Originally Posted by
TransWorld
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.
The difference between a house and other debt is you have to live somewhere and pay for that abode. You can pay it off and build personal equity or rent and build equity for someone else. The difference in cost is not that much for like properties. In fact with today’s interest rates your monthly payment in many parts of the country is less to own than rent.
I have owned my entire airline career. Property appreciation more than covered my payments. I will retire with a brand new retirement home and a vacation home plus about 400,000 in equity left over after just selling my prior home. Had I rented I would not have two paid in full homes and 400,000 extra in the bank.