Author Topic: Kevin O’Leary says pay off all your debts by age 45  (Read 1614 times)

jengod

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Kevin O’Leary says pay off all your debts by age 45
« on: August 01, 2019, 02:00:22 PM »
https://www.marketwatch.com/story/kevin-oleary-says-pay-off-your-debts-by-this-age-2019-02-01

I’d be interested to hear Mustachian takes on this article. We started with Dave Ramsey so it sounds familiar but DR doesn’t frame it with an age boundary.

Bloop Bloop

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #1 on: August 03, 2019, 09:07:31 PM »
The only debt I can think of that is worth accruing is student debt and a mortgage. If you can't pay off your student debt by age 27 you've probably made the wrong career or university choice and if you can't pay your first mortgage off by 35 you've probably spent too much on your first house.

Malkynn

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #2 on: August 04, 2019, 05:10:30 AM »
The only debt I can think of that is worth accruing is student debt and a mortgage. If you can't pay off your student debt by age 27 you've probably made the wrong career or university choice and if you can't pay your first mortgage off by 35 you've probably spent too much on your first house.

That's making a lot of assumptions about life choices.

KBecks

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #3 on: August 04, 2019, 05:22:47 AM »
The article is fine and it's good to set ambitious goals.  Shoot for the moon, land in the stars? 

Bloop Bloop

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #4 on: August 04, 2019, 06:46:16 AM »
The only debt I can think of that is worth accruing is student debt and a mortgage. If you can't pay off your student debt by age 27 you've probably made the wrong career or university choice and if you can't pay your first mortgage off by 35 you've probably spent too much on your first house.

That's making a lot of assumptions about life choices.

We are on a MMM forum. Certain assumptions will be made.

RWD

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #5 on: August 04, 2019, 09:40:07 AM »
The only debt I can think of that is worth accruing is student debt and a mortgage. If you can't pay off your student debt by age 27 you've probably made the wrong career or university choice and if you can't pay your first mortgage off by 35 you've probably spent too much on your first house.

That's making a lot of assumptions about life choices.

We are on a MMM forum. Certain assumptions will be made.

Sooo... don't become a doctor? They're probably just starting residency training at age 27.

obstinate

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #6 on: August 04, 2019, 11:38:20 AM »
Sooo... don't become a doctor? They're probably just starting residency training at age 27.
Every rule has exceptions. I think you know what Bloop Bloop meant. I think anyone intelligent enough to be a doctor, dentist, or lawyer would know as well. There's no point nitpicking when it's clear he's talking about undergraduate student loan debt.

Imma

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #7 on: August 04, 2019, 12:35:21 PM »
The only debt I can think of that is worth accruing is student debt and a mortgage. If you can't pay off your student debt by age 27 you've probably made the wrong career or university choice and if you can't pay your first mortgage off by 35 you've probably spent too much on your first house.

That's making a lot of assumptions about life choices.

We are on a MMM forum. Certain assumptions will be made.

I thought on MMM we didn't believe in paying off loans that are typically low-interest :)

I'm 29 and I just made my very first loan payment for undergrad this month. In my country you're allowed to defer paying it back until 7 years after you've received your last payment, which I did. I am also planning to take the full 30-year term to pay off my mortgage which means I'll not be debt free until I'm 54.

Of course, any debts people take out should be reasonable, which means I wouldn't take out more student loans than what I can expect to earn in one year or take out a mortgage that is higher than the cost of the average house in my area, and any high interest debt should be paid back asap.

Now, if we go back to mr O'Leary, while I don't agree with the details - for example, paying off a mortgage first and only start to save for retirement at age 45 once you've eliminated all other debt sounds like a stupid idea to me - I do believe that for the average non-MMM person, having at least a positive net worth by age 45 is a very good guideline. And I totally think he's right in saying that if you haven't achieved a positive net worth by then, it's going to be very difficult for you to retire at a reasonable age with a reasonable amount of money.

I also really like that the author warns about fees, which is not something that is often mentioned in articles about saving for retirement.

ketchup

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #8 on: August 04, 2019, 02:26:42 PM »
45 is a reasonable blanket vague goal for most people.  25 might make more sense for some, 95 for others.  On MMM though we're about optimization, not arbitrary goals given by talking heads.  If you're on here, you're past that kind of advice.

fattest_foot

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #9 on: August 12, 2019, 10:16:36 AM »
The only debt I can think of that is worth accruing is student debt and a mortgage. If you can't pay off your student debt by age 27 you've probably made the wrong career or university choice and if you can't pay your first mortgage off by 35 you've probably spent too much on your first house.

Bought our house when we were 35 and 32 years old. Our payment is 9% of our income, and at a 3.25% interest rate.

I think looking at any financial consideration solely based on age is misguided.

nereo

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #10 on: August 12, 2019, 10:49:33 AM »

I think looking at any financial consideration solely based on age is misguided.

I second this sentiment.  There are so many caveats to attach to such a definitive statement such as this, particularly when you are using debt as a measuring-stick.  Using net-worth as a percentage of annual expenses would be better, but still problematic.

perhaps the best metric I can think of would be: by the time you are out of school you should be spending less than you earn and investing the difference, year after year.


