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John H[_2_]

On Tue, 21 Nov 2017 11:17:22 -0500, wrote:

On Tue, 21 Nov 2017 09:13:27 -0500,
wrote:

On Mon, 20 Nov 2017 22:15:21 -0500, wrote:

On Mon, 20 Nov 2017 19:12:12 -0500, Alex wrote:

Too many people spend every dime they make, don't take advantage of
401K's, and wonder how they are going to retire on SS alone.

I also wonder how anyone over 50 or so with a mortgage and car
payments ever expects to retire. I paid cash for my house here in 84
and I paid off my mortgage on the condo in 1990. I haven't had a car
payment since the Nixon administration. In spite of all of that I
sound like a pauper when I hear how much money you guys make.

===

Smart borrowing, i.e., borrowing to buy an appreciating asset is good
business when you can earn a higher return than your after tax
interest cost. Even if you can afford to pay cash, borrowing makes
sense if you can invest your cash at a higher return.

That probably describes a house, particularly a second home or a
rental but not necessarily your residence unless you want to sell it
and downsize or live in your car in your old age.
Your home is not your piggy bank., We should have learned that a
decade ago.
Cars, boats and just about every other toy is not going to be an
appreciating asset. It is just an expense and you do not want that to
be an expense that you also pay interest on. Rationalizing that you
invested the money you spent on your toys and the interest is zero
only says you have more money than you need. That does not describe
most Americans and if the **** does hit the fan, as can happen to the
retired, you lose your toys. If that is your car, it is a significant
loss.
Normal people should not be going into retirement with debt unless
they have the liquid assets to pay that debt off ... and that is rare.

Personally I like the idea that I can cut back on the luxuries I pay
cash for and live very cheap if I need to because I don't owe anyone
any money.

Downsizing wouldn't bother me a bit! I'd love to have a smaller house and a much smaller, or
non-existent yard. I could find something to spend the extra on, even if it's just grandkids'
education.

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