No, because then I would have to pay a higher interest rate, worry about pmi or a piggyback loan, and I would be stuck owing money to the bank if the value of the house decreases.

1/20/2007 11:55:39 AM

So we are all in agreement. paying off your home is a good idea. Investing the money is a good idea. Both are good ideas and we cannot fault anyone that picks any strategy that involves doing both to some degree.

1/20/2007 4:03:20 PM

It's quite obvious we are not all in agreement.

kdawg(c) stated

Quote :

"if I had $50K in a savings account and $45K in a student loan, I would use $45K from my savings account and pay off my student loan."

1/20/2007 5:07:21 PM

I disagree. Paying off your home is a good idea. Investing the money is a good idea.

1/20/2007 7:50:40 PM

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1/20/2007 7:53:27 PM

I never implied you were against paying off your home. All I asked was, would you pay extra towards your mortgage in order to pay it off early.

1/21/2007 12:08:37 AM

not before I started investing

1/21/2007 1:18:15 PM

Even though you are doing just that with your student loans?

1/21/2007 1:37:35 PM

Quote :

"Yes, and if you had bought the stock in 2000 and sold it in 2002 you would have gotten back 60 cents for every dollar you put in. Sure, as of 2006 you have turned a profit, about 1% per year (rough guestimate based on graph of DJIA and ignoring dividends). This money would have invariably been better put into your house."

See: http://www.socialsecurity.org/reformandyou/faqs.html

Quote :

"Of course we all know that stocks can go down as well as up. But over the long term, investing is remarkably safe. Over the last 80 years, private investment in the United States has earned an average annual return of nearly 8 percent. That period included not only the market decline of the last few years but the Great Depression, World War II, several smaller wars, numerous recessions, the "stagflation" of the 1970s, and the bursting of the dot.com bubble as well. We need to remember that, with compound interest and stocks held over the working life of a typical U.S. worker, the money grows, even if the returns on that investment are lower in some years than in others. Some people ask, "What if I had had a personal retirement account and had retired in 2002 when the tech bubble burst and the stock market lost so much money?" Good question. If you retired in 2002, most likely you would have been contributing to your personal retirement account for at least 25 years and probably longer. If you started investing in 1978, the Dow Jones Industrial Average was 742. At the low point of 2002, it was 7,286. Despite the crash, you would have received a far higher return than you would have seen from Social Security. The numbers are even more amazing for 40 years of investing. Retirement investments are long-term investments, and historically long-term investing in the American stock market is the best deal going. "

1/23/2007 1:04:09 PM

None of that has anything to do with what I said.

So I must conclude you do not object to my point of view and instead wish to discuss the idiocy of Social Security where if you are black then you are, on average, going to get a negative annual return on your social security payments.

1/23/2007 1:52:24 PM

What are you talking about? It specifically addresses your comment about the 2002 burst.

It also further proves my point that excess money should be invested, not used to pay down loans at wonderful interest rates.

1/23/2007 1:55:43 PM

It doesn't mention debt payments, not once. Or is it your assertion that your Social Security payments are the same as your mortgage payments? You know they go different places, right?

1/23/2007 2:03:59 PM

The purpose of the copied article was to address your irrational fears of the market.

1/23/2007 2:08:20 PM

By reminding me of my rational fears of the Social Security Administration?

1/23/2007 2:37:48 PM

Quote :

"theDuke866: i wonder what this Dave Ramsey cat thinks about buying investments on margin."

Attractive, but risky venture. I wouldn't do it unless I had money I could stand to lose and was a hell of a lot more savvy an investor.

1/23/2007 2:44:18 PM

Quote :

"By reminding me of my rational fears of the Social Security Administration?"

What the hell is your fixation on social security? It is mentioned once in the entire article. Feel free to replace it with something else. Here, I'll help

Quote :

"Despite the crash, you would have received a far higher return than you would have seen from Social Security extra payments towards your student/car/mortgage loans."

1/23/2007 2:49:33 PM

That goes without saying. Look, you evidently did not comprehend what I was saying. I said the market is not reliable on a short time frame. At our age, 20 some-odd years old, we are not worried about retirement. We want to be able to buy a bigger house in 10 years, not 50. We need money we can get at quickly and will give a reasonable return in the process, something the stock market cannot promise.

When we get older and get more concerned with retirement then we should definitely pick whatever will give an 8% return in 80 years. Until then, I'll take my guaranteed whenever-whatever 6%.

