Author Topic: DONT Payoff your Mortgage Club  (Read 125490 times)

AnswerIs42

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Re: DONT Payoff your Mortgage Club
« Reply #1050 on: December 29, 2018, 07:07:34 PM »
Yeah I don't get this at all.... Why would you ever want a mortgage that is adjustable and increases as inflation occurs over time.  Mortgage B make no sense.
Turning this on its head for a minute - why would you want a mortgage that costs more in real terms at the beginning, when you're younger and your wages are presumably lower, and the money could be invested earlier to work longer for you instead; and costs less in real terms later in the mortgage, when you're earning so much you have lots of spare money but if you invest it instead it has less time to grow?

I couldn't get Boofinator's attachment to work, but I had a go too (see attachment). Mine's pretty simplified, assuming you pay the mortgage yearly rather than monthly. Note that my figures are not inflation adjusted.

The initial payments for mortgage B are way less than mortgage A - about 40% less. They don't even cover the interest during the first five years. I also added a couple of columns for what could happen if you invested the difference (later on withdrawing the difference from the investments to make up the difference once mortgage B's payments overtook mortgage A's), assuming 7% above-inflation stock-market returns (big assumption, I know).

I understand why the banks would be reluctant to offer this - the main risks to the bank with mortgages are in the early stages when LTV is high, so it's in the bank's interest to reduce the LTV ASAP in case something goes wrong and the property has to be sold at a loss. That said, the banks used to like offering interest-only mortgages, which is pretty risky for the banks in the early years too.

And I also get why borrowers would be a bit wary about mortgage payments that rise with inflation... but then again, rent rises with inflation too, and renters have to just deal with it.

Boofinator

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Re: DONT Payoff your Mortgage Club
« Reply #1051 on: December 29, 2018, 08:03:29 PM »
The google sheets attachment appeared to be a flop. Here's a summary of the statistics:

                        Principle   Interest   Payment                                   Principle   Interest   Payment
Mortgage A:   100000   71867.99   171867.99   Mortgage B:       100000   93434.24   193434.24

Investment Returns A    Investment Returns B
51257.71                     210065.73

Boofinator

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Re: DONT Payoff your Mortgage Club
« Reply #1052 on: December 29, 2018, 09:13:07 PM »
Inflation is relevant because the conditions that produce it also produce higher (nominal) incomes via wages or via stock market returns. So you have more income relative to your debt (and debt payments).

And, yes, more of that income is sucked away by other expenses, too. But your debt payments have stayed fixed with a 30-year fixed mortgage.

This (bolding mine) is intuitive, but from what I have read is not the historic case. There is some correlation of stocks with inflation at lower inflation values (at which time a mortgage could be considered a deflation hedge and stocks an inflation hedge, as someone else has noted), but the stock market tends to tank even in nominal terms with high inflation (presumably because wages do not rise as fast, and thus consumerism suffers). So overall, there appears to be generally little to no correlation between stocks and inflation. If you have data to the contrary I am open to being educated otherwise.

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1053 on: December 31, 2018, 12:15:13 PM »
As we've veered away from the purpose of this thread and into the realm of hypothetical loan structures, I'd ask those who want to continue that line line of analysis to start a new thread and post a link to it below.

Boofinator

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Re: DONT Payoff your Mortgage Club
« Reply #1054 on: December 31, 2018, 12:35:51 PM »
As we've veered away from the purpose of this thread and into the realm of hypothetical loan structures, I'd ask those who want to continue that line line of analysis to start a new thread and post a link to it below.

Since a very common refrain to not pay off the mortgage is because of "inflation", and since it was brought up yet again in this very thread, it is an appropriate topic of communication. The inflation communicants seem to fall into one of two (or sometimes both) camps:

1) Mortgages are an inflation hedge, since the price is locked in upon purchase. This can be a valid argument when comparing purchasing a house to purchasing things that rise with inflation (or renting). However, historical stock returns appear to be relatively independent from inflation (certainly there's a correlation, since both are generally rising, but if both metrics are transformed than the correlation is minimal).

2) Mortgages are great because payments don't rise with inflation.

The hypothetical mortgage was meant to show the fallacy in argument #2.

I don't think our thread originator B42 was a fan of the echo chamber, so in some small way I think he'd appreciate the comments here.

Telecaster

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Re: DONT Payoff your Mortgage Club
« Reply #1055 on: December 31, 2018, 12:56:59 PM »
I thought it was pretty well accepted that inflation depresses real stock returns.   

A somewhat dense paper exploring inflation on stock returns in ten countries here:

https://www.federalreserve.gov/pubs/ifdp/1994/464/ifdp464.pdf

A less dense explanation from Warren Buffet why inflation depresses real stock returns here:

http://fortune.com/2011/06/12/buffett-how-inflation-swindles-the-equity-investor-fortune-classics-1977/


Boofinator

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Re: DONT Payoff your Mortgage Club
« Reply #1056 on: December 31, 2018, 01:49:06 PM »
I thought it was pretty well accepted that inflation depresses real stock returns.   

A somewhat dense paper exploring inflation on stock returns in ten countries here:

https://www.federalreserve.gov/pubs/ifdp/1994/464/ifdp464.pdf

A less dense explanation from Warren Buffet why inflation depresses real stock returns here:

http://fortune.com/2011/06/12/buffett-how-inflation-swindles-the-equity-investor-fortune-classics-1977/

Thanks for the two papers.

I think we all agree that inflation depresses real stock returns, but what we really want to compare is nominal returns of equities to a fixed-return investment (such as a mortgage). I haven't yet dug deep on the federal reserve paper, but Warren argues that the nominal returns act like a fixed-return bond (and hence are not an inflation hedge).

Radagast

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Re: DONT Payoff your Mortgage Club
« Reply #1057 on: January 01, 2019, 08:35:22 PM »
1) Mortgages are an inflation hedge, since the price is locked in upon purchase. This can be a valid argument when comparing purchasing a house to purchasing things that rise with inflation (or renting). However, historical stock returns appear to be relatively independent from inflation (certainly there's a correlation, since both are generally rising, but if both metrics are transformed than the correlation is minimal).
In the long run stock values are tied to real prices and the economy, plus expectations. If the economy and expectations are tanking while inflation soars then they will not do well in real terms, but that is because of those other two factors. All else being equal, they correlate to inflation. Another issue is choosing too short a period to test for correlation. The idea is that stocks compensate for inflation over say ten years or more, so checking one year rolling correlations is a poor test of this. It is like the people a couple years ago who were saying "US and international stocks are almost perfectly correlated. Besides, international returns are negative over the past ten years while US stocks are positive!" You can tell from the statement that something is wrong, and the something is checking short term correlations and incorrectly extending them to longer terms despite that obviously being incorrect.

