Thread: pilot mortgages
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Old 03-30-2021, 07:30 AM   #192  
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Originally Posted by 123494 View Post
I get that argument. Say if the house is $300k. I can put the 20% down and throw the other money into a Total Market ETF or something similar. If I pay in cash, I'd lose out on that potential compounding returns.

But the other side of me loves the debt-free philosophy on life (e.g., Dave Ramsey). I like not having payments to take care of each month.

Am I thinking of this correctly?
Yes, Dave Ramsey has a very good point to get out of 18%+ high interest credit card debt (and even car debt, a depreciating asset). A house, when interest rates are this low (and an appreciating asset), is a different animal. The use of that money at say, 8% rate of return in investments is better than the 2.5% rate of return in paying down your home loan.

I look at it as you controlling your debt, and wisely using debt. Not debt controlling you.

As far as the emotional feelings, I understand the emotionally driven good feeling of owing nothing to anyone.

But consider two situations.

Someone with enough for just a down payment on a house could stay debt free by living in an apartment until they can pay cash for a house several decades down the road. Not a wise business decision.

A business wanting to expand, but having to go into debt to do it, and getting a profit from it, would wisely and prudently use debt.

Hope this provides some logical contrasting perspective on the emotional side of the brain.
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