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So if or when the market dips from all the whoring out of interest rates, what kind of penalty to withdrawal the CDs early? 6 months worth of interest?
Aren't you jumping a few steps here? I'm pretty sure they would have to both lose their jobs and blow through their emergency fund and the proceeds from the sale of all their non-essential belongings before cashing in their long-term investments to pay the bills.
At least, that's what I'd do. Maybe I'm not as rational as I think I am.
I've earned $30K in vacation perks that cost me not a dime on my credit card purchases, and another $10K in cash back rewards that again didn't cost me a dime. What have you gotten out of your debit card?
1. Not being a slave to the bank
2. Will save close to $85000 on a paid off mortgage
Those 2 alone is well worth it not carrying around someone elses money.
Aren't you jumping a few steps here? I'm pretty sure they would have to both lose their jobs and blow through their emergency fund and the proceeds from the sale of all their non-essential belongings before cashing in their long-term investments to pay the bills.
At least, that's what I'd do. Maybe I'm not as rational as I think I am.
No, but based on the way he is promoting his CD's it sounds like that is what is going to be the difference in everyone eating catfood for retirement and him or her living like kings.
Dave is a radio talk-show host who gives commonsense advice to the average Joe. The average Joe is mainly concerned with getting off the paycheck to paycheck merry-go-round and get out of debt. The average Joe is not a person who is really, truly concerned with a lot of investment advice because, until he gets out of debt, he has nothing to invest.
Callers like the one that you describe is the exception instead of the rule. In these instances, the caller would be much better advised to contact a financial consultant (and ELP, perhaps) rather than try to discuss a somewhat complex matter in a limited amount of time on the radio.
Dave is what he is. One should not made life-altering decisions based upon a radio show. That would be foolish. For the most part, Dave's advice is sound and helpful.
1. Not being a slave to the bank
2. Will save close to $85000 on a paid off mortgage
Those 2 alone is well worth it not carrying around someone elses money.
I think you are doing great.
If that is how you want to do it.
It is financial kindergarten, but if more people were like you, the country would be better off.
Those of us who want our money to work for us will use the more complex tools you don't seem to understand.
Don't worry about us.
p.s. There are plenty of overseas destinations that won't use your debit card.
But I am guessing that won't be an issue for you.
I think you are doing great.
If that is how you want to do it.
It is financial kindergarten, but if more people were like you, the country would be better off.
Those of us who want our money to work for us will use the more complex tools you don't seem to understand.
Don't worry about us.
p.s. There are plenty of overseas destinations that won't use your debit card.
But I am guessing that won't be an issue for you.
Maybe they are, but I was overseas this past summer and didnt have a problem.
Nothing complex in your theory, I would just rather be debt free than play with credit I dont need. I can see why you do what you do, I just dont agree with the concept. This is/was a discussion which is why we are here right?
There are 100s of instruments that you can grow your money that doesn't include debt. You use your debt/credit, and Ill use my cash.
I have no interest in paying off my house. If I had enough in my savings to pay it off today I wouldn't. I'm also not convinced I want to live in this house forever so maybe that makes a difference. The "savings" of paying off vs mortgage is only realized over the course of the loan and plans (life) can change on a dime.
annerk is right that those who can afford some leverage, partly obtained with good FICO scores, can build wealth that way. It's just not as obviously easy as she lays out with 10% returns. But with interest rates below inflation, you can borrow and invest with some level of long-term certainty that you return higher than the low mortgage rate.
A 10% average return last four years comes because it starts off an abyss because the previous yr (08) was the worst in a generation. Unless you are entirely in emerging mkts and they do fabulously, returns the next 4 yrs will be lower. If some of these 10% returning investments were bonds, great, but they definitely will not return 10% anytime soon again.
I also would not lock any part of my portfolio for 10 yrs at 5-7% at any time in the rate cycle, but again annerk is right that everyone has a different situation.
Proverbs...please educate me...if I'm at home and get a call about a family emergency and want to book a flight and a car right away...what's the hold on that...on a Debit card?....
I use my CC book the flight -- go take care of the business -- come back and pay if off.
But at least you do concede CCs are and can be used responsibly. Just because many people don't -- has nothing to do with those of us who use card for points, benefits or convenience....AND we get the benefit of lower rates on mortgages or cars, WITHOUT tying up cash.
There are plenty of people as well, I'm sure, who HAVE the money to pay and use card for convenience, to keep their cash in THEIR pockets as long as they can to MAKE money on it -- and DO NOT pay interest.
Glad you 'cash' lifestyle works for you. Basically a person who never pays interest on their cards, but uses it for benefits or points is paying cash as well...and coming out better than keeping up the cash before they have to.
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