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A lot of paragraphs ^^ to bring in new points that are incredibly obvious. Any rational human being is going to pay down credit card debt 1st.
The debate has always been about paying off a mortgage versus some highly probable way of make more $$'s in another investment vehicle. Therefore taking cheap mortgage money is a brilliant financial strategy. As you say, you think people leave money on the table. Hindsight is always 20-20 so I can show you good and bad gambles. But if you think I should mortgage up my homes to put money in the stock market right now, then we vehemently disagree. Before I borrow any money to make money, I want to a much higher probability it will yield me a higher rate via cost benefit analysis OR a sure fire way I could NOT go backwards resulting in a loss if my possible gains are not much higher. That can only mean I need to steer the investment ship with much more control with my god given skill sets. Therefore I feel extremely comfortable doing what I do best and that it to manufacture and selling my technical trinkets. I'm extremely good at it and I'm very much in control of my performance. Meanwhile, invest how you see fit. I use my jaw though technical knowledge, marketing and sales skilss and connections and I yield an extremely good ROI. If I told you my monthly profit, it would be hard to believe. Yet others borrow money and toss it in the stock market. To each their own. I don't feel as if I am rolling the dice. I just need to be better than the competition. That's easy and profitable. When things turn for the worse, I am comfortable knowing I am debt free and my overhead is extremely low. That's how I roll.
Well, you apparently also roll by overstating others' positions, then disagreeing with the overstatement. :-) Again, you overstate that someone is claiming it's "brilliant" to take a cheap mortgage. Who's saying that? Even better, when did anyone suggest that you mortgage your existing homes to push that money into investments?
I thought the debate was about whether it was better to pay cash for a home, as opposed to paying the minimum down payment that will secure a cheap mortgage, then investing the difference. That's an edge case, because most people don't have up-front cash for a home, but we can have a discussion within the framework of the hypothetical. You don't have to invent topics here. You don't have to misstate my opinions to have your own.
When you misrepresent the points others are making in a discussion, you show disrespect. Nobody here is suggesting that anyone "toss" money into the stock market. Nobody here is suggesting that you mortgage your properties and play the market. Nobody here is doing anything more than offering opinions about various factors in the decision, but you're attacking a simple proposition seemingly because you don't like the assertion that you're leaving money on the table.
You feel extremely comfortable with your approach. There's nothing wrong with that. However, it would be more accurate to say that you know you're leaving money on the table, but you have personal reasons for that, you perceive a significant value from that, or what have you. I can't see why anyone would disagree with that position.
It's not that you have mathematical proof that your approach is superior. You have a personal opinion that your approach is superior, informed by your experience and preferences. And that's fine.
Writer - I am NOT going to join this debate other than this one post as it has been explained by both sides pretty well about 10 times now....BUT - you cannot say this:
"We don't have to agree here, because at this point it's like a religious discussion. However, we can rationally acknowledge that with really cheap debt, like a mortgage at 4%, not investing means leaving money on the table."
DEFINITIVELY - no matter how slight there is SOME RISK in your approach - how much each person can tolerate is a personal decision - but to blindly say that money WILL be left on the table using your approach is just not true.
You could write :
"We don't have to agree here, because at this point it's like a religious discussion. However, we can rationally acknowledge that with really cheap debt, like a mortgage at 4%, not investing means LIKELY leaving money on the table."
This would be a more accurate statement - still subject to debate as to HOW LIKELY that "leaving" would be.
That's all from me on this.
OP - buy a house if it is in your budget and you like the house. Not for investment purposes but because most people enjoy the intangible benefits of home ownership [ IF they can afford it.
Yep, and to distill it down even more, I think the bottom line in all of this discussion is risk/reward go hand in hand. One can't get one without taking on more or less of the other and to think otherwise is naive. While one would think this is beyond obvious to most, I hear lots of overconfidence on the reward side and not as much on the risk but that's human nature. There's some interesting reads on the psychology of investing and overconfidence on how humans view risk and reward that is quite interesting to read.
And investors have an uncanny knack of being overconfident, relying on a 100 year or so of return averages and hinging on that as the de facto average that they can expect out in the future, in their investment time frame. Heck, I hope the sunny optimists are right on returns as I have skin in the game, but I wouldn't count on relying on looking in the rear view mirror as the way of determining the future. Look at some predictions of where we are suppose to be now technology/society/etc wise and lots of those forecasts are downright awful.
Plus one thing that doesn't get kicked around that much in this discussion.....one's job/source of income to pay for one's debt. For those who leverage themselves high, well, let's put it nicely and say such people have way more confidence than me and what the numbers show in terms of one having that same decent paying job 3, 5, 10 years down the line in this day in age, let alone be able to secure a new job with the same income level down the line, regardless if one is working for someone or self-employed.
But yeah, as sh9730 said, I think we are in the world of discussing this in a religion type realm here(and politics I'd say) and there is no way of convincing the others who's way is "best". Anyways, my last post on this as I said more than enough already on the topic but I sincerely hope whatever goal one is after that they reach it no matter what plan/path they take in the world of managing their money. We reached our long term financial goal in the way we felt worked best to us in terms of risk/reward and I will say it's beyond sweet when you get there. All the best.
Well, you apparently also roll by overstating others' positions, then disagreeing with the overstatement. :-) Again, you overstate that someone is claiming it's "brilliant" to take a cheap mortgage. Who's saying that? Even better, when did anyone suggest that you mortgage your existing homes to push that money into investments?
Then let's revisit the thread.
