Yearly net worth

Cydkar

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Apr 12, 2006
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Figure out what a 15 year payment will be, get a 30 year mortgage, and find a conservative, liquid, tax deferred (or tax free) financial vehicle to put the difference in and you will be mortgage free in probably around 11 years.

I've got a great investment for you-
It:
A-Gives up a tax advantage
B-Has no hedge against inflation
C-Has no rate of return
D-If you get disabled you can't use it

How many of you want to sign up?

How can I be mortgage free in 11 years with a 30 year mortgage which is stupid to pay off early? I'm being facetious...sort of.
 

Bobber

Well-Known Member
Apr 12, 2006
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Hudson, Iowa
I've never been afraid to leverage myself to aquire assets. However...I also remember an old saying that describes any debt as a noose that is around ones neck. Most times it won't bother you, but it's always there. I don't like living with a noose, so while I've never been afraid to get loans, have always worked to pay them off ahead of time.

True a home loan has tax advantages and you're getting the money cheap. One of my accountants pointed out years ago however that the interest is still your money going out to somebody else.

Yeah my net worth is probably down, but I don't care. We're debt free and it makes life so simple. It also frees up more money to invest and also have fun.
 

Ficklone02

Well-Known Member
Apr 11, 2006
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City by the Bay
I think he's saying to pay a monthly amount based on a 30 year mortgage, and then alott the difference what you would pay for a 15 year payment less the 30 year payment and invest thay amount. When that investment equals the payoff amount on your mortgage, your debt free.
 

Phaedrus

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Jan 13, 2008
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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.......

This post shows that you have no idea what Dave Ramsey actually teaches. You build liquidity long before you pay off your house using his method.

Straw man argument.

www.daveramsey.com
 

Phaedrus

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Jan 13, 2008
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Very well said.

One of the characteristics that separates that masses from those at the top is that they know how to successfully use debt to their advantage.

IMO it all depends on how lofty your financial goals are and how much you want to work soley yourself (vs having your money also work for you). You need some form of smart leverage for the second part.

"The Masses" are the ones who are always trying to be "smart" and end up broke, and deep in debt. "The Masses" are the ones who "leverage" their lives, becoming slaves to their lenders.

It's the truly exceptional person who understands that being in debt equals being a slave, unable to do what they REALLY want because the banker calls the tune they are forced to dance to.

You do NOT need a form of leverage for the "second part". You need to be properly capitalized and have a sound business plan. And you can get that way slowly, and with patience, you can be outperforming the guy who has debt-load in a relatively short time.

If I had a dime for every failed businessman who believed in leverage, I'd be rich.
 

Cydkar

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Apr 12, 2006
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You aren't debt free just because you have an asset equal to your debt. That just helps your bottom line net worth. Once you have saved money equal to the mortgage debt is he advocating actually paying off the mortgage? He being wartknight.
 

Phaedrus

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Jan 13, 2008
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You aren't debt free just because you have an asset equal to your debt. That just helps your bottom line net worth. Once you have saved money equal to the mortgage debt is he advocating actually paying off the mortgage?

No, but he advocates building wealth in the following order:

1. Build a baby emergency fund of $1000
2. Pay off all non-mortgage debt, starting with the smallest debt first, and rolling the payment into the next largest debt as you pay off.
3. Build a Fully-funded emergency fund of 6 months expenses
4. Invest 15% of your gross income
5. Invest for kids' college
6. Pay off the house
7. Live like no-one else

Once you get all the way to step 6, the risk of being put back into the condition preceding step 1 is effectively annulled. Be advised, he recommends that life and LTD policies be carried starting before step 1.

Hey, if you're the rare one who can manage money (And unfortunately, that skill appears to be getting rarer), good on ya, but if you're in debt and out of control with money, I don't think that you'll get out of debt by borrowing more.
 

Phaedrus

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Jan 13, 2008
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Phaedrus is a mercenary...

:nah: I keep telling you guys, he is the real Indiana Jones. :yes:

I'm guessing bomb disposal technician or cult leader. :wink:

esoteric definition | Dictionary.com
(Intended for or understood by only a particular group: an esoteric cult. Understood by or meant for only the select few who have special knowledge or interest.)

Most mercenaries deliver pizza on the side. In fact Rambo was on my porch delivering a large sausage with double cheese earlier tonight.

While I'm enjoying the witty repartee, you guys DO realize I've been a Military Contractor off and on since 2001, right? That is, when I'm not enjoying the fruits of my labor and comfort of my lovely wife's arms in my alter ego of "Pizza Man"? (It's actually a fun gig that I occasionally enjoy, though I've not delivered pizza since 2005)

I find one of the greatest things most people have to overcome in life to do great, or even mildly interesting things, is to get over their reticence to do distasteful tasks. In the course of doing business, I run into the most interesting people. I know a Cosmo Girl who mows lawns for her parents' apartment complexes when she's home and a beauty pageant winner (who is also a Poli Sci genius) who powersprays her parents livestock sheds on the side. I've also met best selling authors who still, post-fame, do menial labor.
 

Cydkar

Well-Known Member
Apr 12, 2006
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No, but he advocates building wealth in the following order:

1. Build a baby emergency fund of $1000
2. Pay off all non-mortgage debt, starting with the smallest debt first, and rolling the payment into the next largest debt as you pay off.
3. Build a Fully-funded emergency fund of 6 months expenses
4. Invest 15% of your gross income
5. Invest for kids' college
6. Pay off the house
7. Live like no-one else

Once you get all the way to step 6, the risk of being put back into the condition preceding step 1 is effectively annulled. Be advised, he recommends that life and LTD policies be carried starting before step 1.