In any case inflation is apparently good for stock returns up to about 4%, and generally bad at some point after that. But I am confused. The idea that inflation shocks are bad for stock returns in the short term is exactly why I would consider keeping a mortgage if I had the option to pay it off. You seem to be saying that inflation is bad for the returns of stocks (and presumably bonds), and so that makes an inflation hedge pointless? It seems like that is what makes it valuable.

Quote
2) Mortgages are great because payments don't rise with inflation.

The hypothetical mortgage was meant to show the fallacy in argument #2.
There is nothing inherently great about mortgages. But they don't rise with inflation, so if you are considering one, that is something to include in the consideration.

Inflation is relevant because the conditions that produce it also produce higher (nominal) incomes via wages or via stock market returns. So you have more income relative to your debt (and debt payments).

And, yes, more of that income is sucked away by other expenses, too. But your debt payments have stayed fixed with a 30-year fixed mortgage.

This (bolding mine) is intuitive, but from what I have read is not the historic case. There is some correlation of stocks with inflation at lower inflation values (at which time a mortgage could be considered a deflation hedge and stocks an inflation hedge, as someone else has noted), but the stock market tends to tank even in nominal terms with high inflation (presumably because wages do not rise as fast, and thus consumerism suffers). So overall, there appears to be generally little to no correlation between stocks and inflation. If you have data to the contrary I am open to being educated otherwise.
Read "Deep Risk" by William Bernstein.

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #1058 on: January 02, 2019, 12:52:35 PM »
So for everyone who likes that mortgage payments do not rise with inflation: If the bank offered you two thirty-year mortgage loans, both at the same interest rate (say 4%), with the first being a standard mortgage, but the second amortized so that the payments increase for inflation every year by 4%, which would you take?

(I'll post my answer and math in a little while.)

So I read up until this post, and--while I'm fascinated by the idea--I do not think this product would ever become popular with banks. I built a spreadsheet and started tinkering around, and it looks like the bank would actually have to offer negative amortization over the first few years to get something like this. In my example, a mortgage of $300,000 with 4.875 APR and 3% assumed annual inflation had an initial monthly payment of $1,090, while the initial monthly interest was $1,219. It wasn't until the middle of year 5 that the payments had risen to the point that they were more than offsetting interest on the loan.

Now that I've typed this, I'm going to scroll down and read the rest of your posts, it looks like a really neat math exercise.

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #1059 on: January 02, 2019, 12:56:51 PM »
PS I think a mortgage product that starts low and increases over time is...a lot like the one I have.

My 5/1 ARM included sixty payments at a rate of 3.0%, now it's just reset up to 5.0%. It's chunkier than the escalating payments, but my lender gave me a premium, which was five years at that teaser rate.

RWD

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Re: DONT Payoff your Mortgage Club
« Reply #1060 on: January 02, 2019, 01:50:08 PM »
Another month, another minimum payment on our 3.125% mortgage.

Boofinator

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Re: DONT Payoff your Mortgage Club
« Reply #1061 on: January 02, 2019, 04:52:21 PM »
PS I think a mortgage product that starts low and increases over time is...a lot like the one I have.

My 5/1 ARM included sixty payments at a rate of 3.0%, now it's just reset up to 5.0%. It's chunkier than the escalating payments, but my lender gave me a premium, which was five years at that teaser rate.

That is very true. I personally like ARMs, and got one on my previous house (I think I have had the tendency to move enough that ten years in a home may never actually happen, let alone thirty years). I recently moved to a new house, and unfortunately the interest rates being offered for ARMs were no better than fixed long-term mortgages, so I went with the latter.

EDIT: Actually, now that I think of it a bit more, there is a big difference between an ARM and the hypothetical "inflation-adjusted" mortgage in that your interest rate has increased (versus the hypothetical mortgage where the interest rate is constant). In my opinion, the big factors to consider for which investment to send your little green soldiers are investment time horizon, volatility, and expected return. As the interest rate increases, you need a longer time horizon to make stocks a good bet over the fixed-rate debt. I think your interest rate of 5% still favors investments over paying off the debt as long as you have a very long time horizon.
« Last Edit: January 02, 2019, 05:03:51 PM by Boofinator »

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1062 on: January 02, 2019, 11:34:17 PM »
Another month, another minimum payment on our 3.125% mortgage.
What a thrill!

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1063 on: January 03, 2019, 06:21:58 AM »
Another month, another minimum payment on our 3.125% mortgage.
What a thrill!
I feel pretty damn lucky to have a 2.6% mortgage :-)

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1064 on: January 03, 2019, 06:52:15 AM »
Another month, another minimum payment on our 3.125% mortgage.
What a thrill!
I feel pretty damn lucky to have a 2.6% mortgage :-)
Thirty year? OMG!

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1065 on: January 03, 2019, 07:59:48 AM »
Another month, another minimum payment on our 3.125% mortgage.
What a thrill!
I feel pretty damn lucky to have a 2.6% mortgage :-)
Thirty year? OMG!
25y.  O' Canada...
:-)

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #1066 on: January 03, 2019, 12:25:12 PM »
Another month, another minimum payment on our 3.125% mortgage.

While I applaud your discipline in sticking to the plan, RWD, can you include some kind of investment measure with these updates? Perhaps your dividends are starting to appear sizable when compared to your monthly interest or something?

RWD

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Re: DONT Payoff your Mortgage Club
« Reply #1067 on: January 03, 2019, 02:01:32 PM »
Another month, another minimum payment on our 3.125% mortgage.

While I applaud your discipline in sticking to the plan, RWD, can you include some kind of investment measure with these updates? Perhaps your dividends are starting to appear sizable when compared to your monthly interest or something?

Sure. Dividends alone are already significantly more than the interest on the mortgage. I haven't calculated it in a few months but we should be around $9k/year in dividends (all accounts) and mortgage interest is around $5k. Our taxable brokerage account is roughly equal to our mortgage balance. Despite the recent drops the stock market is still up significantly since we bought the house (Spring 2016).

