I received my mortgage statement in the mail yesterday, which basically indicated that my loan “payoff amount” was a sum that I anticipate paying in full within the next twelve months (May of 2015). I’m about to turn 28, my wife is about to turn 29, and we’ve been married for nearly 6 years and have had our house (a split-level home on 9 acres) for about 4 years. Over those years, we’ve made endless improvements to the house, inside and out, but I was fortunately still able to put a substantial amount on the principal of the loan each month. Thankfully, due to partial scholarships and working full-time, I was able to pay for my college without taking a loan. We paid off her college debt shortly after getting married. We have 4 vehicles (2 cars, work truck, SUV), but all were purchased with cash and we’ve never had a car payment (if you read my posts in the “Automotive Section” thread, you know why, haha) and we have no other loans, debt, or bills aside from monthly TV/phone/internet/electric. My goal of being financially independent has certainly left us strapped for cash on many occasions and has required us to forgo many purchases for ourselves and young kids. We don’t “live large” in any way because it isn’t in our nature. We have very high-mileage vehicles (2 over 200,000), we have the cheapest cell phones, the cheapest TV package, we grow lots of food for ourselves/livestock in the summer, we burn firewood for heat, we don't spend much when we go out to eat, etc.
The reason I’m posting this is because everyone I tell (friends, co-workers, neighbors, etc) about my aggressive payment schedule thinks I’m a complete fool. They site reasons such as:
1) The principal money would “work harder for you” if placed into a high-yield CD, safe stocks, or a 401K retirement plan.
2) Once your home is paid off, all of your money is “tied up” in real estate until you sell the home.
3) Without a mortgage loan, you won’t get as much of a tax break on your mortgage interest deduction.
4) What if you need a substantial amount of money for a “rainy day?”
5) What if the real estate market goes south and you’ve paid off a house you can’t even sell to break even?
6) With such a low mortgage interest rate, it’s better to save the money and earn interest while paying the full 30-year mortgage term.
I know there are some highly intelligent and responsible posters here, so I guess I was just curious what your take is on the matter? Even if any or all of these arguments are correct, I could care less. All that really matters to me is that my wife/kids are taken care of if something ever happened to me and leaving them with no mortgage/debt would be a great start. Despite what people say, I plan to pay my place off in the next year and bank a nest egg for their college tuition and to possibly purchase more land to build my agricultural side business. Also, I don’t ever plan to take a loan again, which means that I can officially detach from the Jewish banking cartel, which is a great feeling.
This is a great topic and post, Thrashen, and good sound advice for everyone here, especially the younger guys/gals!
"The rich ruleth over the poor, and the BORROWER is a SLAVE to the lender!" Proverbs: 22:7. The Bible says a lot about money and Jesus spoke more about money than heaven or hell!
Unfortunately, I learned this lesson the hard way! To make a long story short, I grew up not having a lot as a child in the way of money. When I got of college and then the Marine Corps, I started out in the factory from the ground up and then advanced into sales in a the company I was working for. Sales in the early 90's was booming and I started to make good money for me. I bought the big house, nice car, credit cards, etc. Accumulated a lot of debt, however, after 911 the bottom fell out. Fortunately, I didn't lose everything, but things were really tough for our family for years. Had I managed my money properly, like bought a smaller home, had less of a car, no credit cards. I would be debt free today and would in better shape financially.
The financial pattern that Don, Thrashen and Westside have posted is the intelligent way to go. As financial expert Dave Ramsey says, " Live like no one else today, so you can live like no one else later."
Thrashen, your friends, neighbors, etc. are the fools! There are too many points to mention, but briefly..
Your friends are banking on having a job for 30 years to pay the 30 year mortgage, no one is guaranteed a job beyond today!
The tax break theory is a myth. Take your monthly house payment and multiply by 12 months and tell me your going to get that kind of tax break at the end of the year, that's BS!
What if the real estate business goes south and in your in the real estate business and have a 30 year mortgage? If your home is paid for, at least you'll have a place to live.
You do need to have substantial amount of savings, say, at the minimum 6 months of your salary or what it takes to pay the bills. Have this saved before you even think about buying a house in case you do lose your job, you can still pay the bills while looking for another job.
There are countless other things to be said about this subject. I wish I had done what Thrashen and Westside are doing at their age. However, I can report, I never lost my house, thank God, and I am almost debt free. I basically only have my mortgage to pay and about 10 years from paying it off. We have 3 cars and they're all paid for. I have over 200,000 miles on a Chevy Malibu and over 150,000 miles on a Ford Expedition!
Great job Thrashen and Westside. I applaud you. Everyone here should heed their advice!
