What do you consider "good money?"

Deplorable said:
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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Can't argue that, but when S&P is up 14% in the past year, you combine that plus the tax deduction, it becomes a much harder choice.

UTfball68 said:
Unpossible...someone already said no one had that kind of cash laying around.
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Cash out my 401K and I got lots of money!
 
Deplorable said:
Keep in mind, it's impossible to take away what you own..
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So say you lose everything, just because your house is paid off, doesn’t mean there aren’t still taxes and insurance on the property. Tell .gov they can’t take your house because it’s paid for if they say you’re delinquent on taxes.


Deplorable said:
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.
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And what’s the difference in $100k over 10 years at 8% with nothing contributed vs $1000/month at 8% over the same 10 years???
 
UTfball68 said:
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.
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I made no assumptions. Just pointed out that many families experienced foreclosure during the last decade. But I will make one assumption... NONE of the foreclosures that occurred were for families that did not have a mortgage.
 
I've argued both sides of this debate before.
For years I was a zero debt guy. After I lost my business and nearly everything at 24...it hurt. And it stuck with me. Dave Ramsey resonated. I went completely debt free almost all the way to the house.

Then I had a mindset change. I'll spare the details and the story - but its the opposite question of "Would you draw money off a paid for house to invest"

If you lose your job and your ability to earn an income through some unforeseen tragedy but have a paid for house, you cant borrow against that house to buy food. Banks dont lend to folks without an income.
However if I have a $100k mortgage and $100k in cash in a savings account, and I lose my job and earning potential - I still have a problem - its just that now I have 5+ years to figure out how to solve my problem.

I get that I lose 4% of that money by not paying off that mortgage. I choose to pay that as insurance. My choice is right for me. It isnt right for everyone and I wont be so self righteous as to suggest I know the only way.

I also owe some on some of my rental properties. There is a good argument for not owing anything on those, but leverage allowed me to scale quicker. Shit hits the fan there and I walk away I guess.
 
UTfball68 said:
So say you lose everything, just because your house is paid off, doesn’t mean there aren’t still taxes and insurance on the property. Tell .gov they can’t take your house because it’s paid for if they say you’re delinquent on taxes.




And what’s the difference in $100k over 10 years at 8% with nothing contributed vs $1000/month at 8% over the same 10 years???
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First, the taxes and insurance are there regardless if you have a mortgage or not. But certainly you'd agree that it's a bit easier paying $2500 annually for taxes and insurance than paying $1500 monthly for principal, interest, taxes AND insurance.

Sencondly, $100k over ten years would net a lot more than $1000 monthly the same time. This is called compound interest.
 
If anyone needs to borrow some $$$$ for investments, PM me with your mortgage information and we'll work something out. I'm always in the market to make interest profits or gain property. Same reason when my buddies have a big poker night, I jump at the chance to be "the house".
 
On the good money topic.....it's not what you make, it's what you keep. I have a buddy that owns 54 rental properties in Burlington and has never had a job making more than $45k a year, he squeaks when he walks. "Good money" is all relative.
 
Over the past several years, the man who kept his money invested in the stock market would have come out way ahead of the man who paid off his house. That isn't likely to continue though. Interest rates are going to go up, and the stock market cannot continue to climb like it has done since the great recession. Valuations are reaching high levels.
 
drkelly said:
Over the past several years, the man who kept his money invested in the stock market would have come out way ahead of the man who paid off his house. That isn't likely to continue though. Interest rates are going to go up, and the stock market cannot continue to climb like it has done since the great recession. Valuations are reaching high levels.
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And then it's time to convert even more cash into the market, because everything will be on sale.
 
Something else to consider is that the Republicans are apparently discussing removing the mortgage interest deduction from their tax plan, and just increasing the standard deduction for everyone. I haven't been following it that much though, so don't know all the details.
 
Ron said:
I've argued both sides of this debate before.
For years I was a zero debt guy. After I lost my business and nearly everything at 24...it hurt. And it stuck with me. Dave Ramsey resonated. I went completely debt free almost all the way to the house.

