Additional payment to mortgage

STM317 said:

frenchyd said:

STM317 said:

In reply to alfadriver :

Save your internet breath. This argument with frenchy is just going to sidetrack the whole thread while he throws out incorrect stats with zero proof because they substantiate his predetermined points of view.

That’s rather rude.  Because I can’t link no to my sources, ( I can’t post pictures either, I admit I have poor skills compared to you )  does not invalidate my premise.  

You can find the sources if you were to look. However to be fair how credible is any internet source?  

My goal is not to upset you, but there's a pretty clear pattern to your posts on topics like these. Other members have commented about it as well. When a person engages in discussion with you, or questions a post of yours you divert the topic to something tangentially related or centered around your beliefs that:

1. Vintage Jaguars are good

2. Real Estate is a great investment because of leverage/inflation

3. Wealthy people/ Banks/ Wall St are to blame

4. Taxes are good, but the current tax code is too complex

 

In the scientific community, if a person makes a claim, the onus is on them to substantiate it. We're all busy people. We don't have time to chase down every stat that you throw out to verify how legitimate it is. If you can't provide a source with your stats, then make your point without them.

I happen to agree with all of your points except #3 

Before I lost it I earned a extremely good returns on my investments in the stock market.  Yes banks got greedy and caused the worst recession since the Great Depression  but I realize there are some very good people in the market but there are also plenty of  bad as well. 

In reply to Adrian_Thompson :

Thank you, I hope you  don’t think I was whining. For the record I’m not. 

I just say that a pure math approach cannot be valid because life changes. Priorities and values change. 

Math is always fixed unless you approach life as an algorithm ( and the all the permutations  that life offers ) 

STM317 said:

frenchyd said:

STM317 said:

In reply to alfadriver :

Save your internet breath. This argument with frenchy is just going to sidetrack the whole thread while he throws out incorrect stats with zero proof because they substantiate his predetermined points of view.

That’s rather rude.  Because I can’t link no to my sources, ( I can’t post pictures either, I admit I have poor skills compared to you )  does not invalidate my premise.  

You can find the sources if you were to look. However to be fair how credible is any internet source?  

My goal is not to upset you, but there's a pretty clear pattern to your posts on topics like these. Other members have commented about it as well. When a person engages in discussion with you, or questions a post of yours you divert the topic to something tangentially related or centered around your beliefs that:

1. Vintage Jaguars are good

2. Real Estate is a great investment because of leverage/inflation

3. Wealthy people/ Banks/ Wall St are to blame

4. Taxes are good, but the current tax code is too complex

 

In the scientific community, if a person makes a claim, the onus is on them to substantiate it. We're all busy people. We don't have time to chase down every stat that you throw out to verify how legitimate it is. If you can't provide a source with your stats, then make your point without them.

I didn’t know this was a scientific community. I thought we were a bunch of guys who like to go fast on a modest budget. 

frenchyd said:

I didn’t know this was a scientific community. I thought we were a bunch of guys who like to go fast on a modest budget. 

Going fast on a budget sure sounds like a science to me 

GRM=Velocity + finances + Amy help. 

dculberson said:

Driven5 said:

dculberson said:

Lots of people on here advocate against the stock market but few have a solution for how to provide a passive income stream for yourself in your old age without it.

Real estate investing, entrepreneurship, and the lottery.

Real estate is a job. I have the majority of my net worth in real estate and if you think that's ever a passive income stream, I have a bridge to sell you!!

Entrepreneurship is also by definition a job. The major difference between it and working for "the man" 9-5 is that you work longer and harder hours as an entrepreneur.

The lottery - well, if you can sell me a sure thing lottery ticket, I'll take it!

I guess that depends somewhat on whether you're talking about vehicles for getting to the point of having a totally passive income stream, or asset allocation after having reached the point of having a totally passive income stream...Although ultimately, I wouldn't fully agree either way.  While the stock market may be capable of providing a totally passive income stream, when someone is still trying to reach retirement that's a largely irrelevant point...And then once there, the the portfolio allocation is typically moved increasingly away from the stock market the further one goes into retirement.

frenchyd said:

Math is always fixed...