1/23/2007 3:05:22 PM

Heh, sorry pal but I think you've got it backwards.

1/23/2007 3:07:16 PM

Which part?

1/23/2007 3:54:15 PM

Quote :

"At our age, 20 some-odd years old, we are not worried about retirement."

Wrong! I am very worried about retirement. As a result of starting saving earlier and compound interest, I will have to save less money than someone who starts saving 10 years from now and I will have a larger portfolio than they will when I retire.

Quote :

"We want to be able to buy a bigger house in 10 years, not 50."

What is to stop you from buying a bigger house in 10 years?

Quote :

"We need money we can get at quickly"

Why?

Quote :

"When we get older and get more concerned with retirement then we should definitely pick whatever will give an 8% return in 80 years. Until then, I'll take my guaranteed whenever-whatever 6%."

You should be very risky now in hopes of high returns and then adjust your portfolio to more conservative funds with lower risk and return as you get closer to retirement age.

1/23/2007 4:00:06 PM

when you're young you have time to ride out swings in the market so high risk high return is ok

when people get closer to retirement age it starts to make sense to look for low risk low return

1/23/2007 4:02:48 PM

Quote :

"Wrong! I am very worried about retirement. "

you're very worried? you have plenty of time to invest money in retirement plans....people our age should not be worried about retirement. of course we should invest and make sure that money will be available at that point, but its certianly nothing to worry about. if i end up at 50 with under $100,000 in my retirement account, then ill worry....but based on what im doing now, that day will never come. for now, ill continue to invest money deligently every month and worry more about trying to get a good return on my house when i sell it in 5 years to get something bigger and nicer.

1/23/2007 4:04:27 PM

I'm not really a fan of being ultra anal about my retirement yet. I'd rather not sock away tons of money in 401ks and IRAs just yet.

1/23/2007 4:06:20 PM

Quote :

"you're very worried? "

Ok, maybe very worried is a little strong but still worried enough to put plenty of money away in my roth and 401K. It's not like we all have pensions like the baby boomers and the chances we will collect much from social security are quite slim.

1/23/2007 4:33:34 PM

Quote :

"people our age should not be worried about retirement. of course we should invest and make sure that money will be available at that point, but its certianly nothing to worry about. if i end up at 50 with under $100,000 in my retirement account, then ill worry....but based on what im doing now, that day will never come. for now, ill continue to invest money deligently every month and worry more about trying to get a good return on my house when i sell it in 5 years to get something bigger and nicer."

i think most people our age don't worry nearly enough about it.

and if I turn 35 without 100k in retirement and brokerage accounts, I will be quite disappointed.

[Edited on January 23, 2007 at 5:07 PM. Reason : asfasd]

1/23/2007 5:07:05 PM

^ Different issues for different people. Some people need to be hassled to save more, some others need to be hassled to save less.

1/23/2007 5:31:53 PM

not many need to be hassled to save less. i've met a few, but they're a rare bird.

1/23/2007 5:59:35 PM

Quote :

"Different issues for different people."

What?

1/23/2007 7:43:45 PM

I started reading and following some of his stuff about a week ago. I got a book of his for Christmas. Pretty simple stuff. He doesn't really worry as much about the house payment as he does the whole issue of overextending yourself in credit cards, car payments, and other "toys". Course I only owe $4k on my student loan, 450 on my only credit card, and 7k in student loans. And my house, but that ain't much, since I only paid $55k. But I ain't worried about that one. I want to just get my little debts paid off and then try to save before I buy any "toys".

1/23/2007 8:00:50 PM

So ive got 3k sitting in my checking account. What should i be doing with it right now?

1/23/2007 8:08:43 PM

Roth ira?

1/23/2007 8:30:54 PM

I got financial advice for everybody...

Minimize your desires. Cut out that greedy child inside of you that sneaks candy in the cart when mom's not looking. Protect yourself from advertising. Never, ever compare yourself to others, be they seemingly richer or poorer than you. Be honest about what you really need. Enjoy the free things, the simple things, and the things you already have.

If your friend gets a boat, don't hurt your head trying to figure out how you can get an even bigger one. You don't need a boat--your friend already has one for you to enjoy...maintenance-free!

1/23/2007 8:39:15 PM

Quote :

" What's the point of working hard if you can't buy a new TV or computer and throw your old one out whenever you fucking want to? "

Bridget?