Basenji

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Re: DONT Payoff your Mortgage Club
« Reply #1068 on: January 03, 2019, 02:34:02 PM »
Another month, another minimum payment on our 3.125% mortgage.

While I applaud your discipline in sticking to the plan, RWD, can you include some kind of investment measure with these updates? Perhaps your dividends are starting to appear sizable when compared to your monthly interest or something?

Sure. Dividends alone are already significantly more than the interest on the mortgage. I haven't calculated it in a few months but we should be around $9k/year in dividends (all accounts) and mortgage interest is around $5k. Our taxable brokerage account is roughly equal to our mortgage balance. Despite the recent drops the stock market is still up significantly since we bought the house (Spring 2016).

Ooh, gonna go run and check some numbers. Great idea!

Radagast

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Re: DONT Payoff your Mortgage Club
« Reply #1069 on: January 03, 2019, 09:45:20 PM »
Another month, another minimum payment on our 3.125% mortgage.

While I applaud your discipline in sticking to the plan, RWD, can you include some kind of investment measure with these updates? Perhaps your dividends are starting to appear sizable when compared to your monthly interest or something?

Sure. Dividends alone are already significantly more than the interest on the mortgage. I haven't calculated it in a few months but we should be around $9k/year in dividends (all accounts) and mortgage interest is around $5k. Our taxable brokerage account is roughly equal to our mortgage balance. Despite the recent drops the stock market is still up significantly since we bought the house (Spring 2016).
That's a pretty nice way of thinking of it. I hadn't though of that before. Using http://www.multpl.com/s-p-500-dividend-growth dividends have grown by an average of 5.94% per year. Say you had taken a 3.5% mortgage in November 2012. Back then the S&P500 dividend was $33.6 on a price of 1422.29, or 2.2% (lots of imprecision in these numbers). In September 2018 (most recent available) S&P500 dividend was 52.26 on a price of 2785.46. The dividend increased by a factor of 1.55. Apply that to your starting 2.2% dividend yield, and your would dividend is 1.55*2.2%=3.42% of principal. Your dividend now pays as many dollars per year as the interest savings from paying down the mortgage would have! Plus your stock value nearly doubled in that time.

Of course that is one of the most extreme cherry picking examples possible, but lets apply the average dividend growth rate of 5.94% to today's VTI dividend yield of 2.09% to see when it would catch up to paying down various mortgages in terms of cash flow.

Year   Dividend (% of original investment)
0   2.20%   
1   2.33%   
2   2.47%   
3   2.62%   
4   2.77%   
5   2.94%   
6   3.11%   
7   3.29%   
8   3.49%   
9   3.70%   
10   3.92%   
11   4.15%   
12   4.40%   
13   4.66%   
14   4.93%   
15   5.23%   
Erm... feel free to check my math.

Brother Esau

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Re: DONT Payoff your Mortgage Club
« Reply #1070 on: January 04, 2019, 05:20:43 AM »
Another month, another minimum payment on our 3.125% mortgage.
What a thrill!
I feel pretty damn lucky to have a 2.6% mortgage :-)
Thirty year? OMG!
25y.  O' Canada...
:-)

Jeebus, thought my 3.25% was pretty good. 2.6% seems almost criminal.

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1071 on: January 04, 2019, 05:30:40 AM »
Another month, another minimum payment on our 3.125% mortgage.
What a thrill!
I feel pretty damn lucky to have a 2.6% mortgage :-)
Thirty year? OMG!
25y.  O' Canada...
:-)

Jeebus, thought my 3.25% was pretty good. 2.6% seems almost criminal.

For a while I had the mortgage and a few student loans (subsidizsed) at 0%, then 2.1%.  Folks from the DR forum piled on me about snowballing and killing that debt. 
Nope - not going to pay off any sub 3% debt when I still have oodles of headspace in my tax-advantaged accounts.

Brother Esau

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Re: DONT Payoff your Mortgage Club
« Reply #1072 on: January 04, 2019, 05:54:48 AM »
Another month, another minimum payment on our 3.125% mortgage.
What a thrill!
I feel pretty damn lucky to have a 2.6% mortgage :-)
Thirty year? OMG!
25y.  O' Canada...
:-)

Jeebus, thought my 3.25% was pretty good. 2.6% seems almost criminal.

For a while I had the mortgage and a few student loans (subsidizsed) at 0%, then 2.1%.  Folks from the DR forum piled on me about snowballing and killing that debt. 
Nope - not going to pay off any sub 3% debt when I still have oodles of headspace in my tax-advantaged accounts.

I'm doing the same. Will not send one extra cent towards the mortgage until tax deferred accounts are maxed out. Even then I may still not. I listen to DR on the radio occasionally. I cringe every time he says pay off debt from smallest balance to largest regardless of interest rate.

RWD

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Re: DONT Payoff your Mortgage Club
« Reply #1073 on: January 05, 2019, 10:38:12 AM »
I haven't calculated it in a few months but we should be around $9k/year in dividends (all accounts) and mortgage interest is around $5k.
I am entering our final 2018 transactions today and have some more concrete numbers now. Our total dividends (and other interest income) minus administrative fees for 2018 comes to $10,681. We paid $5,932 in loan interest in 2018 (includes 1.69% car loan). Next year I expect our dividends will be more than double our loan interest costs.

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1074 on: January 05, 2019, 01:01:33 PM »
I haven't calculated it in a few months but we should be around $9k/year in dividends (all accounts) and mortgage interest is around $5k.
I am entering our final 2018 transactions today and have some more concrete numbers now. Our total dividends (and other interest income) minus administrative fees for 2018 comes to $10,681. We paid $5,932 in loan interest in 2018 (includes 1.69% car loan). Next year I expect our dividends will be more than double our loan interest costs.

One of the more absurd arguments I had with a DR acolyte was whether I would accept an interest only, $1MM loan at 2%.  The poster simply couldn't believe that I would actually take up such an offer - I the point he/she was attempting to make was that if I would refuse to take on a $1MM loan at 2% then I obviously had to pay off a $7k not at a similar interest rate.  Mind you the 10y treasury note is paying out at 2.7% right now....

I'm still waiting for the paperwork for that loan to come through. Any day now. 