No it's not.  If values of the variables in the equation change, the math can be recalculated.  If the variables themselves change, the equation  can be updated and the math can be recalculated.  When life changes, the math is absolutely free to change with it...In fact, your internal risk/reward calculator necessarily changes the math constantly without you even realizing it.

frenchyd said:

In reply to Adrian_Thompson :

Thank you, I hope you  don’t think I was whining. For the record I’m not. 

I just say that a pure math approach cannot be valid because life changes. Priorities and values change. 

Math is always fixed unless you approach life as an algorithm ( and the all the permutations  that life offers ) 

Hi frenchyd,

I respectfully disagree.

If you want to "Science the E36 M3" out of estimating the effect various investment strategies are likely to have, I suggest skilling up on Monte Carlo simulations.

Or just save 15%+ of your gross income starting with your first paycheck and put at least 75% of it in an ultra-low load index fund and don’t try to time the market…buy and hold no matter what.

This does not guarantee success but due to what are called “Black Swan” events, nothing does and at some point (generally north of about 25%) the risk of wasting your limited time on this plant over-engineering your retirement portfolio, exceeds the added safety that doing so provides.

I’ve shared this quote with 100’s my engineering statistics students…”you can’t guarantee safety but you can kill millions trying”.

Take care,

Retirement Monte Carlo Simulator

I use firecalc 

Driven5 said:

frenchyd said:

Math is always fixed...

No it's not.  If values of the variables in the equation change, the math can be recalculated.  If the variables themselves change, the equation  can be updated and the math can be recalculated.  When life changes, the math is absolutely free to change with it...In fact, your internal risk/reward calculator necessarily changes the math constantly without you even realizing it.

Am I correct in understanding that your suggesting a flexible investment program?? If so that seems different than the approach suggested by many here.  

RX Reven' said:

frenchyd said:

In reply to Adrian_Thompson :

Thank you, I hope you  don’t think I was whining. For the record I’m not. 

I just say that a pure math approach cannot be valid because life changes. Priorities and values change. 

Math is always fixed unless you approach life as an algorithm ( and the all the permutations  that life offers ) 

Hi frenchyd,

I respectfully disagree.

If you want to "Science the E36 M3" out of estimating the effect various investment strategies are likely to have, I suggest skilling up on Monte Carlo simulations.

Or just save 15%+ of your gross income starting with your first paycheck and put at least 75% of it in an ultra-low load index fund and don’t try to time the market…buy and hold no matter what.

This does not guarantee success but due to what are called “Black Swan” events, nothing does and at some point (generally north of about 25%) the risk of wasting your limited time on this plant over-engineering your retirement portfolio, exceeds the added safety that doing so provides.

I’ve shared this quote with 100’s my engineering statistics students…”you can’t guarantee safety but you can kill millions trying”.

Take care,

Black swan events. I like it.  

Adrian_Thompson said:
Good point, but what if he get's laid off in 2-3 years and can't find another job.  In that case I'd rather have a paid off house than a more full retirement fund yet not be able to pay my mortgage.  That's why I say there is no right answer.  I often think that the 'right' answer may not be the 'best' or 'perfect' answer, but instead it may be one that's theoretically only (say) 75% right but lets you sleep easy at night.

I will freely admit that I'm looking at this from a very different perspective. I haven't been hand to mouth on expenses basically ever in my life. Even when I was making $15k a year first out on my own I had a pretty good handle on things and didn't ever run the risk of being unable to pay my bills. And certainly nowadays a layoff (or otherwise job loss) is not something that even enters my mind as a risk. However, from my point of view, having close to $33k in liquid investments (3 years of $10k/year plus 2 years of returns) and a $350/mo mortgage payment due seems preferable to a paid off house and no cash at all on hand when unemployed. Hell at that point he's "break even" for just letting that $33k gradually pay off the house, and any returns he gets from there are gravy.

People can debate the various financial pros and cons, but one should also consider which method provides peace of mind.  Paying off a mortgage (or at least paying it down substantially) can be a real positive thing, and if it removes a lot of worry and stress that's a good thing.    In Curtis' case he can cut out a big chunk of the principal so I say go for it (with maybe a little kept out and put away for emergency funds).

As for the whole parallel discussion about retirement funds, I went through the 2008 recession too but my funds were well diversified - sure, I lost money in the short term like everyone else, but it all came back and more, and today it's a pretty nice sum.  I owe that to having a good financial advisor, there are some things best left to the professionals.

frenchyd said:

Driven5 said:

frenchyd said:

Math is always fixed...

