6 ms·

> why do I want to pay off my house? Because its the poor-man's version of F-You money. It instantly and dramatically lowers the monthly takings to have to ma

> why do I want to pay off my house? Because its the poor-man's version of F-You money. It instantly and dramatically lowers the monthly takings to have to make to keep your household going, and noticeably shifts the balance of power in all financial negotiations in your favour. Try it. Trust me.

tehjoker 5y ago
It's kinda crazy that people think you can only get this by being rich. Why don't we just eliminate the market in housing and make it super cheap to live? We have more houses than people.
- throwaway210222 5y ago
  > Why don't we just eliminate the market in housing … we have more houses than people/ Sure tavaresh, I'd like a mine to be pied á terre in the Hamptons. You know, since there's no shortage. Please try debug your suggestions first.
- vikingerik 5y ago
  Housing exists at a particular place, so there is always scarcity of location. More people would want to live across the street from (say) Disneyland than can physically fit, so a market will exist no matter what. If you mean cheap or free housing should exist as a public works project, that is possible... and what you get without a profit motive is Soviet style apartment cinderblocks.
  - tehjoker 5y ago
    Soviet apartments were constrained by resources (the economy was balancing guns and butter for a long time). I think we can do better. Also worth mentioning, much of our housing stock, especially rentals, are totally falling apart and unmaintained. Soviet housing was of higher quality to at least some of our existing stock -- especially in poor areas.
bittercynic 5y ago
Not only that, but it is an unusually safe place to put money. If you have to go bankrupt, most other assets can be taken away from you, but the house you live in is usually safe.
yupper32 5y ago
I can't parse this comment. Shifts in power? Lowers the monthly takings? What? If you expect to make 6-8% a year in the stock market and pay 2% in interest on a loan, you'd miss out on a lot of money paying it off. You're essentially making another 4-6% a year on the amount of the loan. If that's a million dollar loan, that's $40-60k a year. There are reasons not to do this, like if your interest rate was higher, or you want to be safer (it might not be 6-8% a year! You might even lose it all for some reason!), but I have no idea what your comment is saying.
- theandrewbailey 5y ago
  You're focusing all on the math, but nothing on what it means to the person. Three questions: 1. How much are your monthly expenses? 2. How much of that is your mortgage payment? 3. If you had no payment, what would you do with that money? Let's take an example: 1. Monthly expenses are $10,000 a month. 2. Mortgage is $4,000 a month. 3. If you had an extra $4,000 a month, you could work part time and volunteer more at that coding camp. 3. Because you have $80,000 saved, you could take a 6 month road trip, and still have time to find another job. 3. You could use that for one of the 15 side projects you've been thinking of. 3. You could go on a fancy vacation every year with your family. 3. All the while, no bank can evict you from your house, because you fully own it. Are any of those things really worth foregoing extra 4-6% rate of return? For many people, they are. All it takes is no payments.
  - yupper32 5y ago
    ...what are you talking about? You don't just "have an extra $4,000 a month" if you pay off your house. You lose all the money that's currently earning you 4-6%. $4k/mon is probably a million dollar loan or so, right? Well 4-6% of a million dollars is $40,000-$60,000 per year. $3,333 - $5,000 per month. You can just fund everything you said using the interest gained on the million dollars, while at the same time putting money towards paying off the house. Of course, we're talking about a 2% rate. If it was 4+% then it might not be worth the risk.
sumtechguy 5y ago
It changed my life. I went from debt to significant savings/investments in under 5 years when I did it. Think of whatever your rent/mortgage is per month. Think of getting that sort of raise. How would it change your life? Money/debt became a tool instead of a burden for me personally.
- throwaway210222 5y ago
  Preach brother. Its the psychological value, not some optimisation on a spreadsheet.
  - sumtechguy 5y ago
    Even 'on the spreadsheet' it is borderline a wash. There is a very slight advantage to not paying it off depending on which state you live in and what their tax rates are. Thats if you can get the hypothetical 2% loan and 8% ROI per year. Many people forget taxes in that mix. If you are comfortable with that go for it! Seriously. But paying it off simplified so many things in my life. I am now getting to a point where I could think about helping others with it. Which in and of itself is something you need to put thought into. Also if you have a huge sum of cash you want 'safe bets' and 'gamble bets' and 'medium bets'. Buying property is usually in the 'safe bet' area. 'safe bets' you can realistically borrow against if something goes wrong with the other two catagories.