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1075 on: January 05, 2019, 04:56:03 PM »
May I be next in line, please?

protostache

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Re: DONT Payoff your Mortgage Club
« Reply #1076 on: January 06, 2019, 03:20:48 PM »
I haven't calculated it in a few months but we should be around $9k/year in dividends (all accounts) and mortgage interest is around $5k.
I am entering our final 2018 transactions today and have some more concrete numbers now. Our total dividends (and other interest income) minus administrative fees for 2018 comes to $10,681. We paid $5,932 in loan interest in 2018 (includes 1.69% car loan). Next year I expect our dividends will be more than double our loan interest costs.

One of the more absurd arguments I had with a DR acolyte was whether I would accept an interest only, $1MM loan at 2%.  The poster simply couldn't believe that I would actually take up such an offer - I the point he/she was attempting to make was that if I would refuse to take on a $1MM loan at 2% then I obviously had to pay off a $7k not at a similar interest rate.  Mind you the 10y treasury note is paying out at 2.7% right now....

I'm still waiting for the paperwork for that loan to come through. Any day now.

I keep looking for interest-only mortgages but I haven’t found any yet. Feels like maybe they’re illegal in Michigan.

Brother Esau

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Re: DONT Payoff your Mortgage Club
« Reply #1077 on: January 06, 2019, 06:52:48 PM »
I haven't calculated it in a few months but we should be around $9k/year in dividends (all accounts) and mortgage interest is around $5k.
I am entering our final 2018 transactions today and have some more concrete numbers now. Our total dividends (and other interest income) minus administrative fees for 2018 comes to $10,681. We paid $5,932 in loan interest in 2018 (includes 1.69% car loan). Next year I expect our dividends will be more than double our loan interest costs.

One of the more absurd arguments I had with a DR acolyte was whether I would accept an interest only, $1MM loan at 2%.  The poster simply couldn't believe that I would actually take up such an offer - I the point he/she was attempting to make was that if I would refuse to take on a $1MM loan at 2% then I obviously had to pay off a $7k not at a similar interest rate.  Mind you the 10y treasury note is paying out at 2.7% right now....

I'm still waiting for the paperwork for that loan to come through. Any day now.

Sign me up! Also, I had to google acolyte. Thanks.
« Last Edit: January 06, 2019, 06:56:09 PM by Brother Esau »

SwordGuy

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Re: DONT Payoff your Mortgage Club
« Reply #1078 on: January 06, 2019, 11:09:20 PM »
I have a confession to make.

I didn't exactly fall off the wagon, but I added an extra $140 dollars to my mortgage payment so the principal would go down a full $1,000 each payment.  We have a 15 year, fixed rate mortgage at 2.75%.

I've been tracking our net worth each month for the last 8 months (since we FIRED) and it makes me happy each time I update my spreadsheet to show the mortgage balance dropped another $1000.

Totally emotional.   Totally math irrational.   But it really made me happy to do it.  Because owing that money bugs me.   It sticks in my craw.   

I could have paid off the mortgage any time in the last 3 years by withdrawing from our investments, but I didn't because of what I've learned in this thread.   

I could have paid off the mortgage when we sold our old house last spring, but I didn't.

I could pay off the mortgage when the buyers of our owner-financed Flip #1 finish their renovations and refinance to a lower rate.    I expect it will happen sometime in 2019, probably in the fall.     I think if I see the balance falling $1,000 a month I'll be less likely to pay off our mortgage then.    It will stick in my craw a bit less.

The only reason I can see for paying the mortgage off early (other than I would like to see the back of it!) is that I'll be switching over to the ACA in 2020 from COBRA.   COBRA runs out at the end of 2019 for me.   I know that the ACA premiums are affected by how much our income is, and I don't know (yet) how much that will affect us.    I've got a bunch of research to do to learn what the rules are and how we can tax shelter our income so we don't go over the subsidy cliff.

We have a variety of income sources:

farmland that is sharecropped.
rental houses.
social security.
minimum required distributions from an inherited IRA and also from my wife's 401K.
teaching income
art income (hopefully)

So, it may be that we'll be falling over that subsidy cliff regardless.   But if we can shelter some of that income so it doesn't count against the subsidy, we might need to reduce our expenses.   Being able to drop our expenses by $14,658.36 (P&I) per year that we don't have to treat as income might save us a fair bit in subsidies.   I'll just have to do the math.

I hadn't taken the time to really understand the ACA rules in detail because I expected the GOP would crap on them bigly over the last 2 years.   Now it looks like we're more likely to have the current rules for the next 2 years. 

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1079 on: January 07, 2019, 03:59:55 AM »
I have a confession to make.

I didn't exactly fall off the wagon, but I added an extra $140 dollars to my mortgage payment so the principal would go down a full $1,000 each payment.  We have a 15 year, fixed rate mortgage at 2.75%.

I've been tracking our net worth each month for the last 8 months (since we FIRED) and it makes me happy each time I update my spreadsheet to show the mortgage balance dropped another $1000.

Totally emotional.   Totally math irrational.   But it really made me happy to do it.  Because owing that money bugs me.   It sticks in my craw.   

I could have paid off the mortgage any time in the last 3 years by withdrawing from our investments, but I didn't because of what I've learned in this thread.   

I could have paid off the mortgage when we sold our old house last spring, but I didn't.

I could pay off the mortgage when the buyers of our owner-financed Flip #1 finish their renovations and refinance to a lower rate.    I expect it will happen sometime in 2019, probably in the fall.     I think if I see the balance falling $1,000 a month I'll be less likely to pay off our mortgage then.    It will stick in my craw a bit less.

The only reason I can see for paying the mortgage off early (other than I would like to see the back of it!) is that I'll be switching over to the ACA in 2020 from COBRA.   COBRA runs out at the end of 2019 for me.   I know that the ACA premiums are affected by how much our income is, and I don't know (yet) how much that will affect us.    I've got a bunch of research to do to learn what the rules are and how we can tax shelter our income so we don't go over the subsidy cliff.

We have a variety of income sources:

farmland that is sharecropped.
rental houses.
social security.
minimum required distributions from an inherited IRA and also from my wife's 401K.
teaching income
art income (hopefully)

So, it may be that we'll be falling over that subsidy cliff regardless.   But if we can shelter some of that income so it doesn't count against the subsidy, we might need to reduce our expenses.   Being able to drop our expenses by $14,658.36 (P&I) per year that we don't have to treat as income might save us a fair bit in subsidies.   I'll just have to do the math.