No it's not.  If values of the variables in the equation change, the math can be recalculated.  If the variables themselves change, the equation  can be updated and the math can be recalculated.  When life changes, the math is absolutely free to change with it...In fact, your internal risk/reward calculator necessarily changes the math constantly without you even realizing it.

Am I correct in understanding that your suggesting a flexible investment program?? If so that seems different than the approach suggested by many here.  

No, nobody is suggesting a fixed math solution.  I don't understand why you think that is so.  Everyone has suggested running different scenarios and using that information to make the right decision for one person's situation.  

It's so easy to run different solutions through a model.  Just like done in real business.  There's more than one solution that can work here.  

Given what you have said and your situation, frenchy- I'm 100% sure that your solution would not have nor will it work for me.  Which points out that it may not work for Curtis, too.  And I don't think what I did in life will work, either.  Which is why one should do the math.

It's much better than assuming and guessing at a solution.

In reply to alfadriver : Good, We do agree that no one solution is correct for everyone.  

All that remains is to accept the warning given with all economic advice.  “ past performance is no assurance of future performance.”  

I’d like to also add, “Nor present goals be suitable for future goals”  

dculberson said:

Adrian_Thompson said:
Good point, but what if he get's laid off in 2-3 years and can't find another job.  In that case I'd rather have a paid off house than a more full retirement fund yet not be able to pay my mortgage.  That's why I say there is no right answer.  I often think that the 'right' answer may not be the 'best' or 'perfect' answer, but instead it may be one that's theoretically only (say) 75% right but lets you sleep easy at night.

I will freely admit that I'm looking at this from a very different perspective. I haven't been hand to mouth on expenses basically ever in my life. Even when I was making $15k a year first out on my own I had a pretty good handle on things and didn't ever run the risk of being unable to pay my bills. And certainly nowadays a layoff (or otherwise job loss) is not something that even enters my mind as a risk. However, from my point of view, having close to $33k in liquid investments (3 years of $10k/year plus 2 years of returns) and a $350/mo mortgage payment due seems preferable to a paid off house and no cash at all on hand when unemployed. Hell at that point he's "break even" for just letting that $33k gradually pay off the house, and any returns he gets from there are gravy.

THIS!

This is thing I hate the most about my current financial situation (a few years out from divorce, loss of house, a few layoffs and multiple moves).

I'm not nearly as liquid as I once was. Barely liquid at all in fact. Given the current goings on at my job, I suspect I have time to get back to a more reasonable position before anything should happen, hopefully.

Sorry I haven't updated for a while.

Without divulging everything in my bank accounts, here is how it plays out.

$33,3xx left on the mortgage. (house and property valued at about $87k)
Liquid (checking/savings, including the recent gift) total about $30k
Investment account totaling about $30k (don't want to touch)
Utilities are stoopid cheap.  $14 for water, $40 for electric, $30 for gas, $40 for internet

When it comes to jobs, I usually lay myself off.  I might do that sooner rather than later in pursuit of my Master's degree, and working for a non-profit theater, there is always the nebulous threat that it may close doors.  It hasn't closed doors in 93 years, but we got really close a few times in the last two years.

The schooling will be funded by a loan from mom and dad with a very liberal payback schedule that doesn't even start until school is done.  I have no other debt.  This mortgage is my first ever loan of any kind (other than borrowing a couple hundred from a buddy or something)

So if you had that cash, needed $350 a month for a mortgage, 50/50 on whether or not you're keeping your job, and relatively few other expenses, what would you do?

Not pay a dime extra to the mortgage, that is for sure. You need liquidity if you're liable to go Johnny Paycheck on your job at any given moment. 

In light of the latest post I revise my opinion.  Don't overpay on the mortgage, I'd put any you need for your potential Masters in a separate account then get the rest into retirement savings ASAP.

dculberson and I seem to be living parallel lives in different cities, so pretty much everything he's said is sound, in my experience.  The only thing I'd add is investing in radiators.  Every car I've ever scrapped I pulled and saved the radiator out of.  There's a pile of them behind my house- probably 50 at least.  When I retire, the copper, brass, and aluminum are going to the recyclers.  

