Haven't hit the age yet. To me debt is not evil or bad. Debt is a tool that can be used to facilitate or detract from wealth creation. Currently there are a number of governments that are trying to spur economic growth by giving away free money. If used properly this money will accelerate the time to financial independence. To me not having debt is not fiscally responsible at the current interest rates. You can get credit cards at 3% or less, 30year find rate mortgages at 4% or less, car loans at sub 5%. If you are debt free, mathematically you should be going to the bank to see if you can get a loan to invest for longterm growth.
Ah yeah.....taking out a loan for long term investing? What rate would you be happy with on a unsecured loan (or worse, a secured loan)to use as investment capital?
Last time I heard people talking like this was just around 2001 or so :)
For a 30 year fixed mortgage I would not be paying it off early until it was over 6% or if I could not find steady investments that would beat this rate. For all the other short term loans I would be at 5% or if I could match up an investment with my borrowing. I was able to borrow $50k on my LOC at 7% and loan it out at 18% for a bridge loan three years ago. I had a fairly strong understanding of the risks involved. I was sad when it got paid off after 18 months.
I have purchased numerous other businesses or rentals using my LOC in the 4% - 7% range over the years with great success. My total borrowing is in excess of $1 million, with 95%+ being in fixed rate sub 4% mortgages on my house and rentals. I consider my fixed rate mortgages as part of my assets. This is my hedge against inflation. My balance sheet is in great shape.
My credit score and my understanding of how to utilize debt has improved my net worth, accelerated my time to financial independence, and has been done in a significantly safer manner than those paying off debt. Liquidity is what kills businesses and families. Having your assets tied up in a house puts you at risk of having a liquidity event if there is a negative event in your life. Having a partially paid off mortgage and minimal assets is much more risky than having a fixed rate loan and a diversified portfolio to draw down in the event of an emergency.
Like everything, extremes are suboptimal and risky. At today's rates, having no debt is suboptimal to accelerate financial independence. The only time to have no debt at these 30 year fixed rates is if you have so much money that the hassle of making payments offsets the gains. For those still on the quest for financial independence, paying off your 30 year fixed mortgage early is slowing down your financial independence.
Debt to blow is bad, debt to invest is good! Debt is a tool, use it wisely and you will be rewarded.