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Old 12-31-2019, 09:13 AM
  #14  
rickair7777
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Joined APC: Jan 2006
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Originally Posted by loganeich View Post
I paid my house off around 5 years ago, and incredible how much freedom you have to save with no payments. My retirement and daughters college fund are growing very quickly.

Pay your car off as soon as possible, but keep existing emergency fund. Maintain the same lifestyle and roll the savings from your car payment into your mortgage payment as extra. Let’s say your car payment was $400, then that would be an extra $4,800 a year in principal reduction on your mortgage. You can look at an amortization schedule to see how far this shortens you’re mortgage just by doing one year. The reason he says to pay smallest debt first is to snowball those payments towards the larger debt. “Debt snowball.”

I’m not a great source for flying knowledge, but know a good bit about money, taxes, and business. I regret at 42 is that I was not more aggressive in my 20’s. A little more effort back then compounded over 20 years would have been great.
Some commentary on aggressive debt reduction and aggressive retirement savings....

I'm all for that, conservative by nature, and practiced what I preach from a young age (with a few strategic exceptions, career change and dream home).

However...

If something very bad happens in the future, either to you personally or the economy/society generally, your hard earned sacrifices and savings may end up worth far less than you imagined, or even nothing at all.

If push comes to shove you can't eat or wear money in a digital bank account, and investment instruments are only as valuable as other people think they are at the time when you need to cash them in. You can still live in your paid-off house, but you darn well better still have a job so the government can keep getting their property taxes.

Point being don't forget to enjoy life a little along the way. Because there are many folks who are enjoying life TODAY on the fruits of your labor. They are promising to pay you back someday, but that's only going to happen if all of the stars line up right

The wealthiest members of our society, the ones living very high on the hog, are all mortgaged to the hilt. There's a reason for that... they like other people supporting their lifestyle. If it all comes crashing down, they don't want to be the ones left holding the bag.

That's just some philosphy, not "financial advice".



With that said, pilots (more so than white collar) can be subject to catastrophic long-term (permanent) loss of livelihood. So you need to have a Plan B for that contingency. Whatever Plan B is acceptable to you, but you should have one.

That might involve having everything paid off and living modestly so you can keep your lifestyle on LTD, or it could involve a planned downshift of lifestyle. But you want to plan so you're not having to liquidate all of your assets in a fire sale while also dealing with medical issues.
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