brewer12345
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Mar 6, 2003
- Messages
- 18,085
3 Yrs to Go said:What I'm waiting for is the 100 year zero mortgage.
Ah, the Methuselah mortgage! Its only a matter of time...
3 Yrs to Go said:What I'm waiting for is the 100 year zero mortgage.
brewer12345 said:Ah, the Methuselah mortgage! Its only a matter of time...
Khan said:Japan had 100 year mortgages during its RE bubble.
Wonder what became of them.
. However, I would have to pay significant taxes the year I cash out investments to pay off the mortgage.
If the money to pay that mortgage comes from outside the ER portfolio (inheritance or lottery winnings) then this observation is helpful.So for those of you worried about building a large enough pot of money to RE, having no mortgage would help out greatly by reducing your target amount.
This thread has gone on forever...........FWIW, I am aggressively paying off my mortgage and saving a bunch for retirement......
I did the same until mine was paid off about a year ago. Wait 'till you see how fast that retirement nestegg grows when it is paid off! I have not regretted paying mine off for one minute (but then, I plan to retire in just a couple of years).
One of the threads in the mortgage FAQ points out that a bigger ER portfolio (with a budget including a mortgage payment) has a higher FIRECalc survivability than a smaller portfolio without a mortgage payment.
Why should I pay off my 6.25% mortgage with part of my nest egg when I retire?
- Shabber
I am working on a nestegg and doing a lot of reading. Why should I pay off my 6.25% mortgage with part of my nest egg when I retire, when I can get the tax deduction and only make the payment as usual? Seems that my portfolio well balanced should yield 7-9%?
Thanks in advance!
- Shabber
That makes sense when the factors are weighed up and then the basis of the decision is chosen-- quantitative or emotional. The decision is an informed one.You know, one can go over the financial pluses and minuses, weigh the opportunity costs of paying off or not paying off, figure the tax angles one way or the other, and add up the scores to compare.
But there is a certain cachet, a certain allure, a certain pride, a certain freedom, that only comes when you can say---"I am debt free". Such debt freedom becomes a powerful tool to then geometrically improve your standing from that point forward. "I am debt free"---there is no feeling like it.
Value of being debt free?---Priceless.
[T]here is a certain cachet, a certain allure, a certain pride, a certain freedom, that only comes when you can say---"I am debt free". Such debt freedom becomes a powerful tool to then geometrically improve your standing from that point forward. "I am debt free"---there is no feeling like it.
Value of being debt free?---Priceless.
Value of being debt free?---Priceless.
How do you figure?
For example, if I pay off a $100,000 remaining on a mortgage, it cost me exactly $100,000. There certainly is a price to pay!
Would you say that having $100,000 of liquid value in an account 'priceless', or is it just $100,000? Then why is having $100,000 of illiquid value tied up in your home 'priceless'. I don't get it. It's net worth either way. One is more liquid than the other.
If you find a financial advantage to paying off the mortgage, go ahead - but I think you'll find it to be a fairly small advantage - not in the 'priceless' category at all.
-ERD50
PS - what kombat said
I have a problem with the oversimplifying guys like Ramsey who say "All debt is bad, end of story, no exceptions!"
Ramsey is mostly preaching to people with serious spending and debt problems.
An alcoholic cant be allowed "just one drink this one time" because it'll lead to more. Similarly, someone with a debt problem cant be allowed "just a little bit of debt" even if someone without a problem would consider it to be "good debt".
Looking at his program, its practically a 12 step program for recovering addicts, including the bible thumping. Not for me, but god bless him for his efforts to help people.
Now if his investing advice didnt suck...
Certainly having no mortgage has a pleasing cachet. My wife feels pretty good when she tells people we own our house outright. To me its disaster proofing. I can invest anyway I like and wont ever be forced to liquidate holdings at an unfavorable price because i've got a big bill to pay.
I may choose to take on more volatile holdings to create a greater opportunity for returns, because I have no fear of volatility. I may also choose to take on less volatile holdings to create a better sleep at night factor, because I dont need all that extra money to service the debt I dont have.
I'm sort of doing both at this point. My "short money", the stuff I'll use over the next 20 years, is mostly in cash, bonds and LCV. My "long money" is all in LCV, SVC and REITS. Sort of a poor mans version of the Taleb strategy. I get a smooth easy ride for the next 20 years, and even if we spend all of that bucket, the long money will presumably appreciate to the level where we'll have more than enough for the next 25 years+.
Liquidity? Hardly a problem. I can draw on home equity via a line of credit or a reverse mortgage. Writing a check is even easier than selling a holding and waiting for it to clear. Should we live far longer than we should, and we run a little low on funds, our house will be worth between $1M and $2M. A "payment for life" reverse mortgage will carry us through.