I hadn't taken the time to really understand the ACA rules in detail because I expected the GOP would crap on them bigly over the last 2 years.   Now it looks like we're more likely to have the current rules for the next 2 years.
Sweet Baby Jeebus, 2.75% is an amazing rate! Good for you for locking that in @SwordGuy . I differ from B42 in that I don't believe in endless refinancing. I believe in paying off the mortgage last, after all other boxes have been checked. You have done exactly that.

I saw that ACA convo and it made me wonder about the same thing. If paying the mortgage off at or near FIRE can save a substantial amount of money on healthcare, that angle is completely worth exploring. I believe @lhamo may have more information on that subject, including whether it's better to stay the course or abandon the Good Ship Cobra, so I'm batsignalling her on your behalf. I don't know if she follows this thread, but she's active on the ACA threads and has done her homework.

Fomerly known as something

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Re: DONT Payoff your Mortgage Club
« Reply #1080 on: January 07, 2019, 05:16:15 AM »
Another month, another minimum payment on our 3.125% mortgage.

While I applaud your discipline in sticking to the plan, RWD, can you include some kind of investment measure with these updates? Perhaps your dividends are starting to appear sizable when compared to your monthly interest or something?

I'm not the above poster you are asking for. 

But yearly Mortgage payments for 2018 $11,114.88 (926.24/month)
2018 Vanguard taxable account dividends:  $11,389.93 
ETA:  Mortgage interest 2018:  $6415.91

Taxable account is now about 2x the mortgage so it is not apples to oranges but yes my investments pay my mortgage, next goal is for them to pay taxes and insurance as well which I hope they do by 2020.
« Last Edit: January 07, 2019, 05:19:11 AM by Fomerly known as something »

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #1081 on: January 07, 2019, 07:24:03 AM »
I have a confession to make.

I didn't exactly fall off the wagon, but I added an extra $140 dollars to my mortgage payment so the principal would go down a full $1,000 each payment.  We have a 15 year, fixed rate mortgage at 2.75%.

I've been tracking our net worth each month for the last 8 months (since we FIRED) and it makes me happy each time I update my spreadsheet to show the mortgage balance dropped another $1000.

Totally emotional.   Totally math irrational.   But it really made me happy to do it.  Because owing that money bugs me.   It sticks in my craw.   

I could have paid off the mortgage any time in the last 3 years by withdrawing from our investments, but I didn't because of what I've learned in this thread.   

I could have paid off the mortgage when we sold our old house last spring, but I didn't.

I could pay off the mortgage when the buyers of our owner-financed Flip #1 finish their renovations and refinance to a lower rate.    I expect it will happen sometime in 2019, probably in the fall.     I think if I see the balance falling $1,000 a month I'll be less likely to pay off our mortgage then.    It will stick in my craw a bit less.

The only reason I can see for paying the mortgage off early (other than I would like to see the back of it!) is that I'll be switching over to the ACA in 2020 from COBRA.   COBRA runs out at the end of 2019 for me.   I know that the ACA premiums are affected by how much our income is, and I don't know (yet) how much that will affect us.    I've got a bunch of research to do to learn what the rules are and how we can tax shelter our income so we don't go over the subsidy cliff.

We have a variety of income sources:

farmland that is sharecropped.
rental houses.
social security.
minimum required distributions from an inherited IRA and also from my wife's 401K.
teaching income
art income (hopefully)

So, it may be that we'll be falling over that subsidy cliff regardless.   But if we can shelter some of that income so it doesn't count against the subsidy, we might need to reduce our expenses.   Being able to drop our expenses by $14,658.36 (P&I) per year that we don't have to treat as income might save us a fair bit in subsidies.   I'll just have to do the math.

I hadn't taken the time to really understand the ACA rules in detail because I expected the GOP would crap on them bigly over the last 2 years.   Now it looks like we're more likely to have the current rules for the next 2 years.

Sword guy-
if your goal is for the principal to drop by $1,000 every payment, you can start adding less than $140 soon, because the amount of principal change should rise with each payment in the amortization schedule.

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #1082 on: January 07, 2019, 07:37:01 AM »
I haven't calculated it in a few months but we should be around $9k/year in dividends (all accounts) and mortgage interest is around $5k.
I am entering our final 2018 transactions today and have some more concrete numbers now. Our total dividends (and other interest income) minus administrative fees for 2018 comes to $10,681. We paid $5,932 in loan interest in 2018 (includes 1.69% car loan). Next year I expect our dividends will be more than double our loan interest costs.

One of the more absurd arguments I had with a DR acolyte was whether I would accept an interest only, $1MM loan at 2%.  The poster simply couldn't believe that I would actually take up such an offer - I the point he/she was attempting to make was that if I would refuse to take on a $1MM loan at 2% then I obviously had to pay off a $7k not at a similar interest rate.  Mind you the 10y treasury note is paying out at 2.7% right now....

I'm still waiting for the paperwork for that loan to come through. Any day now.

This is an interesting intellectual exercise.

Is the lender offering this $1,000,000 loan with no collateral? Suppose my $200,000 house is collateral (so it's basically a negative LTV loan; and let's assume the price of the house is fixed)...Bear markets occur routinely in the stock market, perhaps every 3-4 years. So I can expect to be under water--perhaps wayyy under water--at some point in the next four years if I put the money 100% into stocks.

Would the lender that so generously gave me this $1,000,000 suddenly decide to call my loan in a bear market, with my stocks at $680,000, leaving me to sell my house and beg friends/family for the extra $120,000 to make the lender whole at that point? I recognize that Dave Ramsey is a bogeyman in the DNPYM club, but I think there is still quite a bit of risk in the scenario you're describing, much more than in the situation most of us are in here with mortgages that are 60%-80% of the value of our properties.

So really, I ought to

RWD

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Re: DONT Payoff your Mortgage Club
« Reply #1083 on: January 07, 2019, 07:49:34 AM »
whether I would accept an interest only, $1MM loan at 2%.

Would the lender that so generously gave me this $1,000,000 suddenly decide to call my loan in a bear market [...]?

Every time I've seen this hypothetical dream loan it's always stated to be non-callable so you can ride out the market long term. Callable loans already exist (investing on margin) so there is not much point in making a hypothetical about those.

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1084 on: January 07, 2019, 07:57:14 AM »
This is an interesting intellectual exercise.

