Damned if you do, damned if you don’t
Just so you know, when you’re talking about your money, nothing you do is right.
On my post on how we paid for our $600,000 condo in cash to avoid a mortgage, I got a (valid) comment the other day about how silly (he didn’t say silly, but he meant it) it was to tie up $700,000 of our assets ($350,000 of my money as my partner ponied up his half), when we could have easily scored a mortgage at today’s low rates (4.69% in my case), and invested the rest of the money instead.
Paying all-cash for a condo, it seems, was for this commenter, an unrealistic wealth-hindering move.
Maybe for some of you too! Who knows, at least he said something about it…!!
I’m apparently illogical, and I am an extremist for pushing my extremist view of all-cash for a place, not to mention being a terrible role model for young people trying to build wealth.
Okay, maybe I concede to being a bit extremist for this all-cash view, but.. it is my view after all.
You can refuse to do what I did you know, it is called “free will”.
(I am pretty sure I also told people in that post that vegetables are the devil and we should all take up smoking to lose weight.)
(Nooooo. I’m just teasing. 🙂 )
I’m not quite sure what to say about that last part of being a terrible role model, because I myself, am a “young person” who is “building wealth”, and I made this decision on my own, so am I excluded from this group or just a pariah now?
I thought being debt-free was being a good role model… : \
Just as how research has proven that eating tomatoes can cause cancer, but suddenly don’t cause cancer any more, because newer studies have shown eating eggs now cause cancer, you are really damned if you do and damned if you don’t these days..
Especially in what you do with your money.
I am resigned to that now.
IF I HAD MIRED MYSELF IN DEBT….
50% of my assets are in my house
It was an excellent point that I may have been biting off a bit more than I could chew as most of my assets are now in my house, about 50% I’d say which is a pretty good ratio.
I have the other half in retirement funds, and cash.
My partner is in the same boat, with more actually.
I would say it is not a terrible ratio, but 10% in my house would have been a better ratio of course, with 90% being liquid assets… but that’s why I have the next 30 years to work and build up the rest of that money without worrying about a mortgage and this debt I owe.
I’m young! I have time!
I am stupid either way, really
If I had taken a mortgage at 4.69% for 10 years, then I’d probably be called stupid by some other reader (not you, of course) for going back into debt, paying a bank for money I don’t need to borrow, not to mention being on the hook to pay just about the same amount I paid in rent ($1000, perhaps more!!).
How dumb would that be, to go from a sweet renting situation of $1000 a month, to having to fork out an additional $1000 just to pay a bank to borrow money I don’t need, so I can invest my capital on the stock market?
I’d just have kept renting.
My stock investments have been rocky as of late
I have had that capital invested in the stock market, and it has done well, but in recent years, it has kind of gone up and down. My bet on oil has not paid off thus far. I’m gambling with that money, really.
I am still waiting, but who knows WHEN oil will go back up?
Peace of mind is worth that $6000
In all seriousness, with my sort of loosey-goosey situation, I don’t have a steady income, and paying a set, fixed mortgage amount every 2 weeks, also gives me the creeps.
I hate not paying on time, and I do feel rather antsy at owing someone money, especially after having cleared $60,000 in 18 months with questionable forays into frugality such as stapling my too-big pants to avoid buying new ones, or refusing to go out & have fun because I was punishing myself & couldn’t spend a single penny.
So sure, in the “long-run” (estimated time? 10 years..) I could make an average of let’s say 7% on the stock market with that money invested, minus the MER fees I’d pay, so let’s call it 1% as profit on my $300,000 (let’s assume I put down $50,000 as a down payment).
Maybe 2% after all is said and done on $300,000.
A potential $6000 is a pretty sweet chunk of change but it is that versus… peace of mind, paying only condo fees & taxes, owning a place outright, and not giving those greedy banks any more of my money.
Or worse, I lose that money I have invested (it has happened before, you know), and I don’t even have a potential $6000 and I wish I had put that money into something else instead.
Everyone wants to be mortgage-free, right?
I had the money, so I did it.
If people had lots of cash today, they’d clear their mortgage and debts first.
So jumping ahead of the line, seems to have been the most logical choice for me and my money.
It was that, or borrow money & pay interest (no matter how low) would mean I am still paying for something I didn’t need.
It is probably a more PF-approved move if I had taken a mortgage, slogged to pay it off for 10 years and then just suddenly dumped cash on the whole thing and become “debt-free” and “mortgage-free”, and have a nice big party, probably some posts about how I did it and maybe a giveaway to celebrate the whole event.
We can talk about how it was or wasn’t a wealth-building move, and analyze it to death about how it is or isn’t a good thing for young people to learn as a wealth-building move, but at the end of the day, I didn’t put my money on a bonfire & torch it, now did I?
It’s still in a saleable asset, and having received my new house assessment the other day, I am actually a little peeved that it has gone up (it means higher taxes).
And that’s that.