1/23/2007 8:48:28 PM

Yeah?

1/23/2007 8:53:05 PM

Quote :

"I started reading and following some of his stuff about a week ago. I got a book of his for Christmas. Pretty simple stuff. He doesn't really worry as much about the house payment as he does the whole issue of overextending yourself in credit cards, car payments, and other "toys". Course I only owe $4k on my student loan, 450 on my only credit card, and 7k in student loans. And my house, but that ain't much, since I only paid $55k. But I ain't worried about that one. I want to just get my little debts paid off and then try to save before I buy any "toys"."

Sounds like a good plan.

No one needs to be the guy trying to beat out his friends in terms of the accumulation of "stuff." Instead, be the guy who tries to beat the system. (The system that tells you that you need to "Buy stuff you don't need with money you don't have to impress people you don't really like.")

1/23/2007 9:02:22 PM

I'm confused kdawg. You advocate investing and paying a mortgage at the same time, yet you are putting off investing to pay extra on student loans. I don't see the difference between the two scenarios.

1/23/2007 9:16:29 PM

Bridget, from what I have read, that is a lot of the thing that Dave is trying to pound into peoples head. Your neighbor is probably overextended to hell trying to buy that boat, and his new truck to pull it, and all those trips he's taking to go fishing with it, etc. So don't fall for trying to keep up with the Joneses, its just a losing battle that will leave you with some cool toys, but very likely leave you deep in debt.

He doesn't debate that you can't buy these things, but he wants to get folks to actually fucking save for these things instead of just picking up a couple of credit cards and but this shit on credit.

1/24/2007 7:19:24 AM

David, the amount of time needed to pay off the student loans--which are a magnitude less than that of a mortgage--is considerably smaller, so I would rather forego investing for a year or two, pay off my student loans, and then invest and pay off my home (which, historically, is an investment in and of itself). All that, of course, after I've put away enough savings to keep my family financially secure should I lose my job.

1/24/2007 7:53:58 AM

That sounds like Dave talking.

"Pay off the smallest debt first to create the greatest momentum in your debt reduction."

1/24/2007 9:51:22 AM

David, I think everyone here gets the fact that you can, by investing wisely instead of paying down debts, make more money in the long run. I think what the dave ramseyites are saying is that the security and freedom of having no debt as quickly as possible is worth more to them than the potential return on investments they could make.

1/24/2007 11:11:29 AM

Quote :

"I think what the dave ramseyites are saying is that the security and freedom of having no debt as quickly as possible is worth more to them than the potential return on investments they could make."

And for some people huge houses, fancy new cars, and filets 7 nights a week are worth more to them than the potential return on what their investments could make.



[Edited on January 24, 2007 at 11:20 AM. Reason : ]

1/24/2007 11:20:02 AM

correct

1/24/2007 11:25:14 AM

Quote :

"which are a magnitude less than that of a mortgage--is considerably smaller, so I would rather forego investing for a year or two, pay off my student loans, and then invest and pay off my home "

have you done the math on what that year or two is going to cost you over time?

1/24/2007 12:59:04 PM

Quote :

"(which, historically, is an investment in and of itself). "

Not as much as people like to think. When you factor in the maintenance, taxes, etc. they appreciate much less than they seem to. Especially if the government stopped subsidizing it for us with tax deductions. The reason a home is most Americans' most profitable investment is because they leave it alone, much like they should their stocks.

1/24/2007 1:10:42 PM

That and I tried to live in my stocks and found it didn't work so well.

1/24/2007 1:41:08 PM

What does that mean?

1/24/2007 1:44:41 PM

David, what do you do?

1/24/2007 4:30:35 PM

I'm a software engineer. Why do you ask?

1/24/2007 4:46:29 PM

I just want to say that if you are paying down your home faster than you have to you are an idiot.

Houses are subsidized for gods sake. Use the interest deduction and take the low interest rates.


If you really think that at age 25 you should be avoiding high risk/reward vehicles for low risk/reward vehicles you are also an idiot.

Who gives a fuck if the economy has a recession and you have to wait six extra months to buy a home, 2 extra months to buy a car, or 3 extra days to buy a new TV.


I'll borrow any amount of money you want to give me at 5% interest. The more the better.

1/25/2007 4:34:04 PM

yep

1/25/2007 4:41:37 PM