Hello fellow traders Just wanted to start a thread on what traders think about debt. I have no debt other than my mortgage payment. Each month I have been increasing my mortgage payment by $100 so that I eventually pay this off. I realize I could use the funds to try to earn a better return than the 5.125% interest rate I'm paying. But I'm doing this for 2 main reasons. - It is a great feeling to know I will be totally debt free in a few years - Although I follow risk management and position sizing you just never know what the future will bring and it's nice knowing if I ever blew up my living expenses will be minimal. It's amazing how little one can survive on if you have no debt. Any opinions? Kev
Sorry to inform you but you are actually in debt up to your eyeballs courtesy of your elected officials in Government. Don't worry though they are not even trying to pay down their principal obligations, hell they just add a trillion or two to the amount the last week. The interest payments alone will require an increase in taxation very soon. The next president is going become very popular in his first and only term when the magnitude of the problem is revealed. Massive tax increases and Government spending cuts are coming.
Dear Kev: I can't begin to tell you how important it is to be debt free. The very first chapter in my book is titled Fighting Financial Failure, which leads right into Budgets. You and I could talk for hours about budgeting and the many benefits of being debt free. Here are some of my rules. If I can't pay cash for my car then I have not earned the right to have it. All credit cards have to be paid in full at the end of each month. There are no exceptions... ever! I use spending caps to control the wife's spending for such items as Christmas and birthdays. You can never be rich if you spend all your money. Oh, you are very smart for wanting to be debt free! Dan Clemons, author Manage Your Own Money
Agreed, but there is not much I am willing to do about it other than vote and legally minimize the amount of taxes I pay. The only debt I can control is my own.
Kev, Good idea budgeting and getting rid of debt. Did something similar alla David Ramsey method. Only thing I debate about with myself is whether to pay off mortgage. Inflation is kicking the crap out of the numbers and no doubt will accelerate going forward. I understand the pleasure of knowing you don't owe anybody anything anymore, but I have a hard time getting over the fact that I will be paying pennies on today's dollar by the time it's all over. Keeping a tight budget is the way to go. Paying off credit cards every month flips the equation to them paying you to use them. All good things. JIM
We sure as Hell didn't VOTE for that... the Gummint just "charged it to us tax payers" without our consent. (The $TRILLIONS charged to us by Bush for his personal "Iraq War"...? We didn't vote for THAT either!!) I've always been concerned about Federal Budget Deficits... and in 1987, when the "Grammm, Rudman, Hollings" bill...., requiring and end to annual budget deficit spending... was passed and signed into law, I celebrated. However... the next year it was deemed "too inconvenient" (or maybe just NOT FUN), and was chucked into the trash. Imagine that... a Federal Law. Simply ignored... wasn't even repealed. THAT'S the kind of horse shit leadership that makes up the US Gummint!
Hi Jim: Would you volunteer to go to a lake in a state park and toss $1,000 in the lake just for the fun of it? I sure hope not but that is what interest is on a mortgage. You drive in one side with the money and out the other side with a small tax deduction. I have a Path to Prosperity in my book called The Smart Home Mortgage where 1/3 more on the mortgage paying off the 30-year loan 17 years. Invest that mortgage payment for 13 years and you will have a home free and clear and a life income greater than the amount of mortgage payment. Dan Clemons, author Manage Your Own Money
Not true. The "time value of money" of either paying the mortgage for the full term or paying extra to retire the mortgage earlier is exactly the same. If you can earn more on your money than the mortgage rate, you should NOT pay the mortgage off early.... personal feelings of comfort aside.