Then I had a mindset change. I'll spare the details and the story - but its the opposite question of "Would you draw money off a paid for house to invest"

If you lose your job and your ability to earn an income through some unforeseen tragedy but have a paid for house, you cant borrow against that house to buy food. Banks dont lend to folks without an income.
However if I have a $100k mortgage and $100k in cash in a savings account, and I lose my job and earning potential - I still have a problem - its just that now I have 5+ years to figure out how to solve my problem.

I get that I lose 4% of that money by not paying off that mortgage. I choose to pay that as insurance. My choice is right for me. It isnt right for everyone and I wont be so self righteous as to suggest I know the only way.

I also owe some on some of my rental properties. There is a good argument for not owing anything on those, but leverage allowed me to scale quicker. Shit hits the fan there and I walk away I guess.
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Dave Ramsey may have changed his steps since this happened.

But its:

  • Baby Step 1 – $1,000 to start an Emergency Fund
  • Baby Step 2 – Pay off all debt using the Debt Snowball
  • Baby Step 3 – 3 to 6 months of expenses in savings
  • Baby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement
  • Baby Step 5 – College funding for children
  • Baby Step 6 – Pay off home early
  • Baby Step 7 – Build wealth and give!

If you follow step number 3, you will have X number of months to recover. Which you are correct on, having 100k in the bank is certainly a worthy goal!

But it's not just 4% interest you are paying on a mortgage, it's 4% compounding interest. That's why you buy a $170,000 house, and in 30 years, when it's worth most likely less (once you factor in repairs and remodels vs value increase), you have paid almost $300,000 to the bank.

Or you pay that sucker off ASAP and save the $130,000 in interest and years of dealing with banks. And you may be out of a job, and have a hard time making ends meet - but you have a HOME and your biggest monthly bill is gone.

Then you just gotta get to hustling to get back on your feet.

Be it flipping burgers or slinging drugs and self-prostituting under an overpass. (Not recommended).

Debt is the civilized worlds form of indentured servitude.
 
Atla said:
Dave Ramsey may have changed his steps since this happened.

But its:

  • Baby Step 1 – $1,000 to start an Emergency Fund
  • Baby Step 2 – Pay off all debt using the Debt Snowball
  • Baby Step 3 – 3 to 6 months of expenses in savings
  • Baby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement
  • Baby Step 5 – College funding for children
  • Baby Step 6 – Pay off home early
  • Baby Step 7 – Build wealth and give!

If you follow step number 3, you will have X number of months to recover. Which you are correct on, having 100k in the bank is certainly a worthy goal!

But it's not just 4% interest you are paying on a mortgage, it's 4% compounding interest. That's why you buy a $170,000 house, and in 30 years, when it's worth most likely less (once you factor in repairs and remodels vs value increase), you have paid almost $300,000 to the bank.

Or you pay that sucker off ASAP and save the $130,000 in interest and years of dealing with banks. And you may be out of a job, and have a hard time making ends meet - but you have a HOME and your biggest monthly bill is gone.

Then you just gotta get to hustling to get back on your feet.

Be it flipping burgers or slinging drugs and self-prostituting under an overpass. (Not recommended).

Debt is the civilized worlds form of indentured servitude.
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I understand your point.
My wife and I are certified Financial peace counselors and taught the class at our church for 4 years.
I disagree, slightly, now.
 
^^^ that would suck
Ron said:
I understand your point.
My wife and I are certified Financial peace counselors and taught the class at our church for 4 years.
I disagree, slightly, now.
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Wasn't this one of our conversations while traveling for ECORS?
 
Ron said:
I understand your point.
My wife and I are certified Financial peace counselors and taught the class at our church for 4 years.
I disagree, slightly, now.
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Ramsey has some really good points, but I too don't think his plan is the best.

Just out of curiosity, what do you disagree with now?
 
Deplorable said:
Ramsey has some really good points, but I too don't think his plan is the best.