Hey, if you're the rare one who can manage money (And unfortunately, that skill appears to be getting rarer), good on ya, but if you're in debt and out of control with money, I don't think that you'll get out of debt by borrowing more.

When i said "he" I didn't mean Ramsay. I'm familiar with his methods. I meant wartknight, sorry. While i don't follow Ramsay, specifically, I enjoy his show and make a valiant effort at being debt free. I'll be debt free, other than my mortgage, in about 2 months which leads me to my interest in how to handle the mortgage debt being debated here. Having an ex-wife +2 kids in private school doesn't help the cash flow.
 
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cyclonewino

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Apr 11, 2006
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wartknight

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Mar 24, 2006
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CyKar-
I should have been more clear- I meant you will have the ability to pay off your loan at that point.
Believe it or not, the fastest way to have the ability to pay off your mortgage doesn'r usually involve making extra mortgage payments.
 

Phaedrus

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Jan 13, 2008
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I think it's funny you are talking about being a slave to a banker and yet taking a job away from wife and family. You are a slave to money, it's not a great master either.

Ah, but if I chose, I could go back to delivering pizzas, and still do just fine, financially.

I'm taking the job away from wife and family for other, less tangible reasons than income. The income is merely ancillary (which doesn't hurt) to my reasons for going. If it were all about money, I would've done this years ago.

But I am a slave. We're all slaves to something. I just choose to be a slave to "duty" and "obligation".
 

cyclonejd

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Jul 26, 2006
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No, but he advocates building wealth in the following order:

1. Build a baby emergency fund of $1000
2. Pay off all non-mortgage debt, starting with the smallest debt first, and rolling the payment into the next largest debt as you pay off.
3. Build a Fully-funded emergency fund of 6 months expenses
4. Invest 15% of your gross income
5. Invest for kids' college
6. Pay off the house
7. Live like no-one else

These steps changed my life, I was never taught much about money except that spending it feels good. I had bought into the idea that if I could afford monthly payments I could afford whatever my greedy heart desired.

The Dave Ramsey Plan is the best for me and my family! I have read some other books but they just have not clicked like the Dave Ramsey stuff.

5 months ago I had a debt over six figures, not with some discipline I have paid over over 20% of those debts. (note this does not include my house.)

Thanks again Phaedrus
 
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dmclone

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Oct 20, 2006
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No, but he advocates building wealth in the following order:

1. Build a baby emergency fund of $1000
2. Pay off all non-mortgage debt, starting with the smallest debt first, and rolling the payment into the next largest debt as you pay off.
3. Build a Fully-funded emergency fund of 6 months expenses
4. Invest 15% of your gross income
5. Invest for kids' college
6. Pay off the house
7. Live like no-one else

These steps changed my life, I was never taught much about money except that spending it feels good. I had bought into the idea that if I could afford monthly payments I could afford whatever my greedy heart desired.

The Dave Ramsey Plan is the best for me and my family! I have read some other books but they just have not clicked like the Dave Ramsey stuff.

5 months ago I had a debt over six figures, not with some discipline I have paid over over 20% of those debts. (note this does not include my house.)

Thanks again Phaedrus

One question on this concept. Lets say that I did 1-5 and I need to buy a car. Dave wants you to pay cash for the car. Where does that money come from?

I don't have any financial problems and save well for my retirement but I think for 90% of Americans, this is a great plan. When people bring up this type of plan someone always wants to slam it but working in the financial world I can see how this plan makes sense. A lot of people talk a big game but when it comes to savings most Americans fail. I may have to go watch him speak. I watch his show on fox business.
 

brianhos

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Jun 1, 2006
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Figure out what a 15 year payment will be, get a 30 year mortgage, and find a conservative, liquid, tax deferred (or tax free) financial vehicle to put the difference in and you will be mortgage free in probably around 11 years.

I've got a great investment for you-
It:
A-Gives up a tax advantage
B-Has no hedge against inflation
C-Has no rate of return
D-If you get disabled you can't use it

How many of you want to sign up?

E-Allows you to sleep well at night.
F-Gives you the freedom to move jobs/quit/live cheaply.
G-Allows you to feel confident that you can withstand any economy.
H-See part E.
 

Ficklone02

Well-Known Member
Apr 11, 2006
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You aren't debt free just because you have an asset equal to your debt. That just helps your bottom line net worth. Once you have saved money equal to the mortgage debt is he advocating actually paying off the mortgage? He being wartknight.
Yeah, I think his version of paying for your mortgage involves paying off the mortgage with the investment. You're right, having an asset=debt doesn't equal debtfree, but you have a choice to make, do you let the investment ride....or become debtfree. Its a personal choice and I've argued with myself many a times as to what I would do in such a situation.
 

wartknight

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Mar 24, 2006
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E-Allows you to sleep well at night.
F-Gives you the freedom to move jobs/quit/live cheaply.
G-Allows you to feel confident that you can withstand any economy.
H-See part E.
All fair points, but they all work the way I posted as well, and will give a person more wealth over the course of their lifetime.

Its not a bad thing at all to not have a mortgage.
It is very good thing to have a mortgage and not need it. Provided the money that would otherwise go to paying off the mortgage is being saved rather than consumed.