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Old 2 December 2022, 01:49 AM   #61
brandrea
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Never made a lot of money but being an impressively attractive man, women have always been willing to buy me things. I'd say it's a blessing and a curse, but so far, the curse part hasn't revealed itself.
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Old 2 December 2022, 02:46 AM   #62
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Old 2 December 2022, 02:51 AM   #63
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so incredibly true. a million percent.
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Old 2 December 2022, 03:16 AM   #64
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I paid off my mortgage a couple of years ago. I hesitated over it… then did the math. Over the remaining 22 years of the mortgage I’ll save nearly $200,000 of interest.
The flip side is how much did you lose out on potential investment earnings over those 22 years? I can almost guarantee much more than 200k. Compound interest, like Buffet says, is the 8th wonder of the world.

If it was 150k invested at only 6% you would have had $390k in returns...bump it up to 9% and you cost yourself $850k. Ouch.
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Old 2 December 2022, 03:37 AM   #65
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Debt and quality of life.

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Originally Posted by minute_man View Post
More of a philosophical question but curious about your views:

Provided you had a decent income and owned some property to begin with, which route would you prefer:

Owning a modest / ordinary place, driving a used car, buying only what you can afford to pay for outright and upgrading / improving things over time, while saving and keeping debt-free?

Or

Enjoy an arguably better living standard, up front, in a fancy home, a new car, new everything but being in debt with a mortgage, monthly installments etc. and whatever long term obligations, commitments and compromises these entail?

It’s a combination of both for me, but it’s all relative depending on what your point of view is. We have a big fancy home, fancy cars, new everything, etc., but our debt is quite limited. Our lifestyle would be considered “rich” by the overwhelming majority of people, but we’re not “private jet” rich.

We feel as if we live a modest lifestyle relative to our net worth. I drive around in a BMW, not a Porsche. I wear stainless steel Rolex and Omega watches. No Patek Phillipe, AP, or VC for me. We talked about buying a boat, but decided against it.

We live in a large, modern home on lake front property. It’s gorgeous, but it’s not a 10,000 sq foot mansion in Palm Beach.

Bottom line, we live well within our financial means. We could stretch it if we wanted too, but that’s just not us.


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Old 2 December 2022, 03:42 AM   #66
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The flip side is how much did you lose out on potential investment earnings over those 22 years? I can almost guarantee much more than 200k. Compound interest, like Buffet says, is the 8th wonder of the world.

If it was 150k invested at only 6% you would have had $390k in returns...bump it up to 9% and you cost yourself $850k. Ouch.
Where can I get risk free 6% compounding interest ?
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Old 2 December 2022, 03:48 AM   #67
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It’s a combination of both for me, but it’s all relative depending on what your point of view is. We have a big fancy home, fancy cars, new everything, etc., but our debt is quite limited. Our lifestyle would be considered “rich” by the overwhelming majority of people, but we’re not “private jet” rich.
In todays world a 30k positive balance in your bank account and manageable debt would be considered rich to average high debt wagies.

You are not rich my friend, you are wealthy.

Rich comes and goes. Wealthy is forever.
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Old 2 December 2022, 03:51 AM   #68
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Where can I get risk free 6% compounding interest ?

FTX. LOL. Just kidding.

In all seriousness, my financial advisor—who works for one of the big financial services companies—has done much better than 6% on average over the last 15 years. Some years we we around 50% in returns. He’s got us in a mix of stocks, bonds, ETFs, and mutual funds.


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Old 2 December 2022, 03:53 AM   #69
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FTX. LOL. Just kidding.

In all seriousness, my financial advisor—who works for one of the big financial services companies—has done much better than 6% on average over the last 15 years. Some years we we around 50% in returns. He’s got us in a mix of stocks, bonds, ETFs, and mutual funds.
I'm invested in the markets as well and seeing nice overall returns. I thought you might have known something I didn't. :)
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Old 2 December 2022, 04:01 AM   #70
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If I wanted to live in the home I own now, I would be saving way past my 60s (currently mid 30s) before I can afford.

