Millionaire Next Door review -- 20 years late

[dude]

Anyway, the first paragraph goes like this:

The word “millionaire” used to evoke a world of extravagant wealth. But, these days, it’s nothing special, as everyone needs to save at least $1 million for retirement.


http://www.marketwatch.com/story/heres-how-you-can-be-the-millionaire-next-door-2015-07-14?page=1

[slugline]

The article just reminded me -- have there been any good forum threads weighing the pros and cons of choosing a 15-year-fixed mortgage versus a 30-year-fixed-and-invest-the-difference?  Off to the search function. . . .

[MgoSam]

I'll beat (edit "bite).

15 year mortgage

Pro
1. Lower interest rate
2. More of your payment towards principal enabling you to gain equity faster

Con
1. Higher monthly payment
2. Less flexibility
3. With 30 year, you can always pay more than needed to build equity (I calculated out that paying the difference between a 15 year and 30 year every month would take me 16.5 years to pay this off. Would rather do this and have the flexibility, than be locked into a 15 year)

[boarder42]

30 year comes out ahead if staying over 7 years.  staying shorter a 15 year comes out ahead.  in the longterm 30 year is a giant inflation hedge and good for your overall portfolio.  NEVER pay down early with today's crazy low rates.

[EricP]

For Non-Mustachians, though, I would always recommend a 15 year mortgage as having larger "forced savings" is a great benefit for most people.

[slugline]

Thanks for the feedback -- I know MMM has written that he loves the 15 over the 30 when it comes to mortgages, but my hunch has been that you'd come out ahead with 30+investing.

Back to the original thread topic: Other than claiming that "everyone" needs $1 million to retire, I think the article is actually filled with decent advice for those that haven't been exposed to reading TMND.

[kite]

One size doesn't fit all. 
Obviously how long you plan to stay is a factor.  But I think age is an even bigger factor.  I bought my forever home in my early 20s.  Our combined income was roughly what 2 people making minimum wage at full time jobs would earn, and we borrowed 3x our income.  A 30 year mortgage made a nice modest home affordable to us.  A 15 year would have put almost any place out of reach for a decade..  Making the normal payments for 10 years and then accelerating for the next 5 when our incomes were significantly different was the key.  In retrospect, the important thing was getting in the door at a reasonable price for us to spend on a home, not worrying about duration of the mortgage. ...because we were so young.  At 35, with the first place paid off, we bought the income properties, but never traded up on the roof over our heads.  I feel pretty strongly about either owning your home outright before retirement or having passive income cover living expenses before you leave the workforce. 
For those who waited until their 30s and 40s to settle down and buy a home, they probably should consider only buying what is affordable on a 15 year mortgage.  I know plenty who face several thousand dollar monthly mortgage payments through age 70 and beyond and the idea of it exhausts me. 

[dude]

One size doesn't fit all. 

For those who waited until their 30s and 40s to settle down and buy a home, they probably should consider only buying what is affordable on a 15 year mortgage.  I know plenty who face several thousand dollar monthly mortgage payments through age 70 and beyond and the idea of it exhausts me.

Agree with your first sentiment, which brings me to the latter: by the time I'm 70, my (COLA-adjusted) pension + SS (also COLA-adjusted) should net me in excess of 6 figures of income (before touching investment accounts).  At that point, my mortgage -- fixed as it is at 3.5% -- if it were to still exist, would be a tiny fraction of that income. So I have no qualms about carrying it into retirement, though it will likely be paid off well before I'm 70.