"Debt free except for mortgage"...

[bababear_50]

I’d argue that having a plan is great regardless if you are a woman or man as being financially smart benefits either sex. IMO

Ok true,,
BUT from my perspective and many of my female and male friends:
Women sometimes spend more time at home caring for children and miss out on some valuable years of pension contributions--I did
Women tend to live longer than men,,and need to adjust their financial contributions.
Women tend to put their spouse and children's needs before themselves--I did. Many are supporting aging parents.
Women tend to start late to save for retirement--I did
Women's wages --there is still a gender pay gap in many occupations.
JMHO
Regards
Mel

 

[tzolkin]

Can you imagine the power of compounding interest over 50 years when you put in a few hundred dollars a month into an investment? We save a lot of money by renting rather than buying in our high COL area...money we have invested over the past 18 years that we plan to keep investing for the next 30, while we rent. I guarantee you we will not have "nothing to show for it." We will have had a roof over our heads all our lives plus about $2M in fun money, give or take a bit. We're already well on our way there.

Saving on housing and investing the difference is wonderful.

But renting isn’t the only way to accomplish this. Some may save money by buying instead of renting or by purchasing a less expensive house. I have never lived anywhere that renting was a cheaper option. It’s always significantly more expensive than buying. So in my case, I only have that extra money to invest because I own rather than rent.

 

[monica9]

And we plan to leave our house to our children. I can’t imagine paying rent for fifty years and having nothing to show for it in the end.

Exactly. This is why I don't understand the post title. A mortgage debt isn't the same as credit card debt. My parent's just sold my grandparents house and made a good amount of money. Not something you can do with credit card debt or renting. I'd like to do the same for my children.

 

[Skellingtonj]

Gee, why would I care how any of you define your personal debt/lack of debt status? And why would I care whether you, a family that is of no relation to me or mine, rent or own a home? And why would you care about how I use the term "debt' for myself or whether I rent or buy?

I think it is because somehow other people's choices threaten our own comfort with our choice. Or somehow we feel that we have to come out "better than" those who have debt, have a mortgage, do not have money in the bank to pay it off anytime we want, will not have a house at the end of time to bequeath to children, are "throwing money in the toilet," or will not have $2 million in the bank,.....whatever! Man, stop the judging.

Let's give the benefit of the doubt here to people who make different life and financial decisions than we do. So many variables we can never know.
And it can come across as know-it-all, from either side of the fence, or "better than." That is like the Budget Board ethos of many years ago. Most of us here now don't care for that sort of thing.

Here, here. It’s just debt. I’m not beating up kids on the street or mugging old ladies. I stay off this board because I see the judgement. Live and let live

 

[BLAZEY]

There’s risk in any investment, and that risk is concentrated due to the nature of the investment. But nationwide, single family homes have appreciated at a rate of over 6% annually over the past 50 years. Interest covers the risk. The vast majority of people come out ahead.

I don't consider our house a debt as, It's a living expense and an investment. Our home will be paid off before DD9 graduates high school. Do you consider rent a debt? I couldn't afford to rent in my city. A small apartment would be more than double my mortgage payment and it doesn't end as rent is NEVER paid off. I will have a paid off house in less than 10 years time.

 

[ClapYourHands]

We could pay off our mortgage any time. We don't because I'd rather have that money invested. As long as the interest percentage on our mortgage is lower than percentage earned on our investments, we come out ahead having a mortgage.

I'm not interested in lowering my net profit just to fill someone else's definition of what "debt free" is. My assets are greater than my liabilities, and I'm happy with that.

 

[DLgal]

We could pay off our mortgage any time. We don't because I'd rather have that money invested. As long as the interest percentage on our mortgage is lower than percentage earned on our investments, we come out ahead having a mortgage.

I'm not interested in lowering my net profit just to fill someone else's definition of what "debt free" is. My assets are greater than my liabilities, and I'm happy with that.

That's very smart of you. I'm not really as interested in being debt free as having a positive net worth that increases every month.

 

[DLgal]

I don't consider our house a debt as, It's a living expense and an investment. Our home will be paid off before DD9 graduates high school. Do you consider rent a debt? I couldn't afford to rent in my city. A small apartment would be more than double my mortgage payment and it doesn't end as rent is NEVER paid off. I will have a paid off house in less than 10 years time.

As long as your bank owns your house, it is a debt whether you call it that or not. Once you pay it off, it's yours. And it will only pay you back as an investment if you sell it. But THEN you still need somewhere else to live, right?

I don't really consider my rent as a debt. I didn't borrow any money from anyone to pay it and I don't owe any outstanding amount. If I break my lease, CA laws are pretty much on the side of the tenant in these circumstances...at most I might be liable for paying until the landlord finds a new tenant, but I would still need somewhere to live. I consider rent the same way I consider grocery expenses and utilities. They will never end either.

