I think you live in Hawaii? My little icon is a monk seal lounging on Ke’e Beach on Kauai a few years ago. Wonderful spot. He/she seemed to be retired early. Like me! [emoji2].

You're welcome! Glad to help.

That article on leverage made me decide that we've done enough and should just let our mortgage arbitrage play out as is. Or at least until 30-year fixed-rate mortgages drop to 2%?

We're on Oahu, and I see my monk seals relaxing on White Plains Beach while I'm surfing. In an infrequent event, a few months ago one gave birth on Kaimana Beach in Waikiki. That's always popular with the businesses and local residents when that part of the beach is closed...
https://www.fisheries.noaa.gov/featu...-kaimana-beach

[Markola]

^^^^ Nice story, thanks.

“On May 18, 2021, students at Hālau Kū Māna, a local Hawaiian immersion school in Honolulu, gifted the pup a name. The pup's new name, Lōliʻi, means "relaxed, at ease, without worry, or carefree." The name reflects the pup's active, curious, and adventurous nature. It also speaks to the location of the pup's birth, Kaimana Beach, which is also known as "Sans Souci," meaning "without worries" in French. “