It's a cool way to save for retirement.  

Also- "retirement" accounts like IRAs often allow withdrawals for other life events without penalty.  IIRC education is one of them.  So if you think your main expense could be a Master's, plowing all that money into an IRA might be fine- you can still take it out later to pay for your education.  

I'm putting my extra into a Roth IRA rather than paying extra on my mortgage. Reason being, I fairly recently decided that I'm not going to stay in my current house much more than 5 more years (or less) and that's not long enough for me to pay it off. I've got no other debt currently so the extra's adding up fast.

When speaking of going unemployed, cash (liquidity) is king.  Equity won't put food on the table or gas in the tank.

-Pay $350 each month from a $10k lump sum, and do not pay out-of-pocket for your mortgage for over 2.33 years. 

-Use a $10k lump sum to supplement income for 1 year, and have a guaranteed $833.33 per month. 

-Put a $10k lump sum towards your $30k mortgage principle, and at the end of the day you'll still owe $350 each month.

Curtis said:

Sorry I haven't updated for a while.

Without divulging everything in my bank accounts, here is how it plays out.

$33,3xx left on the mortgage. (house and property valued at about $87k)
Liquid (checking/savings, including the recent gift) total about $30k
Investment account totaling about $30k (don't want to touch)
Utilities are stoopid cheap.  $14 for water, $40 for electric, $30 for gas, $40 for internet

When it comes to jobs, I usually lay myself off.  I might do that sooner rather than later in pursuit of my Master's degree, and working for a non-profit theater, there is always the nebulous threat that it may close doors.  It hasn't closed doors in 93 years, but we got really close a few times in the last two years.

The schooling will be funded by a loan from mom and dad with a very liberal payback schedule that doesn't even start until school is done.  I have no other debt.  This mortgage is my first ever loan of any kind (other than borrowing a couple hundred from a buddy or something)

So if you had that cash, needed $350 a month for a mortgage, 50/50 on whether or not you're keeping your job, and relatively few other expenses, what would you do?

Wow,  I need your type of simplicity in life. 30k-80k homes,  Is this typical of your area? 

In reply to yupididit :

Not typical.  I got a little lucky and I had to shop for over a year.  And simplicity is a HUGE deal for me.  I am a responsible adult (mostly) but I hate the craziness of how things get.  Its why I did escrow so I never forgot an insurance payment or tax bill.  Its why I set up all my utilities to directly draft from my account.  Its why I don't like being under a bank's thumb.  I also just hate the idea of paying interest.  Why pay it when I don't have to?  I understand the whole idea of investing and making more than my interest accrual, but the simplest, least stressful, least risk move FEELS like paying down the mortgage.

I am a huge fan of simplicity.  Now if I can only find a commuter car that gets 60mpg, has 500 hp, can haul 12' lumber, tow 8000lbs, go off-roading, and look like a Jaguar, I can simplify all my vehicles into one.

When I started looking for a house, I was looking for a $60k fixer in a rural-ish setting near Harrisburg PA... like a 15 mile radius.  I was finding some, but most of them were too much of a fixer to really live-in while fixing.  That was 2 years ago.  The supply started drying up and pretty soon I was looking at $90k homes that needed a bulldozer.  This one popped up for $87k and I think the reason it was cheap was because it was a 2bd/1ba, 835 sq ft tucked into a neighborhood that has mostly 3bd/2ba and 1200+ sf.  It was a misfit.  Even so, I was here to look at it within one hour of going on MLS, and one hour after that we submitted a full-price offer and it was accepted.  They had to cancel 9 showings the next day.

I would say I got lucky because I didn't hesitate.  It is also not really a fixer at all.  It was a flip in 2012, including all new furnace, PEX plumbing, water heater, appliances, the works.  I'm adding HVAC, and the furnace they put in already has an evaporator, so the whole job is going to cost me less than $1500.  I did update the closet in the master and I added some cabinets in the kitchen and will do new countertops.  The installation of the formica they did is not only ugly, but poorly done.

I had $45k squirreled away from my ex wife buying out my half of our old house, I put in about $5500 of my own cash, so the down big down payment left me with only $38k to borrow.

Link to my property on Realtor.com

You can look at comps around there to see what "normal" homes bring.  Still relatively cheap, but $87k is not the norm.