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Well, first of all $500,000 would get you a mega-mansion here. If you have the salary for one of those, paying for vacations would not be an issue....
Second, you can pay it off early, save $70k (instead of your 80), and take 10 thousand-dollar vacations (or any variant thereof).
Pitt Chick, yes we agree. My numbers was to prove a point though. My mindset is to keep expenses down and produce a cash flow that is above expenses.
Most people produce cash flow from working for someone else, others through work and investment, others through a business (work) and investing. I prefer the latter. I more cash flow I can produce from my investments the better.
I'd pay off the house and all debt. Take that cash flow that is no longer paying debt and invest it.. eventually to produce more cash flow.
For someone who doesnt believe it can be done. After debt free and contributing max to retirement make it fun start investing.. enough where dividends pay maybe your smallest expense, then work on paying maybe property taxes with dividends and then another expense and on and on. (most people try to invest to produce capital gains). It was explained as this... A cow farmer takes his cattle for slaughter for profit, a dairy farmer milks his cows for profit.
Even figuring in a vacation. Eventually living off my investments. Also cash flow from a business, a business with employees instead of a business where I make a job for myself.
Cash flow from business
Build investment income
= multiple sources of cash flow
Maybe I am wrong but it's working for me. I also go on vacation. I love credit cards, Amex in particular. One for business and one for personal. Everything is charged and the full balance paid when the bill comes in. I rack up those points and use them to get free airfare and hotel stays. In Feb I did this and stayed in florida for 2 weeks only the cost of food, auto and misc. Then paid cash for a back to back cruise for 2 weeks.
Then again, if it was a business trip I could have planned to fly on a friday (travel day), saturday and sunday don't count. Do business for 3 days and fly home late thursday (travel day).
My only debt is a 15-year mortgage, and I'm one year into it. We took a big family vacation to Disneyland last month. Paid cash for the trip.
I would not take out a loan to go on vacation. I would not have gone on such an expensive vacation if I had significant debt beyond the mortgage. I don't think I need to pay of my mortgage to have any fun.
I could live a more frugal life. I choose not to. I could stop investing and pay off my mortgage much more quickly. I choose not to. I'm on track to reach my financial goals - retire at 60, live a comfortable life in retirement, take vacations and have cable and new shoes now, provide a college fund for my kids. If it ever seems I am falling off of my goals, then I'll change my lifestyle accordingly, and perhaps not take that vacation now. As long as I'm meeting my goals, I'm in good shape.
My only debt is a 15-year mortgage, and I'm one year into it. We took a big family vacation to Disneyland last month. Paid cash for the trip.
I would not take out a loan to go on vacation. I would not have gone on such an expensive vacation if I had significant debt beyond the mortgage. I don't think I need to pay of my mortgage to have any fun.
I could live a more frugal life. I choose not to. I could stop investing and pay off my mortgage much more quickly. I choose not to. I'm on track to reach my financial goals - retire at 60, live a comfortable life in retirement, take vacations and have cable and new shoes now, provide a college fund for my kids. If it ever seems I am falling off of my goals, then I'll change my lifestyle accordingly, and perhaps not take that vacation now. As long as I'm meeting my goals, I'm in good shape.
Not to p** in your cornflakes but what if you get sick, what if you lose your job? So much can happen. I know people who went on vacation every year, spent money without a care in the world. Now they fell on hard times and are losing the house. They thought the good times would roll forever and didn't even have an emergency fund.
Just because you're buying a house isn't any reason to not take a vacation. Just no need to go too extravagant. Any vacations we've taken, except to Germany to visit my step daughter and family, we've driven our own car. And the furthest we've gone was to North Myrtle Beach, S.C. and split the cost of a condo with my wife's kids.
As far as a nice vacation for my wife, she's happy when we set up our tent in a campground about 40 miles from here ($18/night to camp). If she wants to, the hardest thing she'll have to do while there is keep moving her chair to stay in the shade. We could afford trips like that and our $625/month house payment with no problem.
Just because you're buying a house isn't any reason to not take a vacation. Just no need to go too extravagant. Any vacations we've taken, except to Germany to visit my step daughter and family, we've driven our own car. And the furthest we've gone was to North Myrtle Beach, S.C. and split the cost of a condo with my wife's kids.
As far as a nice vacation for my wife, she's happy when we set up our tent in a campground about 40 miles from here ($18/night to camp). If she wants to, the hardest thing she'll have to do while there is keep moving her chair to stay in the shade. We could afford trips like that and our $625/month house payment with no problem.
