Paid Off Homes (credit, investments, children, education)

[mathjak107]

Originally Posted by kyam11

Let me know when you learn the definition of basic financial definitions from a first year finance course. As I said paying off a mortgage provides a risk free return of the interest rate (minus any tax savings) of the mortgage being paid off. Your philosophical discussion of why one should or should not hold a mortgage has no relevance. Period. Never stated once on anything related to whether someone should or should not pay off a mortgage as that is a personal preference based on nuneroua factors

And no I forgot more about finance today than you will likely ever know.

[mathjak107]

Originally Posted by ncole1

Get a good homeowner’s insurance and umbrella coverage, on the off chance somebody gets hurt. Much cheaper than keeping large interest payments just in case you lose a big law suit!

there are situations that insurance either will not cover or awards exceed the insurance .

when we had the house in pa we learned an interesting thing about insurance when it comes to hoa's,co-ops and even condo's .

civilians in the development would volunteer to drive around and patrol the grounds so we had a civilian patrol .

the question came up as to what if someone patrolling chased some kids on a rtv or snow mobile out and the kids were hurt and an award exceeded the development insurance .

well it was no surprise each one of us would be responsible for the overage , but the surprise was odds are your insurance would not cover the act .

they only cover acts by you and household members , not the actions of others that result in you being sued . . i called geico and they confirmed we would not be covered . they said some insurers will offer you a rider if you specifically ask but they do not .

[mathjak107]

Originally Posted by ncole1

There are many confounding variables there. Even the most fiscally responsible family is unlikely to have the cash to buy their first house outright unless they rent for 10 years or more while saving or have a large inheritance. The median household income is about 1/5 th of the median house price, which means many are renting.

yep , the choices to pay cash or not generally comes later in life as resources become greater and greater . by retirement many seniors have that choice eventually if they relocate or down size.

we lucked out as we rented in a building that went co-op back in the 1980's . they offered us an insider price as an incentive to buy that was very low ,so we did . we even took a mortgage. today my cable bill is bigger than that mortgage was lol .

the co-op craze took hold in nyc and within a few years we sold it for 3 or 4 times what we paid so we had that option early on .

[kyam11]

You are lost. Sorry but that is the truth. Numbersguy hit the nail on the head.

When you understand basic concepts and definitions get back to us. Irony is you posting what I said not once but twice in one of your posts but arguing against it in different posts. Thanks for the chuckle.

"getting rid of a 4% interest rate is risk free , there is no question"

" there never is a risk in eliminating an expense and interest is an expense"

"paying off the mortgage eliminated the expense of the interest "

Oops. Actually 3 times.

Go ahead now and argue against what you already said.

[mathjak107]

You are just flat out wrong in your view of what risk entails when discussing mortgages and loans to buy assets. This discussion with you is pointless . As well as your lack of accounting skills seems to confuse you over the difference between income and expenses. I am done trying to explain it to you

[kyam11]

Originally Posted by mathjak107

You are just flat out wrong in your view of what risk entails when discussing mortgages and loans to buy assets. This discussion with you is pointless . As well as your lack of accounting skills seems to confuse you over the difference between income and expenses. I am done trying to explain it to you

I never ever once said what "risk entails when discussing mortgages and loans to buy assets" other than when I said "buying a house with a mortgage has risk(meaning it has a measurable amount of risk)." Explain how my view can be wrong when I haven't expressed my view. This ought to be good.


The only thing I stated prior to that was "paying a 4% loan off guarantees you wouldn't pay 4% in interest." at which point you stated "no paying a 4% loan off does not guarantee you wouldn't pay 4% in interest." and then went into some other argument where I never took a stance except to repeat "paying a 4% loan off guarantees you wouldn't pay 4% in interest." at which point later you said :

getting rid of a 4% interest rate is risk free , there is no question"

" there never is a risk in eliminating an expense and interest is an expense"

"paying off the mortgage eliminated the expense of the interest "



Care to make anything else up?

[mathjak107]

I will say it one last time ,interest is an expense and paying off the expense of a loan has no risk to it .the risk is in what you bought . You merely reduced an expense and improved cash flow . I could pay off any expense and see similar improved cash flow End of story

[kyam11]

Originally Posted by mathjak107

I will say it one last time ,interest is an expense and paying off the expense of a loan has no risk to it .the risk is in what you bought . You merely reduced an expense and improved cash flow . I could pay off any expense and see similar improved cash flow End of story

LOL. You will say it one last time? All I ever said using your words in this post you just made was "interest is an expense and paying off the expense of a loan has no risk to it" . and then you went into some rambling argument that I never said anything the opposite. I simply restated "interest is an expense and paying off the expense of a loan has no risk to it" and then you again kept going arguing with (not sure who since it wasn't me).

Yes using money to buy an asset that has risk will have risk. No one ever said anything differently. NOT ONE PERSON!!!

Water is also wet. The sky is up. (Insert other very obvious things that no one ever said differently).

You also said -"paying off a loan is only as risk free at the end of the day as what that loan bought". That is not true. Paying off the loan (as you said) and I will quote you "paying off the expense of a loan has no risk to it" .When you took the loan out and used the money to buy the asset you exposed yourself to risk, but now having the cash and paying it back you get the guarantee.

Funny how you said these two things:

paying off the expense of a loan has no risk to it (Hint:This means no risk as in 0)

paying off a loan is only as risk free at the end of the day as what that loan bought . (Hint: This means some risk as in NOT 0).

Oops.

[UnfairPark]

Originally Posted by EDS_

Give me the stock market, especially during volatile times - I love a high amplitude short wavelength VIX.

I also laugh that notion implying people who have nice things cars/boats/second homes/aircraft/farms-ranches etc. are usually fakers. By any rational measure this is a very wealthy area.........some people are going to live larger than others.

No, there is nothing wrong with lavish life if you don’t have money. No matter how you see it, heavy debt is not fiscal responsibility, it’s fake oppulence built without a foundation. That’s why we see so many foreclosures, bankruptcies and stress induced illnesses, people think it’s standard practice to play with fake money, even when they have little financial sense.

[twinkletwinkle22]

mathjak said: paying off the expense of a loan has no risk to it

There could be a risk to paying off a mortgage loan if the money used to do that was needed in another area, medical emergency comes to mind. Prudent people always keep an emergency fund for this reason, to cover the unexpected. It is most peoples dream to own their home free and clear but this is also similar to putting all your eggs in one basket or only owning one stock.

Many financial gurus advocate having savings in a diversified portfolio. Your home should be a part of your savings but don't neglect investing in other areas like stocks.