Asufan wrote:
"Paying with cash is foolish these days when debt is so attractive. People would have to be crazy or bad at math to plunk down $300K on a house when they can borrow it for under 3.75% and put that money to work."
And your response was: "^^ This. " (Meaning you found it to be spot on. a.k.a. a semi-"brilliant" pontification while I found it to be some less than ideal advice.
Meaning, you agreed with him. It seems that I wasn't overstating others. I summarized the word "brilliant" to mean people who plunk down $300K are foolish, bad at math, and they could "put that money to work" at higher yield. In other words, the financially smart invest. I think I pretty much captured the essence of both of your positions. Yes or no. Or maybe just his? You tell me. From the get-go, I was addressing the "crazy bad at math" point of view. For whatever reason, you keep on assuming I'm talking to you. I'm not.
Last edited by MN-Born-n-Raised; 04-17-2015 at 02:20 PM..
Plus one thing that doesn't get kicked around that much in this discussion.....one's job/source of income to pay for one's debt. For those who leverage themselves high, well, let's put it nicely and say such people have way more confidence than me and what the numbers show in terms of one having that same decent paying job 3, 5, 10 years down the line in this day in age, let alone be able to secure a new job with the same income level down the line, regardless if one is working for someone or self-employed.
Are you suggesting that peoples income changes over time?
I vividly remember picking money off the ground in the late 90's up to the mid 2000 era. Then my income went down by a factor of 10 when the economy crashed. I would of had to work twice as hard to make a fraction of the dollars so I coasted out the LONG recession and made a typical family income for 6 years. But things are ramping up and I am working many more hours again. I am satisfied working less and making more $$'s than I need. But I like to stay focused on what I do best. The whole RE buying and selling was fun but also distracting. Lesson learned. But I still made a decent living because I was debt free. Others were struggling all around me. So I am glad I chose the path that I did and placed my bets the way I did.
Wow, how did a simple question of "Wait or buy now" devolve into high finance and bickering over who's smarter? Moreover what does all of that have to do with what the OP asked?
Wow, how did a simple question of "Wait or buy now" devolve into high finance and bickering over who's smarter? Moreover what does all of that have to do with what the OP asked?
"Paying with cash is foolish these days when debt is so attractive. People would have to be crazy or bad at math to plunk down $300K on a house when they can borrow it for under 3.75% and put that money to work."
And your response was: "^^ This. " (Meaning you found it to be spot on. a.k.a. a semi-"brilliant" pontification while I found it to be some less than ideal advice.
Meaning, you agreed with him. It seems that I wasn't overstating others. I summarized the word "brilliant" to mean people who plunk down $300K are foolish, bad at math, and they could "put that money to work" at higher yield. In other words, the financially smart invest. I think I pretty much captured the essence of both of your positions. Yes or no. Or maybe just his? You tell me. From the get-go, I was addressing the "crazy bad at math" point of view. For whatever reason, you keep on assuming I'm talking to you. I'm not.
You're still on this? Tell you what. If you keep quoting my posts, and using "your," I'll keep assuming you're talking to me. Fair enough?
No, you didn't capture the essence of anything I said. You misinterpreted and conflated a ten-second comment, took your own wording, and told me that was my point. When I repeatedly told you that was NOT my point, and not what I said, you kept saying the equivalent of "no, no, it's what you said, it's what you said, infinity! lalalalalalalalalalala" instead of much more simply accepting my explanation.
And yes, you overstated the response. If I say "it makes sense to leverage," and the original opinion was that people would be "crazy" to miss out on cheap debt, you're inventing a position if you claim that means anyone here is saying it's "brilliant" to go into debt.
What's strange for me is that you weren't even able to quote asufan properly, even with the quote text right there. The quote was "crazy or bad at math," and you conflated that to "crazy bad at math."
So would it help at this point for me to say that I don't think you're foolish or crazy? Is that really the whole problem here?
You're still on this? Tell you what. If you keep quoting my posts, and using "your," I'll keep assuming you're talking to me. Fair enough?
No, "I'm not still on this". Did you see the last time I posted on this thread? In fact, I gave the people positive feedback who made a lot of sense to simply move on. I'm so over it.
I've tried to politely explain that I am not interest in your opinion. I was talking with asufan when you wanted to jump in and wedge yourself into the debate. I've now mentioned it a few time and you are not listening. We both have moved on. We (defined as asufan as well as myself) simply disagree, that's all. I just don't care what you're point of view happens to be. I'm sorry... Capiche?
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As you say, you think people leave money on the table. Hindsight is always 20-20 so I can show you good and bad gambles. But if you think I should mortgage up my homes to put money in the stock market right now, then we vehemently disagree. Before I borrow any money to make money, I want to a much higher probability it will yield me a higher rate via cost benefit analysis OR a sure fire way I could NOT go backwards resulting in a loss if my possible gains are not much higher. That can only mean I need to steer the investment ship with much more control with my god given skill sets. Therefore I feel extremely comfortable doing what I do best and that it to manufacture and selling my technical trinkets. I'm extremely good at it and I'm very much in control of my performance. Meanwhile, invest how you see fit. I use my jaw though technical knowledge, marketing and sales skilss and connections and I yield an extremely good ROI. If I told you my monthly profit, it would be hard to believe. Yet others borrow money and toss it in the stock market. To each their own. I don't feel as if I am rolling the dice. I just need to be better than the competition. That's easy and profitable. When things turn for the worse, I am comfortable knowing I am debt free and my overhead is extremely low. That's how I roll.