I like to live a good lifestyle right now when I'm young rather than save and only live the last 20 or so years well. Therefore I have a mortgage and car loan. Albeit they would be the only loans I would get, I wouldn't borrow for a holiday or a watch though...
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Old 2 December 2022, 04:51 AM   #71
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Inherited my fiscal responsibility from my dad who’s philosophy was never buy a house you can’t pay off in 5 years. No other liabilities … cars etc only bought with cash.

I’ve been blessed to have done very well in business so I’ve got the nice house, cars, watches etc … it may not seem to others that I’m thrifty, but as a percent of what I make I actually spend very little. Also blessed to have a wife who agrees with my philosophy.
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Old 2 December 2022, 05:05 AM   #72
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Where can I get risk free 6% compounding interest ?
If you can't get 6% returns over 22 years you should definitely be paying off debt rather than investing. I'm not here to do the work for you.

Not many investments are 100% "risk free".
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Old 2 December 2022, 05:11 AM   #73
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The only debt I have is my mortgage.
I never finance or borrow money for consumer goods nor for luxury stuff like watches, cars or holidays.
If my savings are not enough I just wait
Same here. When you finance items you are paying a much higher price for them as opposed to investing the money until you have enough and earning on it while you are waiting.

I have a friend who is deep in credit card debt and pays about $10,000 in interest a year. I keep trying to make him understand that if he catches up once, that will give him another $10,000 per year to spend on things other than interest. He doesn't seem to care and will probably die deep in debt. He has no assets so there will be nothing for his creditors to go after.
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Old 2 December 2022, 05:12 AM   #74
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The flip side is how much did you lose out on potential investment earnings over those 22 years? I can almost guarantee much more than 200k. Compound interest, like Buffet says, is the 8th wonder of the world.

If it was 150k invested at only 6% you would have had $390k in returns...bump it up to 9% and you cost yourself $850k. Ouch.


The 6% compounded annual return on 150k is 540k.
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Old 2 December 2022, 05:16 AM   #75
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The 6% compounded annual return on 150k is 540k.
No, it's not. The total end value, including principal invested, is 540k. The "earnings" are 390k, just like I said.
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Old 2 December 2022, 05:21 AM   #76
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No, it's not. The total end value, including principal invested, is 540k. The "earnings" are 390k, just like I said.
Yes correct, I missed that “ … “

I think the total end value is important for the OP to compare to what the savings was vs. paying down/off the mortgage.

Either way it’s impressive.
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Old 2 December 2022, 05:24 AM   #77
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Yes, I was shocked myself when I calculated it, and even moreso when earning 9%. $850k is a lot of potential cheddar to forego just to not have a mortgage.
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Old 2 December 2022, 05:55 AM   #78
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Yes, I was shocked myself when I calculated it, and even moreso when earning 9%. $850k is a lot of potential cheddar to forego just to not have a mortgage.
At some point you end up paying off the mortgage anyway. If you pay it off early enough you can take the unpaid interest plus the monthly nut and shove all that into investments guilt free.

Stock market takes a dump, no effect on me.
Lose my business, no effect on me.
Lose all my money, no effect on me.
etc.

You buy piece of mind and stress free living with no debt.

My Dad always told me. Life is all about getting into everyone else's pockets all while keeping them out of yours.
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Old 2 December 2022, 05:59 AM   #79
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Same here. When you finance items you are paying a much higher price for them as opposed to investing the money until you have enough and earning on it while you are waiting.

I have a friend who is deep in credit card debt and pays about $10,000 in interest a year. I keep trying to make him understand that if he catches up once, that will give him another $10,000 per year to spend on things other than interest. He doesn't seem to care and will probably die deep in debt. He has no assets so there will be nothing for his creditors to go after.
WTF is he spending it on?
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Old 2 December 2022, 06:04 AM   #80
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Never made a lot of money but being an impressively attractive man, women have always been willing to buy me things. I'd say it's a blessing and a curse, but so far, the curse part hasn't revealed itself.
weve got a winner
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Old 2 December 2022, 06:12 AM   #81
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You buy piece of mind and stress free living with no debt.