Just out of curiosity, what do you disagree with now?
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As someone who just got married and is starting out and in the process of buying a house, my wife and I have thought about taking that class at her old church, so Im interested to see what you disagree with as well as some pointers for getting things going.
 
JSJJ388 said:
As someone who just got married and is starting out and in the process of buying a house, my wife and I have thought about taking that class at her old church, so Im interested to see what you disagree with as well as some pointers for getting things going.
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Deplorable said:
Ramsey has some really good points, but I too don't think his plan is the best.

Just out of curiosity, what do you disagree with now?
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Dave Ramsey anyone?
 
Ron said:
I've argued both sides of this debate before.
For years I was a zero debt guy. After I lost my business and nearly everything at 24...it hurt. And it stuck with me. Dave Ramsey resonated. I went completely debt free almost all the way to the house.

Then I had a mindset change. I'll spare the details and the story - but its the opposite question of "Would you draw money off a paid for house to invest"

If you lose your job and your ability to earn an income through some unforeseen tragedy but have a paid for house, you cant borrow against that house to buy food. Banks dont lend to folks without an income.
However if I have a $100k mortgage and $100k in cash in a savings account, and I lose my job and earning potential - I still have a problem - its just that now I have 5+ years to figure out how to solve my problem.

I get that I lose 4% of that money by not paying off that mortgage. I choose to pay that as insurance. My choice is right for me. It isnt right for everyone and I wont be so self righteous as to suggest I know the only way.

I also owe some on some of my rental properties. There is a good argument for not owing anything on those, but leverage allowed me to scale quicker. Shit hits the fan there and I walk away I guess.
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Beyond that, you being a landlord it is smart not to own your own home free and clear even with LLC protection and whatever umbrella policy you might have. Just too much risk I think.

Not to mention that any worth a shit investment is going to pay well over the 4% a conventional mortgage is costing. In my opinion the "debt free" method is to keep people that want to work their 9-5 job and worry/learn about nothing else from going broke rather than actually making them "wealthier". Leverage can also be a good thing.
 
Dave Ramsey himself will tell you that he is no master accountant/MBA/financial wizard, etc. He just understands human nature when it comes to money. His plan is simple and works for anyone at any level. Can a Wall Street wizard do better? Of course he can. Can a corporate exec with scads of money do better by investing wiser and taking strategic debt at low interest rates? Of course he can. The beauty of Ramsey's plan is that it's a) biblical in nature, b) it's simple, can be scaled up or down and everyone can benefit from it, c) requires no formal education to follow and d) it is not as subject to the ebb and flow of the economy as most other plans.

The beauty of being debt free is that as things change in your life (sudden job loss, drastic health problems), you don't have the sword of that debt hanging over your head waiting for the last string to break. At that point, you have the contingency plan in place and can cover life events better, with less stress.
 
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ManglerYJ said:
The beauty of being debt free is that as things change in your life (sudden job loss, drastic health problems), you don't have the sword of that debt hanging over your head waiting for the last string to break. At that point, you have the contingency plan in place and can cover life events better, with less stress.
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And when things change at your job and you don't like them you can walk.Having a job your not afraid to lose makes a big difference.
 
Ron said:
Dave Ramsey anyone?
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Beat me to posting this. I remember that thread and was thinking of it. Rather one disagrees or not with some things in his plan, the core of it is full proof and proven to work! Just pay off your debt minus the house and then decide how you want to invest and deal with mortgages.

As an update though, we are actually behind on the plan. We ran into about $16k worth of medical bills about a year after posting that, but we paid it mostly in cash and all within that same year thanks to following Dave’s plan. We also finally sold our old home and bought another, paying a good portion down and putting money into it the first year.

We should be debt free (minus the mortgage) by March/April next year. I too have changed my views on some things a little. But for anyone wondering about doing Dave’s plan, don’t hesistate. It was a real blessing from the Lord I feel to have my eyes opened to financial wisdom thru this.
 
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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My grandfather did exactly this.
And when he died, left his wife/kids millions of dollars.

Sooo... yeah.
 
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