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A non-serious thread about money (1 Viewer)

Wayne Ernst

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10 years ago, I would have easily said that I'd pay off the mortgage. However, today, there are much bigger issues. For example:

1) My real estate assessments have gone up +20% each year for the past 4 years. Granted, this is not a bad position to be in because when it comes time to sell, a good pay-off could potentially exist.

2) Healthcare insurance. For a period of 2 years, I was faced with paying 100% of the healthcare premiums for my family's medical insurance. At the time, coverage for 3 of us was about $550 a month. This was 1/2 the amount of my current mortgage. Fortunately, I'm gainfully employed by an employer that covers a good portion of the premiums once again.

If I came into such money, which could more-than-likely happen in the next few years, I'd consult the opinion of a finacial specialist - or, at least get the opinions on what would be best to do from more than one person.
 

andrew markworthy

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Hmm ... I imagine that if you'd got the money by scamming a drugs cartel and they'd just found out where you lived, the source of the money could be a very important consideration. ;)
 

Scott Merryfield

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I do not understand your logic here, Mark. $200k is $200k, regardless of whether you earned it, "won it", or inherited it. The only difference is how the IRS will treat the money for taxes.

...and I know Andrew was joking, but my assumption is that the money was obtained legally. :)
 

Brad_Harper

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Jul 5, 2001
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I think it all depends on your age and the interest rates at the time. Right now if you are young, interest rates a pretty low for mortgages and I think it would be a poor mathematical decision to pay off a low interest mortgage. I know a lot of people are afraid of the stock market but there really isn't a better place to make your money work for you.

Any decent financial planner can earn you 10% a year plus dividends on the market. Keep adding that to your total and it quickly adds up. Most will make you 20 to 30% some years. Once in a while you can even earn 80% plus in returns. With a lump sum of $200 grand and time on your side, you could become a millionare in a few years. Paying off the mortgage to save a $1000/month payment can't do that near as quickly. Plus the value of your home will go up regardless of whether you have a mortgage or not.

This is why the rich only get richer. They have so much money that even a 10% return a year makes them more money then most of us earn in a year.
Being debt free would certainly be nice, but in this case it doesn't make make a lot of mathematical sense.
 

MarkHastings

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Let me explain it again. :)

Let's say you won $300K - I bet a lot of people would use that money to build a kick ass HT (or something less 'vital' like an arcade room, or a new Motorcyle, or a life sized Darth Vader statue :D, or whatever)...

Now let's say you saved that money (for the past 20-30 years), would you be more inclined (or less) to spend it on the above items? I know I'd be more apt to spend $200K on a Darth Vader statue if that money was 'won', rather than using my life savings (that took me 20 years to save up).


That's all I was getting at. It just seems like some people are more cautious with "earned" money than with "won" money. I've seen people win $100 on a scratch off and blow it on a fancy dinner, where they normally wouldn't spend $100 of their 'earned' money.

That's why I made that disclaimer in this thread. I was trying to get a more 'spontaneous' response to how to use the money, rather than a 'financially sound' response.

Just like the "What would you do if you won the lottery" threads. - Lots of fun ideas in that thread. :)
 

Mort Corey

Supporting Actor
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Nov 21, 2003
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981
In your brothers situation, I think I'd pay down and re-finance the mortgage to a point where it would be a non-issue every month...ie, $1000 down to $400-500 or so....and then save/invest the balance (or three girls if there was enough left)

Mort
 

Todd Henry

Second Unit
Joined
Feb 4, 2002
Messages
324
Some very interesting conversation. I had a similar decision last year. I sold my one house decided only put enough down on the next house so that I wouldn't have to pay PMI and then invested the profits. My quick back of the envelope calculation showed that I only need to make a 4% return on my investment to be ahead instead of reducing my mortgage payments by increasing the down payment.
 

Jason L.

Second Unit
Joined
Jul 12, 1999
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483


When the Encyclopedia of Utterly Ridiculous Statements Made on the After Hours Lounge is finally published, there will be a separate chapter on the declaration above.

Phillip Hamm will now probably chime in telling us that his clients earn %500 a year.
 

Philip Hamm

Senior HTF Member
Joined
Jan 23, 1999
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6,874
Where in the hell did that come from? All you have to do is earn modest interest from relatively safe investments to be better off investing than paying off the mortgage in one lump sum.

There are accounts where you can earn better than bank interest and still have access to your money by writing checks (as I wrote already). Invest your money wisely and use it to pay off your mortgage month-by-month.
 

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