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Old 05-24-2015, 08:56 AM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,421,913 times
Reputation: 1971

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Quote:
Originally Posted by ncole1 View Post
Irrelevant, because if your salary goes up, then it would go up whether you have a mortgage or not.
...

It may take less hours to pay it than before, but it still takes more hours of work than the 0 hours you would need if the mortgage didn't exist!
But then how many hours would it take you to match my investment stash that you have tied up in an illiquid investment that appreciates exactly the same whether leveraged or not?
Inflation 1 point
Amish investing 0 point
And remember we're both getting inflated dollars. Mine are worth more because I am paying fixed dollars. Wouldn't it be nice to go to the grocery store and have them FREEZE todays prices for you for the next 30 years!?

Last edited by honobob; 05-24-2015 at 09:06 AM..
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Old 05-24-2015, 09:45 AM
 
12,709 posts, read 9,992,785 times
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Quote:
Originally Posted by honobob View Post
But then how many hours would it take you to match my investment stash that you have tied up in an illiquid investment that appreciates exactly the same whether leveraged or not?
It depends on the relative rates of return, not on inflation. If you adjust mortgage for inflation you must also adjust investment value for inflation, and the adjustments are a wash.

Replace "inflation" with "earnings increase" and the argument goes through the same. While earnings increases mean you'd work less with the mortgage, they also mean you'd work less without the mortgage in order to "pay" the opportunity cost.

So the fact that higher wages mean less work is needed is true regardless of whether you have a mortgage or not and is thus 100% irrelevant to the decision to pay off a mortgage or not.

Quote:
Originally Posted by honobob View Post

Inflation 1 point
Amish investing 0 point
And remember we're both getting inflated dollars. Mine are worth more because I am paying fixed dollars. Wouldn't it be nice to go to the grocery store and have them FREEZE todays prices for you for the next 30 years!?
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Old 05-24-2015, 09:49 AM
 
71,806 posts, read 71,896,917 times
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this discussion and point comes up as never ending because it can't . the mortgage is only a tool that allows you to buy something.

whatever you buy ,whatever you earn will still do whatever it is going to do whether you paid off a mortgage , have a mortgage or not.

the mortgage is neutral in the process.

it is an expense that allows you to buy something that hopefully will hedge inflation or allow you to invest in other assets that will or at least let you gain more than the cost of the mortgage.. maybe they will , maybe they won't
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Old 05-24-2015, 10:05 AM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,421,913 times
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Quote:
Originally Posted by ncole1 View Post

It may take less hours to pay it than before, but it still takes more hours of work than the 0 hours you would need if the mortgage didn't exist!
BUT at what cost? It is ONLY costing <4% to pay over 30 years AND I have the same benefit of the property PLUS some government subsidy. You are taking your $300,000, 400,000, 600,000 and putting it under your mattress. I'm not sure what future you envision where that is a good plan.
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Old 05-24-2015, 10:13 AM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,421,913 times
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Quote:
Originally Posted by ncole1 View Post
It depends on the relative rates of return, not on inflation. If you adjust mortgage for inflation you must also adjust investment value for inflation, and the adjustments are a wash.
I'm not sure what "adjusting" you are talking about. There is no "adjusting" for the mortgage because it is FIXED. Now if you want to say you have to adjust my investment value I agree and that adjustment will be UP! So when I'm earning 18% on my $600,000 in CD's and paying my <4% mortgage the only wash I see is YOU getting hosed!

And are you saying you don't agree that having your food costs frozen is a good thing? See how quick your Safeway will agree to that!
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Old 05-24-2015, 10:37 AM
 
6,312 posts, read 4,757,627 times
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Quote:
Originally Posted by honobob View Post
.... You are taking your $300,000, 400,000, 600,000 and putting it under your mattress. .
No without a mortgage, the homeowner already paid that amount and no longer has it.
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Old 05-24-2015, 10:53 AM
 
12,709 posts, read 9,992,785 times
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Quote:
Originally Posted by honobob View Post
I'm not sure what "adjusting" you are talking about. There is no "adjusting" for the mortgage because it is FIXED. Now if you want to say you have to adjust my investment value I agree and that adjustment will be UP! So when I'm earning 18% on my $600,000 in CD's and paying my <4% mortgage the only wash I see is YOU getting hosed!

And are you saying you don't agree that having your food costs frozen is a good thing? See how quick your Safeway will agree to that!
"Adjustment" here meaning the process of calculation, not the change in value of something. I'm using the term in the same sense as when you say "The movie's sales are the third largest ever, not adjusted for inflation".
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Old 05-24-2015, 10:56 AM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,421,913 times
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Quote:
Originally Posted by jrkliny View Post
No without a mortgage, the homeowner already paid that amount and no longer has it.
Exactly! The money is STUCK in the house earning NOTHING just as if it were under the mattress only way less liquid.
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Old 05-24-2015, 10:57 AM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,421,913 times
Reputation: 1971
Quote:
Originally Posted by ncole1 View Post
"Adjustment" here meaning the process of calculation, not the change in value of something. I'm using the term in the same sense as when you say "The movie's sales are the third largest ever, not adjusted for inflation".
Please show your calculations for this adjustment so I can understand.
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Old 05-24-2015, 11:07 AM
 
6,312 posts, read 4,757,627 times
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I am having one of those days. I look at conversations like this an wonder if people truly do not understand what seems to be simple ideas or if they are just arguing for the fun of it.
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