Is the lender offering this $1,000,000 loan with no collateral? Suppose my $200,000 house is collateral (so it's basically a negative LTV loan; and let's assume the price of the house is fixed)...Bear markets occur routinely in the stock market, perhaps every 3-4 years. So I can expect to be under water--perhaps wayyy under water--at some point in the next four years if I put the money 100% into stocks.

Would the lender that so generously gave me this $1,000,000 suddenly decide to call my loan in a bear market, with my stocks at $680,000, leaving me to sell my house and beg friends/family for the extra $120,000 to make the lender whole at that point? I recognize that Dave Ramsey is a bogeyman in the DNPYM club, but I think there is still quite a bit of risk in the scenario you're describing, much more than in the situation most of us are in here with mortgages that are 60%-80% of the value of our properties.

So really, I ought to

It's a very real example DR uses to try to convince people why they shouldn't carry any debt.
In this particular, hypothetical case, the bank would never call the loan due.  I'd owe $20,000/year in interest, or $1,667/month.  In exchange I'd have $1MM to do with as I pleased. 
The idea (as I understand it) is to make people feel uncomfortable at the idea of paying $1,667 every single month, and in effect bring them to the conclusion that they must get rid of all debt now, regardless of the rate or its fixed (not indexed to inflation) status. The interest payment is supposed to feel like a weight around your neck, while one is told to ignore the massive asset because you're reminded of the weight every single month.  In this thought exercise it aways came back to "but you'd be paying over a thousand dollars every single month!!!"

Of course the counter-argument is that one could simply rely on the gains from that $1MM to more than pay off the interest.  A 2% WR is in crazy-conservative territory, particularly if one doesn't index it to inflation.  There's never been a 30year period where that wouldn't result in having more money, and under the majority of scenarios you'd have a ton more money. Even the worst 30 year period would have you more than doubling the initial $1MM. If even that were too 'risky' for you one could put the money into 10year US treasury bonds and still come out (slightly) ahead.

ETA: I was curious about the effects of NOT adjusting for inflation with a constant (not adjusted for inflation) withdraw rate, so I monkeyed a bit with cFireSIM - turns out there has never been a 40 year period when a 4% WR failed if one does NOT index (increase) distributions with inflation each year.  Your purchasing power would steadily erode, but in this absurd hypotthetical interest-only loan one could pay off the interest and have an additional $20k/year to do with as he or she pleased in perpetuity. Man, i wish this actually existed...
« Last Edit: January 07, 2019, 01:08:29 PM by nereo »

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1085 on: January 07, 2019, 12:02:46 PM »
whether I would accept an interest only, $1MM loan at 2%.

Would the lender that so generously gave me this $1,000,000 suddenly decide to call my loan in a bear market [...]?

Every time I've seen this hypothetical dream loan it's always stated to be non-callable so you can ride out the market long term. Callable loans already exist (investing on margin) so there is not much point in making a hypothetical about those.
Agreed. One of the many reasons I'm not a DR fan. Even real world mortgage loans aren't callable any more. Duh, DR.

TexasRunner

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Re: DONT Payoff your Mortgage Club
« Reply #1086 on: January 07, 2019, 12:53:02 PM »
whether I would accept an interest only, $1MM loan at 2%.

Would the lender that so generously gave me this $1,000,000 suddenly decide to call my loan in a bear market [...]?

Every time I've seen this hypothetical dream loan it's always stated to be non-callable so you can ride out the market long term. Callable loans already exist (investing on margin) so there is not much point in making a hypothetical about those.
Agreed. One of the many reasons I'm not a DR fan. Even real world mortgage loans aren't callable any more. Duh, DR.

In his defense, he has updated his advice online to pay off everything but a "normal mortgage", which is a big step up from "kill all the debt now".  I'm not sure what he actively teaches, because I won't pay for his content, but the online (free) stuff isn't a bad place to start at all.  My biggest issue is his "save now to spend later" mentality about having a Fat FIRE retirement...  And he pushes mutual funds and doesn't ever mention ETFs.


Edit: Found his stuff-  https://www.daveramsey.com/baby-steps/?snid=start.steps
He still says to pay off the mortgage AFTER saving 15% of your income.  Not sure why 15%.  Why not 10%?  Why not 45%?  Why not 24,000 that you can put away tax-advantaged?  Or is 15% just a nice round number that seems easy for people to swallow and allows you to sell to people without pushing too many away (you betcha)...
« Last Edit: January 07, 2019, 12:55:22 PM by TexasRunner »

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1087 on: January 07, 2019, 01:20:29 PM »

Edit: Found his stuff-  https://www.daveramsey.com/baby-steps/?snid=start.steps
He still says to pay off the mortgage AFTER saving 15% of your income.  Not sure why 15%.  Why not 10%?  Why not 45%?  Why not 24,000 that you can put away tax-advantaged?  Or is 15% just a nice round number that seems easy for people to swallow and allows you to sell to people without pushing too many away (you betcha)...

Bingo - it's behavioral advice for those who tend to make poor decisions about money to begin with - like spending more than they have and impulse purchasing.  And I'll fully admit that DR helps a lot of people who need this kind of advice. 
My objections are when advice becomes gospel without any hard reasoning behind it.  Why not keep investing in your tax-advantaged accounts until you max every available bucket? Why pay off low-interest debt before getting a 50% match from your employer and lowering your taxes? At times his advice is ill-tailored for an individual.

TexasRunner

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Re: DONT Payoff your Mortgage Club
« Reply #1088 on: January 07, 2019, 02:07:14 PM »
My objections are when advice becomes gospel...

Heh heh heh.  I see what you did there.  :D


Very valid, though, and it is (one of the reasons*) why we don't teach DR at my local church.  We have a financial class that covers staying out of unproductive debt, and that cover the biblical definitions of money and spending (particularly that wasting it and spending more than you have or earn actually does go against the Bible...).  We use some of his stuff, but not nearly as much as the whole program.


*Note:  The other reason we don't use his stuff as it seems extremely unethical to charge $139.00 dollars to someone who is struggling to tithe and struggling with finances.  When that point is brought up (poor people can't afford to pay for the program to even learn how to get on the right track), the excuse given seems to be that "the church should cover the fee"...  So 139 bucks for what should be a 25$ (ish) book and some youtube videos.  That doesn't sit right with many of us- hence our class that uses a $4.45 book, free youtube videos, and volunteer time which we happily give.

