What do you consider "good money?"

Deplorable said:
Although this is correct it is not accurate, as you have to live somewhere! This assumption doesn't take that in account and it also implies you have the full $170k at the beginning. Neither of which are realistic.
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I did edit to address this. But like in my edit, it's been proven many times here, whether you're talking an extra $50/mo on your mortgage or $5,000,000 offroad park purchase...the smart choice is being net positive on cheap debt (again ignoring any tax/gains implications, but even then you only need an additional 1.5-2% to offset). There are literally an infinite amount of scenarios, sometimes break even is sooner, some times it's later...and some times the net will need to be more than 1.5-2%, but we're living in a time of cheap money right now. Mortgages are sub-4%, car loans are sub 3%...you could damn near put your money in a CD and be ahead of an accelerated payment structure.
 
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Deplorable said:
If you don't owe anyone anything and have a stack of cash, I'm pretty confident you can ignore math.
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Chicken dinner!!!!!! All my friends who come at me with the "cheap money" argument all seem to be leveraged heavily in some way or another. That argument is so people who do owe money can feel good about. No debt trumps cheap money every time in my book. Why would you pay interest to anyone if you can put yourself in a position of no debt? (cue the people who wish they weren't in debt to explain to me how it's a benefit).
 
Deplorable said:
Nah. The smart choice is not having debt.

You don't get rich by owing money.
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If you make a higher percentage rate return on investments than the interest you are paying on them, then you are. Unfortunately, I don't know how to do that, so I am still broke.
 
Deplorable said:
If you don't owe anyone anything and have a stack of cash, I'm pretty confident you can ignore math.
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Deplorable said:
It's much easier to BUILD wealth when you aren't using your income to pay debt.
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So you only paid cash for your house and cars??? To which you're going to say no (worst case you'll say you probably never bought a new car, so haven't needed to anyway) and that you accelerated your payment(s) and that has afforded you the ability to have that stack of cash. And that since your house is paid off you're keeping that money, so your stack of cash is bigger. I know, I've heard the argument every time...but the math has been done and posted several times, it doesn't work the way you think and/or want it to. 8% return is greater than 4% interest every single time.
 
UTfball68 said:
So you only paid cash for your house and cars??? To which you're going to say no (worst case you'll say you probably never bought a new car, so haven't needed to anyway) and that you accelerated your payment(s) and that has afforded you the ability to have that stack of cash. And that since your house is paid off you're keeping that money, so your stack of cash is bigger. I know, I've heard the argument every time...but the math has been done and posted several times, it doesn't work the way you think and/or want it to. 8% return is greater than 4% interest every single time.
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Conversely, how many people do you know took out a mortgage on their paid for house to invest? With your thought, that would be extremely common...
 
UTfball68 said:
So you only paid cash for your house and cars??? To which you're going to say no (worst case you'll say you probably never bought a new car, so haven't needed to anyway) and that you accelerated your payment(s) and that has afforded you the ability to have that stack of cash. And that since your house is paid off you're keeping that money, so your stack of cash is bigger. I know, I've heard the argument every time...but the math has been done and posted several times, it doesn't work the way you think and/or want it to. 8% return is greater than 4% interest every single time.
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So your master plan is to stay in debt forever and you'll be making money hand over fist?
 
Mathematically, as long as your interest debt is lower than your investment growth you will come out ahead. Unfortunately life, debt and investments rarely follow math...
 
Deplorable said:
Conversely, how many people do you know took out a mortgage on their paid for house to invest? With your thought, that would be extremely common...
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I know several that have taken out LOC's on their homes for investments.

BIGWOODY said:
So your master plan is to stay in debt forever and you'll be making money hand over fist?
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I'm saying I'm not going to allocate funds to a lower return just so I can say something is paid off.
 
UTfball68 said:
I know several that have taken out LOC's on their homes for investments.

this was common in the early 2000's nothing bad happened there...

I'm saying I'm not going to allocate funds to a lower return just so I can say something is paid off.
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This is a Ford Chevy argument....I know highly educated people who argue both sides of this. I don't know the answer I just know I sleep better not owing a mofo ANYTHING. I invest more freely with cash when I know I don't have a debt hanging over me. However with the way all that shit went down in 2008 and forgiving of debts etc.. by the banks, who knows maybe being debt heavy doesn't matter cause you may not have to pay it back anyway. Hell we've got politicians running on the platform of forgiving student loan debt so yeah I can see why this is a popular way of thinking.
 
BIGWOODY said:
This is a Ford Chevy argument....I know highly educated people who argue both sides of this. I don't know the answer I just know I sleep better not owing a mofo ANYTHING. I invest more freely with cash when I know I don't have a debt hanging over me. However with the way all that shit went down in 2008 and forgiving of debts etc.. by the banks, who knows maybe being debt heavy doesn't matter cause you may not have to pay it back anyway. Hell we've got politicians running on the platform of forgiving student loan debt so yeah I can see why this is a popular way of thinking.
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Actually it's a today thing too, sit down with a good financial advisor, I bet you'll get the same answer. I get it, there's a warm and fuzzy feeling when you pay something off, but assuming you lose your job, that investment doesn't disappear. It's still there, you can still liquidate, and you'll probably have more than the principal you were paying, so you'll more than likely be ahead of where ever you were by strictly paying on the house and ignoring your portfolio.
 
