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Old 03-29-2021, 04:23 PM   #191  
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Exactly.

You certainly get more than 2.5% (less tax savings) in your investments. If you canít, you need a good financial planner to help educate you.
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?
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Old 03-30-2021, 07:30 AM   #192  
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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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Old 03-30-2021, 05:03 PM   #193  
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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.
Thank you. This gives me something to think about. I'm ready to move somewhere a little more affordable and with better weather.
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