I wasn’t at all addressing the issue of whether most people COULD pay off their homes, just whether it was wise to keep paying a mortgage payment when one doesn’t have to. Your strategy works for you, so bravo. I myself wouldn’t do it, wouldn’t advise it. I want the security of knowing my home is mine. I don’t think deliberate debt (even if one has the money to pay it off) is wise, and I’d argue that it may even violate Scripture, where we are told to avoid debt.

In fact, most people I know have the opposite problem–they’re still in mortgage debt (and other forms of debt) well into their fifties.

I have no choice but to have a mortgage now. But I expect to have it paid off by the time I’m 50 (I’m on track for 48 or 49, but am hoping to make it earlier). After that, my costs will go WAY down, and I can save more. If Social Security would return all the money I’ve paid through the years, I could pay off my home NOW, have enough left over for a good used car (mine is 14), and in ten years, saving only the money I’m currently paying in mortgage and Social Security, I’d have the equivalent of four years’ income–more if I invested it well.

I have no desire to “get rich.” But my strategy of living within my means and avoiding debt should still allow me plenty of surplus in my later years. For me personally, I don’t want to risk my home on an investment, and I think it would be unwise for most people to do so. I don’t care whether a home is “liquid.” I haven’t bought it as an investment. I bought it to live in. My car isn’t an investment either; I bought it to drive, and knew when I bought it that it would depreciate. Thus, in buying homes and cars, I buy reasonably within my means, not extravagantly.

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YOU WRITE:……..”So your idea that people do not have the net worth to pay off their mortgage any time they want is quite wrong. They just don’t plan properly and do not know how to take advantage of leverage the low risk way. It all comes down to the (6) P’s and simple ignorance. Prior planning prevents piss poor performance. But planning doesn’t do one any good if you don’t know how through ignorance.”

“Leverage just magnifies profits. If your investments are low risk to begin with then any normal leverage is welcome and completely conservative.”

Notwithstanding the vulgarity of your six P’s. Please tell me if you refi your home at say – 6% interest than the cash you are taking out requires that you earn at least 10 or 12 % return on your money. Assuming that return, where do you get off saying that a 10- 12% return on your money is a “conservative” investment return especially when a typical “conservative” corporate or municipal bond rarely pays more than 5 to 6 % year in year out. Of course there are always “conservative” mutual funds which have paid about 12% average over the past five to ten years:

HOWEVER THE AVERAGE RETURN FOR MUTUAL FUNDS HAS BEEN ABOUT A -6% SINCE LAST FALL. SO IT WILL TAKE MANY INVESTORS USING THIS STRATEGY ABOUT 2 YEARS JUST TO GET BACK TO WHERE THEY WERE LAST FALL.

In short, nothing you have stated in your post is “CONSERVATIVE” but quite risky.

Any investor, novice or experienced knows that “LEVERAGE” magnifies both the return and the “LOSS” when various economic factors such as those in last six months come into play.

Perhaps you should write your book – it could become a comedic best seller.

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I want to continue some thoughts on personal homes. You mentioned that you didn’t think too many people could pay off there home when ever they needed to. This is an erroneous assumption on your part.

In some cases you are right, but taking one example, many retired people own their own homes outright after paying off a 30 year mortgage. They usually plan not to have house payments when they go into retirement. I tell them this is crazy thinking and is totally against a low risk retirement strategy that maximizes income while reducing risk.

What they end up with is a home that is appreciating but they have no net worth. They haven’t saved anything of note to retire on, as far as net worth goes, so they sell their home, downsize to a smaller one (which they pay off) and then have some way too small net worth to live on even including their social security pittance.

The bad thing for baby boomers is that, as they start to retire now, the real estate market has crashed in much of the country and their only savings they had counted on in now worth 25% or more less than a year ago.

But it gets worse. The number of baby boomers retiring is staggering and since few have saved for retirement, the are all trying to sell their homes because they need to downsize to get some net worth to retire on. They will find out their home price is depressed even further because of all the additional baby boomers trying to do what they want to do – downsize – all at the same time.

Many Baby Boomers have now figured out that they will not be able to retire because they do not have and cannot get the net worth to do so. But they easily could have done so.

They could have refined their home when they had equity in it years before and converted the equity into investable net worth and invested it to build real retirement net worth outside of their home. Since their investments are net worth and very liquid, unlike real estate which is not net worth or liquid as so many have found out the hard way, they could at any time, easily liquidated their investments and paid off their mortgage any time they wanted or needed to. But they could have been making huge piles of profit by not doing so too. You can’t make profits unless you invest net worth.

So your idea that people do not have the net worth to pay off their mortgage any time they want is quite wrong. They just don’t plan properly and do not know how to take advantage of leverage the low risk way. It all comes down to the (6) P’s and simple ignorance. Prior planning prevents piss poor performance. But planning doesn’t do one any good if you don’t know how through ignorance.

Leverage just magnifies profits. If your investments are low risk to begin with then any normal leverage is welcome and completely conservative.

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False accusations are hard to bear, thankfully the LORD knows all about it.

God bless you all

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Congratulations Lynn!

Paperback Nonfiction – New York Times

29 – SAME KIND OF DIFFERENT AS ME, by Ron Hall and Denver Moore with Lynn Vincent (Thomas Nelson)

Lynn Vincent

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