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I would not call them dumb. Instead I see lots of people acting based on emotion and feelings without doing any sort of fact finding or analysis. That holds true not only for financial matters but seems to be a common way to make all sorts of decisions. The outcomes are often very poor. Whether or not they are happy behaving that way is not something I could decide. Some people just don't seem to know any better or have the training and habits needed for rational decisions.
As to the outcomes, I will let you decide. I took a mortgage when I had the cash to pay for a house. I also had the cash for an emergency fund and for a comfortable retirement based on social security and investments. I borrowed $350K. Over the past 6 years the investments on that money I borrowed have paid for the mortgage payments and yielded an additional $100K. Now I have an extra $450K invested and that just keeps growing and compounded. In another say 15 years, that $450K will have grown to close to a million and I will be $650K ahead. Do you find that to be a significant amount or just "wringing every last nickel"?
Glad it worked out for you! Emotions and feelings are part of life. Perhaps analysis and emotions and feelings could all be considered in decisions? We’re not robots. Part of life is feeling things. I’ve done analysis, weighed the options and then decided that the extra costs sometimes is worth it for my happiness. Clinically the right decision ? No, but what value do you place on happiness or peace of mind?
You may not, but others do.
I really think behaving based on emotion and feelings is pathetic. It comes from animal instincts and as humans I would like to see that we can move beyond that and behave rationally. Drifting through life based on emotions and the wind is not only dumb, but IMO is fat, dumb and lazy.
Anyway, none of this discussion is helpful unless others want to analyze the question instead of just reacting emotionally. If that is the case, then some facts have been presented which might help one make a decision.
I really think behaving based on emotion and feelings is pathetic. It comes from animal instincts and as humans I would like to see that we can move beyond that and behave rationally. Drifting through life based on emotions and the wind is not only dumb, but IMO is fat, dumb and lazy.
Anyway, none of this discussion is helpful unless others want to analyze the question instead of just reacting emotionally. If that is the case, then some facts have been presented which might help one make a decision.
we all act emotionally .. if we didn't we would all be 100% equities long term , even in retirement as data and facts show statistically that has had the best outcomes over and over .
so we all have that line in the sand where we balance out what is factually the best choice and what we can live with emotionally .. some just have a higher tolerance then others emotionally ..
some people are goal oriented as well … if one of their goals was to pay off the house then best choice or not , they will meet that goal ..that does not mean they neglect the other goals … they just prioritize them …
so there is not one way to do something ...but there is the fact that sometimes we choose one way and then wish we did it another way .
Last edited by mathjak107; 08-03-2019 at 07:03 AM..
we all act emotionally .. if we didn't we would all be 100% equities long term , even in retirement as data and facts show statistically that has had the best outcomes over and over .
so we all have that line in the sand where we balance out what is factually the best choice and what we can live with emotionally .. some just have a higher tolerance then others emotionally ..
some people are goal oriented as well … if one of their goals was to pay off the house then best choice or not , they will meet that goal ..that does not mean they neglect the other goals … they just prioritize them …
so there is not one way to do something ...but there is the fact that sometimes we choose away and then wish we did it another way .
I really think behaving based on emotion and feelings is pathetic. It comes from animal instincts and as humans I would like to see that we can move beyond that and behave rationally. Drifting through life based on emotions and the wind is not only dumb, but IMO is fat, dumb and lazy.
Anyway, none of this discussion is helpful unless others want to analyze the question instead of just reacting emotionally. If that is the case, then some facts have been presented which might help one make a decision.
Good luck with that. Your disdain for those that choose not to follow your path is duly noted.
Good luck with that. Your disdain for those that choose not to follow your path is duly noted.
It is not disdain for those who do not follow my path. It is an indication of how difficult it seems to be for all of us to act rationally. I hope we can avoid fat, dumb, and lazy.
Obesity is a huge health problem. In fact it is the leading cause of death and health complications. It is so bad in the US that life expectancy has been decreasing in spite of the advances in medicine. We know this and yet we overeat because it feels good. I don't pretend to be somehow superior or beyond that. I certainly have an extra 15 pounds.
Dumb, meaning ignorant. It takes work and education to gain knowledge.
Lazy, it takes work to gain knowledge, to develop critical thinking and analytical skills and to move beyond our basic feelings and instincts.
The paths we choose are likely to differ considerably. I hope as humans we will try to understand and make rational decisions even when we don't have all the facts to be certain. What scares me are people who make no effort and are content to follow their emotions.
NO! A heloc works when the economy is doing well, when housing costs are increasing and when you really can get by without the loan. Just because you are approved for a heloc does not mean you will get the money years later if you need it. The banks protect themselves with all sorts of restrictions.
My sister was in desperate need of an approved heloc when her husband died and she needed to settle the estate and debts. The bank required her to pay off the heloc at a crippling rate that almost sent her to bankruptcy.
Not sure what HELOC you're talking about, but I had one on my last home. They gave me a line of credit for the equity in my home along with a checkbook. I was able to write a check against that line of credit any time I wanted and the interest rate was ~4%.
I only got it to use as an emergency fund. If I needed the money, it was there.
Last edited by flamadiddle; 08-03-2019 at 07:48 AM..
Remember, we are moving out of state and selling the home in four years so getting a new mortgage to save 1% would not make it mathematically.
Basically, the question is: Would you take 4.14% annual GUARANTEED in a 4 year fixed period or would you gamble with the balanced mutual fund and hope you do better in the next four years?
With the 15 year, you'll grow the equity twice as fast over that same period.
I send $500 a month to Fidelity Investments which puts the money directly into my Fidelity Balanced Mutual Fund (FBALX). Maybe there is a better option?
Right now my wife and I are paying for our home via a monthly mortgage. Our 30-year fixed mortgage rate is about 4.14%. I calculated that if we sent the mortgage company $500 a month our guaranteed rate of return would be about our mortgage interest rate. (slightly different due to rounding and compounding)
The 4.14% return would be guaranteed, but I can't guarantee that my Fidelity Balanced Mutual Fund (FBALX), which is getting the $500 payment each month currently, will be up 4.14 percent a year for the next four years in today's crazy times. What are your thoughts?
Seems that if you shift the entire $500 a month to paying off the mortgage then you'll wind up after four years with an allocation that has drifted off your target. The mortgage repayment is essentially a fixed income investment while FBALX is about 70%% equity. You'll have made all new contributions for four years 0/100 instead of your current 70/30 allocation. Your balance might be big enough that $24,000 won't matter but, if not, it needs to be considered in the big plan.
In the words of Michael Kitces never confuse a mortgage with any kind of fixed income investment in a portfolio.... you will not only skew the volatility of the portfolio way out of kilter by having to much in equities but you can’t rebalance your portfolio, swap in to different kinds of fixed income investments or spend the mortgage ...
You keep them totally isolated from each other
Last edited by mathjak107; 08-04-2019 at 01:01 PM..
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