My Dad always told me. Life is all about getting into everyone else's pockets all while keeping them out of yours.
You can definitely buy peace of mind and stress free living, it just costs you future earnings. Some are ok with that, or even need it. I prefer to maximize, just have never been afraid of taking on large debts.

Funny thing on the quote...my Grandpa always said the opposite, his exact quote...."If you aren't in some debt you probably aren't doing much."
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Old 2 December 2022, 06:19 AM   #82
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The flip side is how much did you lose out on potential investment earnings over those 22 years? I can almost guarantee much more than 200k. Compound interest, like Buffet says, is the 8th wonder of the world.

If it was 150k invested at only 6% you would have had $390k in returns...bump it up to 9% and you cost yourself $850k. Ouch.
That was part of my consideration, the opportunity cost of not having it invested. But those returns are only potential returns, not guaranteed, the mortgage payment every month was a certainty. Also, reducing monthly fixed expenses is a great benefit.

Debt free is the way to go.
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Old 2 December 2022, 06:46 AM   #83
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Debt and quality of life.

When it comes to a mortgage, I think it’s better to be somewhat in between. I personally would never pay it down to zero. Especially if you have a very low interest rate. Quite simply, you can generate more wealth with that money if you know what you’re doing.

At the same time, you don’t want your payoff amount to be anywhere close to the market value of your home. You could end up owing more than what your home is worth.

I think 25% to 50% is the sweet spot. (i.e., payoff amount is about 25% to 50% of the market value of your home).


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Old 2 December 2022, 06:53 AM   #84
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I’ld say one of my bigger financial regrets is not borrowing more and buying more real estate the last 15 years when rates where silly low. I won’t be in the position I am without taking on a lot of debt, but it has worked out wonderfully. The key is having a good, stable income to service it, and living below your means.
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Old 2 December 2022, 07:13 AM   #85
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Funny thing on the quote...my Grandpa always said the opposite, his exact quote...."If you aren't in some debt you probably aren't doing much."
I guess grandpa never knew anyone who is building 3.5 million dollars worth of townhouses just by stroking a check while the debt boys are sitting on the sidelines because the numbers don't work out anymore.
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Old 2 December 2022, 07:13 AM   #86
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Definitely the former.

Regardless of what my financial advisors (and the majority of the investors) recommend, I don't like debt. I'll only take it on if absolutely necessary, like a mortgage to lock in a property before the "train leaves the station."

Anything other debt just stresses me out and doesn't make my life better.
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Old 2 December 2022, 07:20 AM   #87
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I know tons of guys in their 60s who lived their whole lives frugally to save up millions. Now even after all of that, they have grown used to that lifestyle and still don't spend. What's the point in that? You can't take it with you.
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Old 2 December 2022, 09:21 AM   #88
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I know tons of guys in their 60s who lived their whole lives frugally to save up millions. Now even after all of that, they have grown used to that lifestyle and still don't spend. What's the point in that? You can't take it with you.
This is so true. People that like to spend always spend throughout their lives. The ones that dont never do despite having the money in the end. It is mostly personality based
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Old 2 December 2022, 09:28 AM   #89
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This is so true. People that like to spend always spend throughout their lives. The ones that dont never do despite having the money in the end. It is mostly personality based
My dad is like this — so cheap that it’s sad. He refused to replace a broken fridge, despite having many millions in the bank, and then got food poisoning from spoiled chicken wings. I kid you not.
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Old 2 December 2022, 09:34 AM   #90
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My dad is like this — so cheap that it’s sad. He refused to replace a broken fridge, despite having many millions in the bank, and then got food poisoning from spoiled chicken wings. I kid you not.
that is amazing
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