 

[TwoMisfits]

As long as your bank owns your house, it is a debt whether you call it that or not. Once you pay it off, it's yours. And it will only pay you back as an investment if you sell it. But THEN you still need somewhere else to live, right?

I don't really consider my rent as a debt. I didn't borrow any money from anyone to pay it and I don't owe any outstanding amount. If I break my lease, CA laws are pretty much on the side of the tenant in these circumstances...at most I might be liable for paying until the landlord finds a new tenant, but I would still need somewhere to live. I consider rent the same way I consider grocery expenses and utilities. They will never end either.

I think a lot of folks who have posted consider a bought house starting to pay them back the 1st month after payoff, when their bill becomes just taxes on the house. The likely 5 digit "savings from rent/mortgage expenses" per year from that point forward are part of the payoff for them.

Now, it could be said that a lot of folks will probably spend that "savings after payoff" fixing up the house the 1st few years...but eventually, they will see the savings (and they probably consider the reno both a quality of living and an investment item)...

For example, if someone pays off their house at 50 and plans no further moves, they have roughly 30-35 years to enjoy the savings even if they never sell (according to average life expectancy). Will they spend money updating the house and making it livable while they age? Sure. But those costs probably will be about 5-10 years of their former mortgage costs, still giving them 20-30 years of 5 digit savings...that can add up.

Now, houses can become worthless - ask a lot of folks in Detroit what their houses back from the 50's/60s might be worth today. So, housing decisions should also be made based on more factors than possible future savings and sales...

 

[BLAZEY]

As long as your bank owns your house, it is a debt whether you call it that or not. Once you pay it off, it's yours. And it will only pay you back as an investment if you sell it. But THEN you still need somewhere else to live, right?

I don't really consider my rent as a debt. I didn't borrow any money from anyone to pay it and I don't owe any outstanding amount. If I break my lease, CA laws are pretty much on the side of the tenant in these circumstances...at most I might be liable for paying until the landlord finds a new tenant, but I would still need somewhere to live. I consider rent the same way I consider grocery expenses and utilities. They will never end either.

If you don't consider your rent as a debt then those who have a mortgage can have the same line of considering it a living expense. It (rent or mortgage) would be paid regardless of who own the building as you need a place to live so it's a living expense. The bank may own 25% of my home but the landlord owns 100% of yours. My mortgage is no more a debt than your monthly rent. In less than 10 years my mortgage will end, and I won't have that payment. Will you still be paying rent? I could easily pay off my mortgage now, but my money earns more in investments than I would save by paying off the mortgage. To pay it off would be stupid and I would lose a 8% rate of return (difference between the rate of growth of my investments ans the rate of interest I pay on my mortgage).

 

[Dakota731]

Can you imagine the power of compounding interest over 50 years when you put in a few hundred dollars a month into an investment?

I sure can! We pay $1000 a month for our mortgage on a four bedroom house when renting a two bedroom in a crappy neighborhood would cost $1500 a month, so not only do we have a nice yard and a great school district, but we invest the $500 a month we save (plus a lot more) in a 401k. We will have the house paid off in ten years and will live rent free the rest of our lives (other than $350 a month taxes) plus have a nice inheritance of a house for our kids. The only reason, in my opinion, that it’s not smart to buy rather than rent is if you have to move frequently.

 

[BLAZEY]

Can you imagine the power of compounding interest over 50 years when you put in a few hundred dollars a month into an investment? We save a lot of money by renting rather than buying in our high COL area...money we have invested over the past 18 years that we plan to keep investing for the next 30, while we rent. I guarantee you we will not have "nothing to show for it." We will have had a roof over our heads all our lives plus about $2M in fun money, give or take a bit. We're already well on our way there.

Yes That's why we bought rather than rent. Our mortgage is less than the cost to rent the difference is invested. The money I make on my investments is way more than I would save by paying it off.

 

[BLAZEY]

I sure can! We pay $1000 a month for our mortgage on a four bedroom house when renting a two bedroom in a crappy neighborhood would cost $1500 a month, so not only do we have a nice yard and a great school district, but we invest the $500 a month we save (plus a lot more) in a 401k. We will have the house paid off in ten years and will live rent free the rest of our lives (other than $350 a month taxes) plus have a nice inheritance of a house for our kids. The only reason, in my opinion, that it’s not smart to buy rather than rent is if you have to move frequently.

