Interesting Statistic Heard Today

[CAJUNLAWYER]

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.

 

[Mike SC Hunter]

Only so far as it means they can afford a bigger car payment and we're back in a BMW.

House and acreage paid for........Never wanted a BMW cuz they don't have beds, ground clearance or 4WD.

 

[Bald1]

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.

 

[Papa Lee]

I had a large dollar-amount stock sale a few years ago. I mentioned taking some of it and paying off my mortgage to my financial investor. He said, "Why would you take money that will earn 10% to pay off a loan costing you 4%? It's like taking 6% right out of your pocket."

I'm still paying the mortgage, which at this point is primarily principle and escrow.

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]

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.

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]

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.

A practice that should be banned by law, IMHO.

 

[Geronimo Jim]

A practice that should be banned by law, IMHO.

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.

 

[quikdraw67]

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.

Indeed it is.

 

[GypsmJim]

A practice that should be banned by law, IMHO.

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.

 

[PatAz]

In my case cash was paid for both.

 

[Mike SC Hunter]

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.

Anytime you're out of debt free and clear.......Interest rates DON"T MATTER.

 

[Golddollar]

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.

 

[Bald1]

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.

 

[Bald1]

Anytime you're out of debt free and clear.......Interest rates DON"T MATTER.

The point was you could invest the money elsewhere for a net positive. Again, that thought process is not for everyone

 

[tops]

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]

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.

Sent from my SM-G960U1 using Tapatalk

 

[Mike SC Hunter]

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.

See post #54......It's always better to be debt free ALWAYS.........You can cover debt in chocolate. But its still debt.

 

[Old cop]

We paid off our mortgage awhile ago and I never cared for BMWs anyway. I read "The Millionaire Next Door" (forgot the author) when I was in my 40s and recommend it to young folks just getting started.

 

[greeman]

Now if we could only pay off the property tax the way we did the mortgage........ It is a shame there is never an end to how long we have to pay property tax!

 

[Bald1]

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.