I generally advise against an accelerated mortgage payoff, and with many people now taking out their first mortgage sometime in their 30s (and often late 30s) that note is going to be sticking around... and that's ok.

Cassie

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #11 on: August 12, 2019, 11:18:17 AM »
We bought our first house in 1980 when the interest rate was 12%.  My husband was 34 and I was 26.  We bought a fixer upper and certainly didn’t spend too much for our income. We had 3 kids and I was going to college which we paid cash for.  Obviously it wasn’t going to be paid off by age 35.

DadJokes

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #12 on: August 12, 2019, 12:20:27 PM »
The only debt I can think of that is worth accruing is student debt and a mortgage. If you can't pay off your student debt by age 27 you've probably made the wrong career or university choice and if you can't pay your first mortgage off by 35 you've probably spent too much on your first house.

That's making a lot of assumptions about life choices.

We are on a MMM forum. Certain assumptions will be made.

I thought on MMM we didn't believe in paying off loans that are typically low-interest :)

I think that's why he said "if you can't pay off your mortgage" instead of "if you haven't paid off your mortgage."

If you have the money in investments that is greater than your mortgage balance, then you technically "can" pay off the mortgage.

Even so, attaching these concrete statements to ages probably isn't the best idea, for reasons that have been mentioned.

bluebelle

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #13 on: August 12, 2019, 01:26:07 PM »
while I don't disagree with what the article says, I'm not sure that taking financial advice from o'leary is the best idea.

https://www.cnbc.com/2019/08/07/how-much-kevin-oleary-says-spends-on-food-each-day.html

Raenia

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #14 on: August 13, 2019, 05:59:20 AM »
while I don't disagree with what the article says, I'm not sure that taking financial advice from o'leary is the best idea.

https://www.cnbc.com/2019/08/07/how-much-kevin-oleary-says-spends-on-food-each-day.html

I'm not sure which part of that article's advice you object to... he says straight up that no one should follow his example, because he spends a lot on business lunches/dinners and always picks up the tab.  All the advice he gives for others to follow is reasonable, if not exactly mustachian: try to keep eating out to no more than 10% of your after-tax income, eat at home at least 4 days a week, preferably 6 days a week and only go out 1 day, buy good quality ingredients so you can cook at home better, eat healthy.  That's all decent advice.

nereo

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #15 on: August 13, 2019, 06:37:45 AM »
while I don't disagree with what the article says, I'm not sure that taking financial advice from o'leary is the best idea.

https://www.cnbc.com/2019/08/07/how-much-kevin-oleary-says-spends-on-food-each-day.html

I'm not sure which part of that article's advice you object to... he says straight up that no one should follow his example, because he spends a lot on business lunches/dinners and always picks up the tab.  All the advice he gives for others to follow is reasonable, if not exactly mustachian: try to keep eating out to no more than 10% of your after-tax income, eat at home at least 4 days a week, preferably 6 days a week and only go out 1 day, buy good quality ingredients so you can cook at home better, eat healthy.  That's all decent advice.
my, oh my have we set the bar low...

Raenia

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #16 on: August 13, 2019, 07:51:47 AM »
while I don't disagree with what the article says, I'm not sure that taking financial advice from o'leary is the best idea.

https://www.cnbc.com/2019/08/07/how-much-kevin-oleary-says-spends-on-food-each-day.html

I'm not sure which part of that article's advice you object to... he says straight up that no one should follow his example, because he spends a lot on business lunches/dinners and always picks up the tab.  All the advice he gives for others to follow is reasonable, if not exactly mustachian: try to keep eating out to no more than 10% of your after-tax income, eat at home at least 4 days a week, preferably 6 days a week and only go out 1 day, buy good quality ingredients so you can cook at home better, eat healthy.  That's all decent advice.
my, oh my have we set the bar low...

I said it wasn't mustachian, but it's also not like he's telling people to do what he does, which is what the previous poster made it sound like.

I know plenty of people who would do better to follow this advice.  You just don't see those people around here.
« Last Edit: August 13, 2019, 07:56:42 AM by Raenia »

RelaxedGal

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Re: Kevin O’Leary says pay off all your debts by age 45
« Reply #17 on: August 15, 2019, 07:50:09 AM »
Now, if we go back to mr O'Leary, while I don't agree with the details - for example, paying off a mortgage first and only start to save for retirement at age 45 once you've eliminated all other debt sounds like a stupid idea to me - I do believe that for the average non-MMM person, having at least a positive net worth by age 45 is a very good guideline. And I totally think he's right in saying that if you haven't achieved a positive net worth by then, it's going to be very difficult for you to retire at a reasonable age with a reasonable amount of money.

I also really like that the author warns about fees, which is not something that is often mentioned in articles about saving for retirement.
Exactly this. Thank you Imma!

Per the article Mr O'Leary is assuming people won't save for retirement until they're paid off all debt.  Bad advice.  Yes I paid off my student loans first, but only to avoid interest (I paid them off during the 6 month grace period, woo!) and I'm keeping my mortgage which is at < 3% until it's paid off ~ age 47, and I took that 0% interest loan on my car instead of paying cash.  Sometimes the math just makes sense.

And the investment fees... I'm also very glad the author mentioned them.