Yearly net worth
- Thread starter dmclone
- Start date
I agree with you. Pay the highest interest rate off first. Plus with the student loan debt you have tax advantages.
One good thing about paying off the student debt is once it's gone, it's gone. With the auto loan you may find yourself buying a new car (new loan) within a couple years of paying off your current auto loan.
"good debt" is only "good" if you ignore the extra risk that debt adds. If you consider the risk, and don't look long-term, (in the long term, cash only businesses KILL debt-inducing business plans) sure, you can make betend that there is such a thing as "good debt".
American business is crammed full of "boom-splat" businesses built on "good" debt.
Naw... I've been intentionally under-shooting my income potential since the early '90s, so I could live with my wife and kids in Central Iowa. I have a unique skill-set in a couple esoteric areas, that pay around the NFL league minimum. Unfortunately, the work tends to be overseas, in areas where families can't go, doing things that aren't particularly "safe".
Now that it's obvious that my work isn't going to give me a chance of living with my wife and kids, I've decided to take one of the offers that have been coming around about twice a year, and go off and work internationally for awhile.
I told you guys my life started getting really interesting the last couple of months.
What's funny is that just a few years back, I was turning down these jobs and earning around $30,000 a year to deliver pizza. But things change, and I have my reasons for resetting my values on this....
Perfect plan for perpetually being broke. Car loans are for broke people, since it is debt on a rapidly depreciating asset.
If you pay off the smallest debt, regardless of rate, you approach the problem from a sound psychological standpoint. It gives you a sense of achievement which gives you the power to go after the other debts.
Plus, you can roll the payment from the smallest debt into the next highest debt, since you are psychologically conditioned to not see that money.
Unfortunately, money problems are behavioral problems, so math is relatively meaningless in the equation. And if you are fierce about paying off your debts, the amount of interest involved is miniscule.
Hopefully you are never in a position in your life were you can't make a mortgage payment for an extended period of time. I personally can't wait until I am completely debt free.
Your focus on being debt free is actually putting you at more risk for not being able to pay your mortgage payments again sometime in the future. You should focus on liquidity as well as being debt free. If you are liquid (have plenty cash saved up and set aside in an emergency fund) then you will have few worries about paying any of your debts for an extended period. The more money you put towards paying off your mortgage the more money you are putting in the walls of your house and the less liquid you are. Bankers don't give loans against assets they give loans against income so if you lose your job and you have your house paid off but haven't saved a penny elsewhere, you are screwed.
Has anyone else noticed the new craze for Reverse Mortgages??? This is because so many people feared their mortgage and ignored the fact that they needed to save up some for retirement, etc......now they have a need for cash and find themselves doing reverse mortgages where they are getting screwed.......
Paying off your house gives you a lot of piece of mind, so just for that it is worth it to me. Not having to write that big check to interest every month is great.
Yes, having your house paid off is a great feeling and makes a person feel proud, etc........it just doesn't make the best "financial sense". It makes decent-to-good financial sense, just not the best. The fear of a big mortgage and the fear of "paying interest to the bank" typically puts blinders on people to see the big financial picture.
I give plenty of credit to those who have their mortgage paid off though, not many can say that. And if you have your house paid off and are still relatively young enough to save a lot of money for retirement, then you are truly a lucky, lucky individual and rare in the world today.
Actually focus and intensity is the main reason Dave's plan works. I agree with Brain that its the piece of mind not having to write the check out every month to the bank. I am also looking forward to the day that all my income is going towards the purchase of something instead of paying somebody interest every month so I could have instant gratification.
It's my expectation to have my mortgage paid off before I turn 40. That would mean hopefully I would have plenty of years to live completely debt free and really enjoy the fruits of my labor or have my wife stay at home. I feel like I live in a really nice house as well.
The fact that people don't pay off their mortgages or save enough for retirement is a personal decision in most cases and not luck.
Hope to pay off mine in 2009. Then it is just real estate taxes and utilities and insurance to pay.
I went down the mortgage free path once. It's a nice cozy feeling.
Then I realized carrying a mortgage is about the only way to leverage your existing assets with the lowest amount of risk.
I think I want my mortgage paid off the day before my demise.
Then I realized carrying a mortgage is about the only way to leverage your existing assets with the lowest amount of risk.
I think I want my mortgage paid off the day before my demise.