Same here. Renting is way more expensive than buying in the city I live in. We pay $840/ month ( $420 x 2 payments a month). We have a 2300 sq foot house and a nice size yard. 3 bed 3 bath. Privacy. DH lived in apartments and hated hearing the neighbours through the walls. A 2 bedroom apartment runs about $1800/ month plus utilities here. Renting ISN'T always cheaper.

 

[2China2009]

I am Debt Free with NO Mortgage. I own my home.
If owning allow for "Murphy" to visit and regular home maintenance costs.

JMHO (Just My Honest Opinion),, I need to state that I am a member of the Budget Board Debt Dumpers 2018 and debt can occur at anytime of your life and preparing for it is important. I restarted at age 40 without a penny and three teens to support.

When my eventual retirement comes about I will have less income than when I was working, even with savings ,,work pension and government pensions therefore I felt it best to not have a mortgage payment.

Whether renting or mortgage,,, either way you need a strong financial plan.I can't emphasize how important this is for women.
If renting allow for cost of living /inflation costs and availability.
Far too many people have no *plan* at all.

Our next generation unfortunately face a lot of challenges in the rising costs of housing,,many just can not afford to buy in and that spells bad news for current owners (equity) and for communities/government who soon may have to help with the cost of housing for seniors.
Every report I have read states that the amount of seniors needing housing accommodation assistance in the near future is going to be astronomical.
So either way PLAN.
Hugs Mel

https://www.cnbc.com/2018/05/15/how-much-americans-have-saved-for-retirement.html
https://www.bnnbloomberg.ca/32-of-canadians-are-nearing-retirement-without-any-savings-poll-1.991680
https://business.financialpost.com/...ings-is-756000-according-to-poll-of-canadians
https://www.cnbc.com/2018/05/11/how-many-americans-have-no-retirement-savings.html

Old article but really had me thinking when I found out my grandmother's monthly room at a retirement home-with 1 meal a day was costing $5,500 a month.
https://seniorhousingnews.com/2015/04/27/why-senior-living-must-change-dramatically-by-2050/

I could not agree more with you. As a single mom of 2 my largest bill every month is my mortgage. I am hoping to pay an extra 2 mortgage payments a year and have my house paid off in 5 years at 52. Other than that I have no other debt. I live in the midwest and our housing prices are dirt cheap compared to the coasts and major cities. I paid $99,000 20 years ago before I got priced out of the market. But I knew this was my forever home and was going to die here. Knowing this It has made a comfortable lifestyle for us.

 

[QueenIsabella]

I am Debt Free with NO Mortgage. I own my home.
If owning allow for "Murphy" to visit and regular home maintenance costs.

JMHO (Just My Honest Opinion),, I need to state that I am a member of the Budget Board Debt Dumpers 2018 and debt can occur at anytime of your life and preparing for it is important. I restarted at age 40 without a penny and three teens to support.

When my eventual retirement comes about I will have less income than when I was working, even with savings ,,work pension and government pensions therefore I felt it best to not have a mortgage payment.

Whether renting or mortgage,,, either way you need a strong financial plan.I can't emphasize how important this is for women.
If renting allow for cost of living /inflation costs and availability.
Far too many people have no *plan* at all.

Our next generation unfortunately face a lot of challenges in the rising costs of housing,,many just can not afford to buy in and that spells bad news for current owners (equity) and for communities/government who soon may have to help with the cost of housing for seniors.
Every report I have read states that the amount of seniors needing housing accommodation assistance in the near future is going to be astronomical.
So either way PLAN.
Hugs Mel

https://www.cnbc.com/2018/05/15/how-much-americans-have-saved-for-retirement.html
https://www.bnnbloomberg.ca/32-of-canadians-are-nearing-retirement-without-any-savings-poll-1.991680
https://business.financialpost.com/...ings-is-756000-according-to-poll-of-canadians
https://www.cnbc.com/2018/05/11/how-many-americans-have-no-retirement-savings.html

Old article but really had me thinking when I found out my grandmother's monthly room at a retirement home-with 1 meal a day was costing $5,500 a month.
https://seniorhousingnews.com/2015/04/27/why-senior-living-must-change-dramatically-by-2050/

My suspicion on the bolded is that seniors are going to have to re-think their living arrangements, if they haven't planned for the future. IMHO, shared housing is going to become popular--either seniors sharing a larger house, or a senior having a younger person move in and provide some maintenance/care in exchange for all or part of the rent.