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1089 on: January 07, 2019, 02:25:21 PM »
My objections are when advice becomes gospel...

Heh heh heh.  I see what you did there.  :D


Very valid, though, and it is (one of the reasons*) why we don't teach DR at my local church.  We have a financial class that covers staying out of unproductive debt, and that cover the biblical definitions of money and spending (particularly that wasting it and spending more than you have or earn actually does go against the Bible...).  We use some of his stuff, but not nearly as much as the whole program.


*Note:  The other reason we don't use his stuff as it seems extremely unethical to charge $139.00 dollars to someone who is struggling to tithe and struggling with finances.  When that point is brought up (poor people can't afford to pay for the program to even learn how to get on the right track), the excuse given seems to be that "the church should cover the fee"...  So 139 bucks for what should be a 25$ (ish) book and some youtube videos.  That doesn't sit right with many of us- hence our class that uses a $4.45 book, free youtube videos, and volunteer time which we happily give.

If I lived in 'Tejas' I would happily volunteer my time there to help people get a better hold of their finances. 
As I tell people... it's not hard, we just never properly learn how to do it.

SwordGuy

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Re: DONT Payoff your Mortgage Club
« Reply #1090 on: January 07, 2019, 04:38:17 PM »
I have a confession to make.

I didn't exactly fall off the wagon, but I added an extra $140 dollars to my mortgage payment so the principal would go down a full $1,000 each payment.  We have a 15 year, fixed rate mortgage at 2.75%.

I've been tracking our net worth each month for the last 8 months (since we FIRED) and it makes me happy each time I update my spreadsheet to show the mortgage balance dropped another $1000.

...

Sword guy-
if your goal is for the principal to drop by $1,000 every payment, you can start adding less than $140 soon, because the amount of principal change should rise with each payment in the amortization schedule.

Yeah, the amount of principal paid goes up about $2 per month.   This last payment was $2000.00   It's a nice round number that requires no thought or effort to remember. :)

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #1091 on: January 08, 2019, 09:49:42 AM »
This is an interesting intellectual exercise.

Is the lender offering this $1,000,000 loan with no collateral? Suppose my $200,000 house is collateral (so it's basically a negative LTV loan; and let's assume the price of the house is fixed)...Bear markets occur routinely in the stock market, perhaps every 3-4 years. So I can expect to be under water--perhaps wayyy under water--at some point in the next four years if I put the money 100% into stocks.

Would the lender that so generously gave me this $1,000,000 suddenly decide to call my loan in a bear market, with my stocks at $680,000, leaving me to sell my house and beg friends/family for the extra $120,000 to make the lender whole at that point? I recognize that Dave Ramsey is a bogeyman in the DNPYM club, but I think there is still quite a bit of risk in the scenario you're describing, much more than in the situation most of us are in here with mortgages that are 60%-80% of the value of our properties.

So really, I ought to

It's a very real example DR uses to try to convince people why they shouldn't carry any debt.
In this particular, hypothetical case, the bank would never call the loan due.  I'd owe $20,000/year in interest, or $1,667/month.  In exchange I'd have $1MM to do with as I pleased. 
The idea (as I understand it) is to make people feel uncomfortable at the idea of paying $1,667 every single month, and in effect bring them to the conclusion that they must get rid of all debt now, regardless of the rate or its fixed (not indexed to inflation) status. The interest payment is supposed to feel like a weight around your neck, while one is told to ignore the massive asset because you're reminded of the weight every single month.  In this thought exercise it aways came back to "but you'd be paying over a thousand dollars every single month!!!"

Of course the counter-argument is that one could simply rely on the gains from that $1MM to more than pay off the interest.  A 2% WR is in crazy-conservative territory, particularly if one doesn't index it to inflation.  There's never been a 30year period where that wouldn't result in having more money, and under the majority of scenarios you'd have a ton more money. Even the worst 30 year period would have you more than doubling the initial $1MM. If even that were too 'risky' for you one could put the money into 10year US treasury bonds and still come out (slightly) ahead.

ETA: I was curious about the effects of NOT adjusting for inflation with a constant (not adjusted for inflation) withdraw rate, so I monkeyed a bit with cFireSIM - turns out there has never been a 40 year period when a 4% WR failed if one does NOT index (increase) distributions with inflation each year.  Your purchasing power would steadily erode, but in this absurd hypotthetical interest-only loan one could pay off the interest and have an additional $20k/year to do with as he or she pleased in perpetuity. Man, i wish this actually existed...

You are correct in that I've heard Dave use this example to attempt to persuade people toward maintaining a mortgage in order to get investing sooner.

But--when you add conditions such as collateral and the possibility of calling a loan--the riskiness of being in debt is real and present. You're welcome to review my posts if you think I'm not still a member of the DNPYM club (I am).

But you don't have to be a Dave Ramsey disciple to learn from the example of market timer here: https://www.bogleheads.org/forum/viewtopic.php?t=5934

Emotions, income, market conditions all imply some optimum amount of debt to be servicing, and I cannot help but think that optimum is below $1,000,000 for most people.

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1092 on: January 08, 2019, 09:58:05 AM »
But--when you add conditions such as collateral and the possibility of calling a loan--the riskiness of being in debt is real and present. You're welcome to review my posts if you think I'm not still a member of the DNPYM club (I am).
I know you are, but for Pete's sake, please stop with the loan calling boogeyman act! US based mortgage loans are simply NOT callable.

Your point is taken for other types of loans debt, but it does not apply to mortgages, which is the point of this thread.

Boofinator

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Re: DONT Payoff your Mortgage Club
« Reply #1093 on: January 08, 2019, 03:28:00 PM »
As we've veered away from the purpose of this thread and into the realm of hypothetical loan structures, I'd ask those who want to continue that line line of analysis to start a new thread and post a link to it below.

One of the more absurd arguments I had with a DR acolyte was whether I would accept an interest only, $1MM loan at 2%.  The poster simply couldn't believe that I would actually take up such an offer - I the point he/she was attempting to make was that if I would refuse to take on a $1MM loan at 2% then I obviously had to pay off a $7k not at a similar interest rate.  Mind you the 10y treasury note is paying out at 2.7% right now....

I'm still waiting for the paperwork for that loan to come through. Any day now.

I'm glad you appreciate a nice hypothetical loan structure to illustrate a point as much as I do.

