llowry61;141626356 Any financial advisor worth their salt /QUOTE said:
Interesting Statistic Heard Today
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If I hadn't paid off my mortgage, I never would have been able to retire when I did. But because I did, I now live quite comfortably in retirement.
In fact, I have no loans out at all. My vehicles are also paid for. All I have are regular monthly expenses such as electricity, water, groceries, gas and such.
But there's a catch. The less money you owe, the lower your credit score is. Yeah, makes no sense to me either. Back when I was still working and had a mortgage, I had excellent credit. But now, being retired and completely out of debt, my credit score had dropped well over 100 points. WTH?
I have been retired almost 13 years, and that never happened to me. Scores are still up there. I have no debt of any kind. I do however use a credit card and pay it off monthly. That gets me cash back, and works in a positive mode on the credit score
I'd rather carry a home mortgage than a car loan. The first is often an appreciating asset while the later is depreciating.
About 40 years ago, I read that the Swedes start off with a $100,000 mortgage and die with a $100,000 mortgage. It made sense to me then, so I've always treated a home mortgage as a good fix liability rather than a burden.
I buy quality used cars with cash and hold them for the long term. My last car purchase was a 2005 Infinity coupe in 2012.
About 40 years ago, I read that the Swedes start off with a $100,000 mortgage and die with a $100,000 mortgage. It made sense to me then, so I've always treated a home mortgage as a good fix liability rather than a burden.
I buy quality used cars with cash and hold them for the long term. My last car purchase was a 2005 Infinity coupe in 2012.
Some consider a hefty tax bite on income or investment growth a good problem to have.
Tax planning and healthcare are the other elements of a comprehensive retirement plan. Especially since many folks have a substantial portion of their retirement funds in pre-tax 401K's IRA's etc. and an average retiree will spend close to 300k in medical expenses during retirement.
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bigwheelzip
Absent Comrade
When we lived in Switzerland, the homeowner Swiss typically had perpetual mortgages also (likely over a million dollars value), though interest rates are near zero and bank regulations require the note be held locally.
The debt didn't stop them from having the world's highest incomes and standards of living.
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GypsmJim
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But there's a catch. The less money you owe, the lower your credit score is. Yeah, makes no sense to me either. Back when I was still working and had a mortgage, I had excellent credit. But now, being retired and completely out of debt, my credit score had dropped well over 100 points. WTH?
Must be more to the story. Yes, it's true you're credit score is adjusted to how much you owe, but it is also based on how much credit you actually have, whether you use it or not.
I use 2 credit cards - one for "daily" purchases, and the other for regular monthly expenses, like utility bills and such. But, I also have 8 or 9 more, which were only added because of a special one-time discount. Those have never been used again, but are still in my credit history.
I pay all my cards off each month and have never incurred an interest charge. If I can't afford something, I simply don't buy it, as opposed to using credit to get it.
My credit score hovers around 820. Why do I care? You betcha I do! It's not that I intend to borrow money. Insurance companies look at that and your rates can be affected.
Two good jobs and zero kids, we paid off the mortgage quickly.
I don't view a paid off mortgage as a status symbol at all.
Now my new Seekins rifle and Nightforce scope, well thats a different deal
I don't view a paid off mortgage as a status symbol at all.
Now my new Seekins rifle and Nightforce scope, well thats a different deal
No mortgage or car payments. No BMW either, but that's OK.
Not sure what 2023 will bring, but if we sell and move, I don't want a mortgage payment.
I plan on running Tiggy until she dies of old age.
Not sure what 2023 will bring, but if we sell and move, I don't want a mortgage payment.
I plan on running Tiggy until she dies of old age.
smoothshooter
Member
I was listening to a financial program on the radio today, and the host said that a paid off mortgage has replaced the BMW as a status symbol.
There may be hope for us yet
Unfortunately, that advice from Dave Ramsey is ignored by most people.
CAJUNLAWYER
Member
In my tiny town (less than 5000 people)you can tell the broke ones-they are driving leased new black Mercedes or BMW's or Volvos. The ones who have money are driving older trucks, Chevys or Fords.
House and acreage paid for........Never wanted a BMW cuz they don't have beds, ground clearance or 4WD.
There's good debt and bad debt. If you were smart enough to refinance at 2.5 - 2.75% you'd be foolish to pay it off. After taxes the interest rate is even lower. If it gets paid off over life of mortgage fine but I wouldn't drop a lump sum on it.
My brother sold his big house last year and was going to pay cash for his new smaller house. His financial advisor gave him the same advice as above about putting the money in the stock market and getting a mortgage, and he took it. So far he is down over $200,000.
GypsmJim
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That's one way of looking at it, I guess. But it still amounts to PAYING interest to someone else. The satisfaction of being debt free is simply priceless.
LVSteve
Member
A practice that should be banned by law, IMHO.
Geronimo Jim
Member
Statistics show there is a direct correlation between credit scores
and loss ratios. I am all for it. I have great credit. How do I know?
Spent 30 years in the insurance industry. Insurance companies want
to give you the lowest possible rates and credit is one way for good
scores and drivers.
Indeed it is.
GypsmJim
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Maybe. But since I am taking advantage of it, I won't complain to my representatives.
My Homeowner's Insurance gets a discount because I have a security system. I'm still waiting for them to reduce my Fire & Theft rates for having a firearm in the house.
I'm not holding my breath though....LOL.
Anytime you're out of debt free and clear.......Interest rates DON"T MATTER.
On my final job I oversaw many foreclosure sales. If that didn't give me the incentive to pay off my mortgage, I don't know what else would.
I think the paid off mortgage matters to people based on where they are in life and what their finances look like. If you are retired or on a fixed income I understand not wanting one more payment each month which is also probably the biggest payment. Where I live in NY over half (YES OVER HALF) my mortgage payment goes to property taxes and insurance escrow. So even if my home were paid off I'd still have a big monthly nut. I had this conversation with a co worker once. He was bragging that his home was paid for. I told him his paid off home was worth $150k. I have $400k in equity. I WIN LOL.
The point was you could invest the money elsewhere for a net positive. Again, that thought process is not for everyone
You could invest the money elsewhere and lose it. That is my thought process.
We have built 2 houses since we got married and both times when the man drove the last nail we paid him off. I can see a house and know where my money is and if the bottom falls out I still have a place to live.
When the money is invested somewhere it may or may not be there when I want it. Stocks, bonds, etc. are just pieces of paper that somebody says are worth something when in reality they may only be good for starting a fire. Larry
Rowlette
Member
Equity is just funny money, it not real until the asset is liquidated. When sold at the best price ( which fluctuated by market trends) one should consider costs of replacement of primary residence, moving cost, insurance, taxes, on and on.
As per using the money's for investments, risked needs to evaluated and overall cost including taxes.
As per being free of debts, one must consider the mental well being. The financial comfort on having an asset that potentially hard to lose, specially during difficult times by personal or economic downturn.
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As per using the money's for investments, risked needs to evaluated and overall cost including taxes.
As per being free of debts, one must consider the mental well being. The financial comfort on having an asset that potentially hard to lose, specially during difficult times by personal or economic downturn.
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See post #54......It's always better to be debt free ALWAYS.........You can cover debt in chocolate. But its still debt.
Again, this mindset is not for everyone. But it has served me well as an investor and landlord. As for having to sell or liquidate to get equity, what asset doesn't require selling to get your money? And yes stocks and bonds go up and down. But so does the real estate market. I fully understand the value of "peace of mind". And also the sense of accomplishment that comes with paying off a mortgage. But I'll still not do it. In fact I wish I would have borrowed against my primary residence at 2.5% instead of just refinancing. Lol.