 

[Nebraska_Disney]

Ok true,,
BUT from my perspective and many of my female and male friends:
Women sometimes spend more time at home caring for children and miss out on some valuable years of pension contributions--I did
Women tend to live longer than men,,and need to adjust their financial contributions.
Women tend to put their spouse and children's needs before themselves--I did. Many are supporting aging parents.
Women tend to start late to save for retirement--I did
Women's wages --there is still a gender pay gap in many occupations.
JMHO
Regards
Mel

I guess my wife and I think of it as “our” plan. Everything we do is for “us” as 22 years into marriage, we have developed this plan since we said “I do”. Neither of us are going to take care of parents. They are on their own, just like we have been on our own since we were 18. We have a nice college fund for our 2 kids and since I am a faculty member at a state University, that covers 50% of their tuition too. Our plan is on track and it is for the benefit of both of us. Since we pay ourselves first every month, we will reach our goals. Regardless of gender, every single person or couple should have a plan and don’t get derailed along the way.

 

[Mackenzie Click-Mickelson]

As long as your bank owns your house, it is a debt whether you call it that or not. Once you pay it off, it's yours. And it will only pay you back as an investment if you sell it. But THEN you still need somewhere else to live, right?

I don't really consider my rent as a debt. I didn't borrow any money from anyone to pay it and I don't owe any outstanding amount. If I break my lease, CA laws are pretty much on the side of the tenant in these circumstances...at most I might be liable for paying until the landlord finds a new tenant, but I would still need somewhere to live. I consider rent the same way I consider grocery expenses and utilities. They will never end either.

As long as you rent you don't have the ultimate control of the place you are staying at. An apartment complex can be sold, a home can be sold or no longer able to be rented, etc.

If it's a house the landlord owns the home and thus can opt to stop leasing it at the end of your lease. We signed an 18 month lease on a home for people who lived several hours away. We knew a little more than halfway through that they were thinking about putting their house back on the market (as they tried to sell it too soon after the Recessioin) but they would let us know if they were really going to put it on the market so the place could have pictures, etc though they wouldn't be able to move in til the end of our lease. As it were we were building our house anyways during that time period and we kept our landlords up to date on the anticipated completion date. Well instead of selling the house the landlords were actually moving back into the area and wanted their house back. We actually extended our lease by 1 week per an agreement with the landlords as our home was completed just a few days after what would have been our end of our 18 month lease. Regardless of us having our house built or not we would not have been able to stay in that house past our lease as they wanted the house back thus we would have been on the move trying to find another place to stay.

Now rent is debt too. You can't just not pay your rent unless it was agreed upon. If you own past rent it can affect your ability to get housing elsewhere. Rent payments can be reported (as a general not state specific) to your credit report and all 3 companies use that if it's reported to them, it's just it's very rare for landlords to do that.

And for most people there's a stricter payment schedule-for instance the places I lived rent was due the 1st-3rd for apartment complexes but the rental house was the 1st always unless it was on a holiday or Sunday in which she would accept it a day later. I have the 1st-15th to pay my mortgage and would hazard that's the case for most (though I'm guessing on that part). Now we have the monies to pay on the first (meaning we're not waiting on a paycheck to come in) but it's nice that we have a bit of time.

Most people's viewpoint on a mortgage is because there's light at the end of the tunnel. I have no beef with those who want to rent forever, my best friend is one of them, but she doesn't quite have your opinon on it. She doesn't want the maintenance of owning a home and prefers to rent from low-maintenance places.

 

[LYSE]

The thing is mortgage debt isn't necessarily a bad thing..sometimes it's not worth paying off and equity is a very powerful tool.

 

[Sagginit]

Mortgage as debt is just different than most other debt. Cars will depreciate. If you can't pay your student loans you can't hock your degree at a pawn shop. Credit card debit is often a chunk of interest and was spent on items that again can't be sold for value. So while a mortgage is debt it is a debt on a giant asset that can be liquidated and depending on your market you may break even or make money off of without paying that debt off in full first.

We just bought our first home with a 36% down payment and a 15 year mortgage. We were paying below market value for rent so it was way less, but the house is also much bigger which is another reason the numbers wouldn't add up for the rent vs owning argument. So for us living 15 miles outside NYC to rent the same square footage our mortgage is in fact less than our rent would be. Even with a 15 year mortgage we hope to pay it off in 10 years, we are being cautious on that as we are growing our family and a one income family until the children go to school full time.

Mortgages can be a bad debt if you didn't research your market or couldn't really afford the home in the first place, but if you make the right decisions it is the best debt you could possibly have. I mean up until 3 months ago we had a chunk of cash in the bank and were debt free, but I don't think as far as most people would be concerned we aren't less financially savvy because we took on a mortgage, which people would think less of us if we did suddenly have a huge chunk of credit card debt.

 

[chicagodisneyfan]

I do not WANT to pay off my mortgage. It is stupid for me to do so. My mortgage has a low interest rate, has tax advantages, and I get way greater returns from my investments. I would in essence lose money should I pay off my mortgage.