That being said, I would take the latter loan structure in a heartbeat. The only (quasi-)loans I'm aware of where you're not really expected to pay back the principle as a borrower are payday loans (hence the exorbitant interest rates) and stocks (each must inevitably go to zero at some point in time). Theoretically, much higher interest rates are associated with forever loans to offset never getting a return on principle, so this loan would be the equivalent of a 1.x% 30-year loan (with x depending on your preferred time value of money).

What's also interesting, is that people were lending long-term money for less than 2% interest for a good chunk of 2011-2016 (10-year treasury yields spent a good portion of this time below 2%). I like to think I'm not a market timer, but I would find it hard to stomach investing in something that is guaranteed to yield less than 2% for ten years.

AlexMar

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Re: DONT Payoff your Mortgage Club
« Reply #1094 on: January 14, 2019, 06:12:40 AM »
whether I would accept an interest only, $1MM loan at 2%.

Would the lender that so generously gave me this $1,000,000 suddenly decide to call my loan in a bear market [...]?

Every time I've seen this hypothetical dream loan it's always stated to be non-callable so you can ride out the market long term. Callable loans already exist (investing on margin) so there is not much point in making a hypothetical about those.
Agreed. One of the many reasons I'm not a DR fan. Even real world mortgage loans aren't callable any more. Duh, DR.

In his defense, he has updated his advice online to pay off everything but a "normal mortgage", which is a big step up from "kill all the debt now".  I'm not sure what he actively teaches, because I won't pay for his content, but the online (free) stuff isn't a bad place to start at all.  My biggest issue is his "save now to spend later" mentality about having a Fat FIRE retirement...  And he pushes mutual funds and doesn't ever mention ETFs.


Edit: Found his stuff-  https://www.daveramsey.com/baby-steps/?snid=start.steps
He still says to pay off the mortgage AFTER saving 15% of your income.  Not sure why 15%.  Why not 10%?  Why not 45%?  Why not 24,000 that you can put away tax-advantaged? Or is 15% just a nice round number that seems easy for people to swallow and allows you to sell to people without pushing too many away (you betcha)...

This is what most of his advice seems to be geared towards.  Which is why I don't dislike the guy at all.  It's not always about the "smart money" decision and he understands that.  People are people.  Like starting with the smallest debt regardless of interest rate.  Obviously this is about the psychology of it.  And he may very well be on to something.  His advice isn't bad, and from an objective viewpoint, his advice may even be better than MMM when applied to a larger number of people due to psychological factors with a larger portion of the general population.  Of course, that's not US, which is why we are here. :)

nereo

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Re: DONT Payoff your Mortgage Club
« Reply #1095 on: January 14, 2019, 07:42:32 AM »
"I don't dislike the guy" and "his advice isn't bad" is probably the most tepid endorsement I've read about someone in a very long time.

You do bring up a good point - whether more 'good' is done by getting a very large number of people to address their impulse-driven debt traps, or an arguably smaller segment of the population to move into more advanced financial topics.  I don't think they are mutually exclusive; as an analogy DR's main contribution is to get overweight couch potatoes to start exercising regularly and not guzzling empty calories every day, whereas MMM's a trainer focused on getting your body into a finely tuned machine.
Meh, maybe not the greatest of analogies....

point is they can both be helpful, but largely serve different niches. DR's really about helping people who have had no spending impulse control.  Suggestions of his like "freezing your ER fund in a block of ice so really have to work to access it" is borderline crazy to those of us who have no problem separating 'need' from 'want' and can reliably live on less than we earn.  His full-throated support of high-fee managed mutual funds makes me certain that some of his advice is structured around kickbacks to him (i.e. conflict of interest) and his religious leanings are not my religion leanings.   I also don't care for DR's advice of: once you can afford it you can buy it, it's your reward, since it fails to address the worst parts of our consumeristic lifestyles.

Dicey

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Re: DONT Payoff your Mortgage Club
« Reply #1096 on: January 14, 2019, 07:48:07 AM »
@AlexMar, that's my point exactly, DR is fine for sheeple, er, people, especially those mired in credit card debt. Becoming mustachian means you are seeking a more focused way to reach a targeted goal. DR is not a FIRE guy, so why follow a non-FIRE guy's approach?

And +1 to what nereo just cross-posted.
« Last Edit: January 14, 2019, 08:40:16 AM by Dicey »

talltexan

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Re: DONT Payoff your Mortgage Club
« Reply #1097 on: January 14, 2019, 08:20:52 AM »
Despite my full-throated support for building investment assets even as I maintain various low-interest rate debts, I force myself to read the famous "market timer" thread from Bogleheads once a year. It's a good reminder about the psychology that you have to manage in yourself to deal with building ample market exposure through leverage in the short term.

https://www.bogleheads.org/forum/viewtopic.php?t=5934

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Re: DONT Payoff your Mortgage Club
« Reply #1098 on: January 14, 2019, 10:35:13 AM »
Despite my full-throated support for building investment assets even as I maintain various low-interest rate debts, I force myself to read the famous "market timer" thread from Bogleheads once a year. It's a good reminder about the psychology that you have to manage in yourself to deal with building ample market exposure through leverage in the short term.

https://www.bogleheads.org/forum/viewtopic.php?t=5934

Doesn't apply.  His loan was CALLABLE.  Its not even a close comparison...

AlexMar

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Re: DONT Payoff your Mortgage Club
« Reply #1099 on: January 14, 2019, 11:35:06 AM »
Nereo and Dicey.  We are all saying the same thing :)

We are HERE for a reason.  But DR isn't a bad guy or giving bad advice for the general population.  It's hard to understand the thinking of some people.  I have friends I've sent to MMM and have read quite a bit.  One of them just got done telling me about how they are going to buy a new car next year since they got a pay raise.  I mean, it's insane.  I can't make sense of it.  But it just underscores why DR's approach is probably pretty good.  And ultimately, whatever works for different people - as long as it's working, is good as far as I'm concerned.

But even DR wouldn't let me friend finance a new car!  But damned if these people won't buy new cars anyways, knowing they shouldn't and still justifying it.  So if you can get people to at least DO SOMETHING, it's at least.... something.

I like the couch potato vs trainer comparison, lol.  That's pretty accurate.  But really, I don't think MMM is all that radical at all or outside of the mainstream.  Which is why it becomes all the more shocking when you see readers do stuff that is so far out of left field.