tehjoker 5y ago

It's kinda crazy that people think you can only get this by being rich. Why don't we just eliminate the market in housing and make it super cheap to live? We have more houses than people.

throwaway210222 5y ago
> Why don't we just eliminate the market in housing … we have more houses than people/ Sure tavaresh, I'd like a mine to be pied á terre in the Hamptons. You know, since there's no shortage. Please try debug your suggestions first.
vikingerik 5y ago
Housing exists at a particular place, so there is always scarcity of location. More people would want to live across the street from (say) Disneyland than can physically fit, so a market will exist no matter what. If you mean cheap or free housing should exist as a public works project, that is possible... and what you get without a profit motive is Soviet style apartment cinderblocks.
- tehjoker 5y ago
  Soviet apartments were constrained by resources (the economy was balancing guns and butter for a long time). I think we can do better. Also worth mentioning, much of our housing stock, especially rentals, are totally falling apart and unmaintained. Soviet housing was of higher quality to at least some of our existing stock -- especially in poor areas.

bittercynic 5y ago

Not only that, but it is an unusually safe place to put money. If you have to go bankrupt, most other assets can be taken away from you, but the house you live in is usually safe.

yupper32 5y ago

I can't parse this comment. Shifts in power? Lowers the monthly takings? What? If you expect to make 6-8% a year in the stock market and pay 2% in interest on a loan, you'd miss out on a lot of money paying it off. You're essentially making another 4-6% a year on the amount of the loan. If that's a million dollar loan, that's $40-60k a year. There are reasons not to do this, like if your interest rate was higher, or you want to be safer (it might not be 6-8% a year! You might even lose it all for some reason!), but I have no idea what your comment is saying.

theandrewbailey 5y ago
You're focusing all on the math, but nothing on what it means to the person. Three questions: 1. How much are your monthly expenses? 2. How much of that is your mortgage payment? 3. If you had no payment, what would you do with that money? Let's take an example: 1. Monthly expenses are $10,000 a month. 2. Mortgage is $4,000 a month. 3. If you had an extra $4,000 a month, you could work part time and volunteer more at that coding camp. 3. Because you have $80,000 saved, you could take a 6 month road trip, and still have time to find another job. 3. You could use that for one of the 15 side projects you've been thinking of. 3. You could go on a fancy vacation every year with your family. 3. All the while, no bank can evict you from your house, because you fully own it. Are any of those things really worth foregoing extra 4-6% rate of return? For many people, they are. All it takes is no payments.
- yupper32 5y ago
  ...what are you talking about? You don't just "have an extra $4,000 a month" if you pay off your house. You lose all the money that's currently earning you 4-6%. $4k/mon is probably a million dollar loan or so, right? Well 4-6% of a million dollars is $40,000-$60,000 per year. $3,333 - $5,000 per month. You can just fund everything you said using the interest gained on the million dollars, while at the same time putting money towards paying off the house. Of course, we're talking about a 2% rate. If it was 4+% then it might not be worth the risk.

sumtechguy 5y ago

It changed my life. I went from debt to significant savings/investments in under 5 years when I did it. Think of whatever your rent/mortgage is per month. Think of getting that sort of raise. How would it change your life? Money/debt became a tool instead of a burden for me personally.

throwaway210222 5y ago
Preach brother. Its the psychological value, not some optimisation on a spreadsheet.
- sumtechguy 5y ago
  Even 'on the spreadsheet' it is borderline a wash. There is a very slight advantage to not paying it off depending on which state you live in and what their tax rates are. Thats if you can get the hypothetical 2% loan and 8% ROI per year. Many people forget taxes in that mix. If you are comfortable with that go for it! Seriously. But paying it off simplified so many things in my life. I am now getting to a point where I could think about helping others with it. Which in and of itself is something you need to put thought into. Also if you have a huge sum of cash you want 'safe bets' and 'gamble bets' and 'medium bets'. Buying property is usually in the 'safe bet' area. 'safe bets' you can realistically borrow against if something goes wrong with the other two catagories.