UTfball68 said:
sit down with a good financial advisor, I bet you'll get the same answer.. but assuming you lose your job, that investment doesn't disappear. It's still there, you can still liquidate.
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Most financial planners have an ulterior motive.

Most people who have debt, don't have that debt tied up in "investments". Vehicles, homes, boats and hookers are all liabilities until they are paid for.
 
UTfball68 said:
Actually it's a today thing too, sit down with a good financial advisor, I bet you'll get the same answer. I get it, there's a warm and fuzzy feeling when you pay something off, but assuming you lose your job, that investment doesn't disappear. It's still there, you can still liquidate, and you'll probably have more than the principal you were paying, so you'll more than likely be ahead of where ever you were by strictly paying on the house and ignoring your portfolio.
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again Ford and Chevy...My old man was CEO of a major bank, spent his life doing this shit. Lives in Boca Raton in a (paid for) $3.8 mil. house half the year , the other half @ Torrey Pines CC in a pretty posh place in Cali. I'm sure he's got problems, but $$$$ ain't one of them. He lived his whole life by paying for everything he could in cash and said he never missed a deal from not being liquid, if the deal was too big , he didn't do it. That's who my financial advisor is. I think he's got a pretty proven track record...Now, If I was a financial advisor and you came to me I'd do my best to get you invested in something debt be damned as long as my services were being paid for. I'm not saying those people don't do their jobs or do them well, but they're not there to make friends.
You speak of losing your job and having the investment still there, I guess that's cause you'll need to to pay for whatever is leveraged. There were lots of people running around in the early/mid 2000s wondering WTF happened to their investment, they sold houses cheap or let them get foreclosed on. I'd be more concerned about my investment going away and me standing there with a lot of shit not paid for, but that's just me. The only debt I go into is tangible income producing stuff.


OH yeah and before you wonder about how I acquired my houses/businesses etc....I went out on my own at 17 never took a dime from him(because I was a hardheaded dumbass) , but did listen and things have worked out quite nicely.
 
Deplorable said:
Most financial planners have an ulterior motive.
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And that ulterior motive would be??? And before you say it's beneficial for their commission, be sure you understand how their payment structure works. Also, a planner and advisor are two different things.

Deplorable said:
Most people who have debt, don't have that debt tied up in "investments". Vehicles, homes, boats and hookers are all liabilities until they are paid for.
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Just because they're stupid, doesn't decrease the validity in my statements. There are plenty of folks on this forum that live by that philosophy. And I'm not sure what you're not understanding about liquidating the 'investment' to pay for those liabilities if the situation were to arise.
 
BIGWOODY said:
The only debt I go into is tangible income producing stuff.
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I guess if you don't understand how forgoing paying off debt at a lower interest to gain money on the back end IS income producing, there's really nothing else to talk about here. It's your money, do with it as you please, and I'll enjoy making more with my money.
 
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UTfball68 said:
I guess if you don't understand how forgoing paying off debt at a lower interest to gain money on the back end IS income producing, there's really nothing else to talk about here. It's your money, do with it as you please, and I'll enjoy making more with my money.
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So those that posted about paying off the house.

If interest rates are 4% on my home and I have 100k sitting right now to do something with. Why would I pay off my mortgage when I can make more than 4% in the stock market. Plus the interest deduction on my taxes for the mortgage interest. Not all debt is bad.

Unless my math is off.
 
Look beyond arguing! There may be more than one way to accumulate wealth. Although mine is the better way. :D

We differ in opinion. I'm pretty sure I understand math and numbers better than the average man. An despite that, I'm not leveraged.

Like @BIGWOODY I was taught that it's hard to get rich paying other people (via debt). Keep in mind, it's impossible to take away what you own. Not so the case when you have debt. Just ask all the foreclosed families in the last decade...
 
And again you’re making a lot of assumptions on how those people were leveraged. Numbers are numbers, if you’re not stupid...you won’t get foreclosed on either.
 
DSM Turbos said:
So those that posted about paying off the house.

If interest rates are 4% on my home and I have 100k sitting right now to do something with. Why would I pay off my mortgage when I can make more than 4% in the stock market. Plus the interest deduction on my taxes for the mortgage interest. Not all debt is bad.

Unless my math is off.
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Nope, your math is not off. At all. But I'd still pay off the house, then reinvest what I paid in mortgage payments to accumulate wealth with a free and clear home.

Let's not go down the road of interest deduction. Anyone that's good with numbers (@UTfball68) will certainly agree paying $1 in interest to write off $0.25 is a bad business proposition...
 
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