As long as you paid 20% down and are not paying PMI. That's throwing even more money away.
Lets say you are paying $320 "interest a month in interest alone. If you make $20.00 an hour you have to work "over" 2 - 8 hour days (after taxes) a month to put that money in someone else's pocket.
When I was a kid and needed something, my dad would always say... do you know how many hours I have to work to pay for that. At the time it was like fingernails on a chalk board but I get his point.
My only debt is a 15-year mortgage, and I'm one year into it. We took a big family vacation to Disneyland last month. Paid cash for the trip.
I would not take out a loan to go on vacation. I would not have gone on such an expensive vacation if I had significant debt beyond the mortgage. I don't think I need to pay of my mortgage to have any fun.
I could live a more frugal life. I choose not to. I could stop investing and pay off my mortgage much more quickly. I choose not to. I'm on track to reach my financial goals - retire at 60, live a comfortable life in retirement, take vacations and have cable and new shoes now, provide a college fund for my kids. If it ever seems I am falling off of my goals, then I'll change my lifestyle accordingly, and perhaps not take that vacation now. As long as I'm meeting my goals, I'm in good shape.
Do you plan on living in that house for 15+ years?
Not to p** in your cornflakes but what if you get sick, what if you lose your job? So much can happen. I know people who went on vacation every year, spent money without a care in the world. Now they fell on hard times and are losing the house. They thought the good times would roll forever and didn't even have an emergency fund.
I get what you are saying but just a thought.
But he IS investing -- so there's a good chance he has cash, too. Or if push came to shove, he could sell his investments.
I never think it's a good idea to put all my eggs in one basket. Not doing anything BUT paying off a mortgage is putting all my eggs in one basket.
I think it's far wiser to buy a house and pay the mortgage, maybe pay a little extra, save and invest a set amount for retirement, save and invest for wealthbuilding and save for a vacation. That way every thing gets done, although it might take a little longer.
Not to p** in your cornflakes but what if you get sick, what if you lose your job? So much can happen. I know people who went on vacation every year, spent money without a care in the world. Now they fell on hard times and are losing the house. They thought the good times would roll forever and didn't even have an emergency fund.
I get what you are saying but just a thought.
An old co-worker talked like you type... Always waiting on retirement to have fun... that perfect situation where he was saved up and free. The perfect world. He unexpectedly died several months after retirement. It was a lesson for those around him.
But it sounds like Aggiebuttercup has a plan and maybe even insurance to cover a sickness. Funny thing is that you can't plan for every little thing... you need to live life.
Would you borrow against a paid off house to go on vacation?
Would you go on vacation if your house was not paid off yet?
It seems like a lot of people think the first is unwise or risky but think nothing of the second. How can this make any sense at all? The end result of both is the same, after all...
Similarly, a lot of people who consider themselves to live within their means have cable TV or live without roommates despite the fact that they say they will likely get a car loan the next time they buy a car - is this not the same as borrowing against a paid off car to pay for those same things?
You could even ask the same question about student loans - how is going on vacation/buying "X" luxury items while having outstanding student debt supposed to be less foolish than taking extra student loans while in school in order to pay for the same thing(s)?
No. I would try and avoid that.
Yes I would go on vacation if my house was not paid off. I don't see why not.
I don't see how. I'm not going on a vacation equal to my house equity
There is a whole discussion on buying vs leasing vs cash vs borrowing to buy a car in the auto forum
Student loans are debt. Some people take them others don't. People are gonna buy things weather they're in debt or not. It's up to the person to make sure they do not borrow too much take too much risk and leave themselves open for a catastrophe. Its IMO personal. Lots of people can't handle their finances. Lots of people can. I know a few people making 90-150k a year and they're broke. They can't not spend it.
An old co-worker talked like you type... Always waiting on retirement to have fun... that perfect situation where he was saved up and free. The perfect world. He unexpectedly died several months after retirement. It was a lesson for those around him.
But it sounds like Aggiebuttercup has a plan and maybe even insurance to cover a sickness. Funny thing is that you can't plan for every little thing... you need to live life.
Yes that is a risk the same as falling on hard times and being in financial trouble. I'm not saying that people should stop living. I'm just saying that if you can build a solid foundation first.
At first I had the same mindset, in fact I used to look at people like your co-worker the same way you do but the rat race got old and tiring so I chose to change my ways. It's the best thing I did.
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