Sorry I missed it, I’ll go back and read up.

 

Sure, so you agree that, for any given investor, some balance exists for risk tolerance. Surely you would never borrow money on a large scale at one rate just to throw it into a bond at a lower rate, just to keep it "accessible."

Everybody's risk tolerance is different. I'd put extra towards my 6% mortgage before I'd ever put it into 4% bond, as part of a balanced strategy that suits me, for example. Max 401k into ETF types, a nice cherry on top to each mortgage payment, and everything leftover into a brokerage/crypto which is where I get to play and get risky. It works for me, and I lose zero sleep over wishing I paid less into the mortgage and more into my risky brokerage/crypto plays.

"Balanced" is not one-sized-fits-all, nor is it all-or nothing.

 

This is someone who actually read the book "Die with Zero" and follows the concepts instead of overreacting to the title.

USFR, SGOV or a high yield savings account are all good cash options. Over the last two decades in two different houses and multiple investment properties, I've made only the minimum mortgage payment and invested excess cash. That cash pile has created a stream of dividends and rental income that largely make an "emergency fund" unnecessary. I've even done a couple cash out refis to access capital and lower my interest rates. Over two decades, your approach of paying off in 3.5 years and investing heavily will yield similar results.

HVAC, medical bills, estimated tax payments and property tax payments go on the CC for the float and cash back. Robinhood Gold is 3% which more than offsets the CC fee that the IRS charges. I also use the CC spend to play the CC sign up bonus game.

This is so true. The other part people miss is that you don't have to sell, you can get a SBLOC, PAL or execute a short box trade on SPX to access the capital. In a down market it saves you from taking the L and in an up market you access capital without paying taxes. Liquidity matters. I've borrowed against securities instead of selling to access cash multiple times in the last decade.

 

This post, especially the bolded part is likely where some of the paid off mortgage opinions differ. Old guys like me (GenX) are more likely to be sitting on sub 3% mortgages and can get a better return on cash than paying down a mortgage. Millennials and GenZ are more likely to have newer mortgages at 6% where the math is different. A sub 3 mortgage offers a 7% spread to the S&P historical returns. A 6% mortgage only offers a 4% spread. Said differently, my "risk free rate of return" is 2.25% by paying off a mortgage. Verdell gets a 6% "risk free rate of return".


I'd been a no car payment guy for years, but in 2022 money was free (1.9%) I hate having a stupid car payment, but he!! if I'm taking money out of a money market account to pay it off. I'm just letting it ride for another year or two. Yes, I tried the all cash option, but the dealership makes money originating loans. My latest car purchase, I got a better deal by taking a 6% car loan, then paid it off a week later with cash. That was my 6% risk free rate...

 

You can balance it however you want. I've gone full risky with crypto, I've played options, you name it.

My blend has been yielding around 10% per year for the last 10 years. I'd do that every day and twice on Sunday over paying extra on the house.

 

100%

As a Gen X myself, I've lived on both sides of this financial conundrum, as I'm sure others have. 10 years of a 2.75% mortgage that I never tried to aggressively pay down. But then life happened and a move was required. Housing prices rose, and I was sitting on a sh*ton of equity. So I had a choice of things to do with that equity when I moved.

I could either invest all that equity on the market (or diversify it) and burden myself with a new giant mortgage on the new house, or slide that equity straight towards the new house and have a similar low mortgage principal to the previous house but at 6%. I chose the latter.

Not saying that my choice was the correct one from a strictly numbers standpoint. It was a difficult decision to make. But I do not regret it, and would likely do it again.

 

That stuff is still around. I got 1.9% last year just because I told them I wouldn't buy the car without it. Initially they told me to pound sand, but eventually they came around lol. Only bought new because of a family member employee discount. I'll take a loan every time at that rate.

 

I also gave you the math in post 125.

You are having to invest 2.25 million dollars to make 7.95 million, instead of investing 1 million to make 9.35.

 

Question in a slightly different but similar vein: Am I correct in saying that in the 401(k) loan option, we are only able to loan out $75k at a time? Do we as Delta pilots have access to other credit or debt instruments that don't involve opening a new account?

 

1. Yes Ramsey is a good starting point, and everyone should be familiar with his philosophy. They also give great advice for dealing with family and business inter-personal problems related to money.

2. No Ramsey is not good SOP for most of us established major airline pilots, too simplistic and focused on psychology at the expense of math.

Too much Ramsey is akin to bundles of cash under your mattress.

If you really must, manage some minority of your wealth and income per Ramsey, and live frugal. Then invest and manage the rest of it appropriately. Don't forget to enjoy the later part before it's too late (if you don't, your kids will).

And FFS if your mortgage is less than 3%, don't pay that off early. Only two people ever *actually* own your house, the bank and the government. Paying it off only gets the bank out of the picture, you still have to pay your rent to the tax man forever.