What I did years ago was keep refinancing for a lower interest rate and shorter mortgage term. My payments increased slightly each time I did this, as did my income. I also got a bi-weekly mortgage. In short order, my house was paid off in 9 years. I retired a couple years later and it's REALLY nice to have no debts. I have such low expenses, it puts no pressure on my investing. I trade when I feel like it, not because I have to make $$.
The government knows they can not raise interest rates which is why they are pulling that scam now with banks to have them put their money in interest bearing government CDs to help curb inflation without raising interest rates. Of course this will blow up in the end and just balloon our deficit and create more money and sooner or later, that money will get out into the open and cause hyperinflation which is when you want to have debt as a few ounces of silver might pay off your mortgage in 10 years. The government will hyperinflate before it lets housing drop again. If housing dropped another 30% from here, its the financial crisis all over again, except worse. I am only interested right now in preserving what I have, so a little more than half of my money is in physical silver/gold. Get renters insurance if you go that way as if you a few hundred thousand dollars of gold & silver in your house, you dont want someone to break in and get it all. It should only cost you a little under $500 per year to insure 100k worth of gold & silver which is like 1/2 of 1% (so if your 100k of gold goes up 5 bucks per oz every year, it pays for itself.)
i don't have any(or very little deductions) @ my current tax bracket..cash\liquidity is good,but like i said above-i just can't find anything relatively safe with reasonable rate of return..by reasonable i mean >3%,not 10 or 100%. once again-i have no problem to pay it in full. it's not going to change anything at all in my lifestyle. i actually been in this situation back in 90's in russia and believe that us is heading in same direction..the only questions is "when"..in this scenario both situations are good.(no mortgage,hard asset) -good,and debt is even better. but like i said before-i do not dismiss Japanese scenario..that's why i'm a bit confused here...
100% correct! For the average person the key to financial freedom is not how much money you have, it's how much debt you don't have. Debt free is the way to go.
Inflation in the future sure. But with money velocity at nil we are in a deflationary cycle so be prepared for gold to drop, never mind the fact that USD is rallying hard as we know, not good for gold.
The banks don't need an incentive, it's the law. It's just the way the foreclosure process is prescribed in law. Foreclosure is a long process, and not a sure one. I had a friend, a semi-sleazy Russian, who was into flipping foreclosures about 10 years ago, I tagged along for a while wanting to get into it. Here's how it works in California anyways, and it's pretty much the same everywhere. You take a mortgage to buy your home, you stop paying, and after a while the lender puts your name on a list; notice of pending foreclosure. That list is public info, so watch for the junk mail and phone calls to start pouring in offering a way out. Refi, fast sale, wraparound loans, all this stuff. If you don't get current, the sheriff comes to your house and throws you and your stuff out on the curb. (Seriously, that's a function of the Sheriff, but it hardly ever happens. I heard stories from the old-timers where a protesting homeowner has had to be handcuffed to a tree in the front yard.) Next your deed winds up on the courthouse steps (literally this is where it takes place) in the hand of an auctioneer. He auctions it off, a surprisingly low-key affair, no fast-talking like on TV. The buyer usually gets it for around 20% under market, the rub is that you have to pay right then and there. Cash or certified check. Not the next day, not an hour, or even 15 minutes later. There's not many people who can command a certified check for $300k (that was the ave price in CA for a foreclosure that I saw). The buyer slaps on a coat of paint, mows the yard, puts it on the market, and collects their 20% a month or two later when it sells. This is where the proceeds of the loan are dispersed. If you had $200k outstanding on your 1st mortgage, $100k on a second, and $50k on a third, and the house is auctioned off for $1 total, that's all the holder of the 1st gets. Junior loans get nothing, and the property is completely unencumbered. This is why banks are so afraid of foreclosing on the junk loans in their portfolios. Dump 1000 houses on the auction block all at once and the pool of money available to buy them dries up damn quick. Foreclose, and you might get paid something (if their are any buyers) but that's it. You might have to settle for 50 cents on the dollar. Or 25 cents. Or 1 cent. Hang on to the loan, let the people live there, keep tacking on late fees. Maybe the economy will improve, they get a job, and you can restructure the loan in a few years and get your money back. Better to lose a year or two of interest than a huge chunk of your investment.
See: Reverse Mortgage http://en.wikipedia.org/wiki/Reverse_mortgage Similar things are available for younger folk with lots of home equity.