"Debt free except for mortgage"...

[Dakota731]

And contrary to CNBC there are many more suburban and rural areas in this country where it’s cheaper to buy a house than rent. The problem according to our realtor is that so many people in this country can’t even save enough to have a down payment to buy property. It’s sad and reinforces my belief that we don’t educate our children enough on financial issues. And there aren’t too many more important issues that will affect their future, their marriage and their happiness.

 

[MillauFr]

These people did great by buying....

https://www.zillow.com/homes/for_sa...,-122.31552,47.675991,-122.320134_rect/17_zm/

The housing prices here are going up, up, up....

 

[focusondisney]

I live in an area with a low cost of living. I bought my home 13 years ago for $148,000. I owe $40,000. To buy this house today would cost me about $220,000. Right now, my payment is $976 a month including insurance and taxes. Once it is paid off, my insurance and taxes will run me about $200 a month.

To rent a similar home is anywhere from $1,200 - $1,400 a month. Even a cheap one bedroom apartment runs in the $700 range. So, that $200 a month is a very cheap monthly cost for a place to live.

I totally agree. Our home is paid off. Our taxes & insurance cost less than $400 a month. You can’t rent anything for $400 a month, even in the skeeviest part of the inner city. Lots of new senior apartment complexes are going up near us. Rents start at $ 1200 for a 1bedroom apartments. We have a 1600 sq foot 3 bedroom home in a nice suburb. When we retire, we will have no problem paying taxes & insurance from an annuity policy we have. I am so relieved to think that my family will always have a place to live, no matter what happens. Never have to worry about rents or landlords.

We haven’t had a mortgage in about 12 years. We carry no credit card debt. We do have car loans. Yes, I could have paid for the cars outright. When I can get a car loan for 0% or .9%, why should I take money out of savings to buy the car? I might not be making much more than that with my savings account, but I am making something. A zero percent loan is kind of like free money to me. If the interest rate was higher than my savings account rate, I would just pay cash. Our credit scores are in the 820s. Those car loans aren’t hurting our credit ratings.

I don’t have a problem with people saying they are debt free, even with a mortgage. Guess what, if you rent & have a lease, you aren’t debt free either. You owe that rent for the life of the lease. So you have debt too. I guess I feel like everyone has some type of housing costs.

 

[Mrs. Ciz]

I am Debt Free with NO Mortgage. I own my home.
If owning allow for "Murphy" to visit and regular home maintenance costs.

JMHO (Just My Honest Opinion),, I need to state that I am a member of the Budget Board Debt Dumpers 2018 and debt can occur at anytime of your life and preparing for it is important. I restarted at age 40 without a penny and three teens to support.

When my eventual retirement comes about I will have less income than when I was working, even with savings ,,work pension and government pensions therefore I felt it best to not have a mortgage payment.

Whether renting or mortgage,,, either way you need a strong financial plan.I can't emphasize how important this is for women.
If renting allow for cost of living /inflation costs and availability.
Far too many people have no *plan* at all.

Our next generation unfortunately face a lot of challenges in the rising costs of housing,,many just can not afford to buy in and that spells bad news for current owners (equity) and for communities/government who soon may have to help with the cost of housing for seniors.
Every report I have read states that the amount of seniors needing housing accommodation assistance in the near future is going to be astronomical.
So either way PLAN.
Hugs Mel

https://www.cnbc.com/2018/05/15/how-much-americans-have-saved-for-retirement.html
https://www.bnnbloomberg.ca/32-of-canadians-are-nearing-retirement-without-any-savings-poll-1.991680
https://business.financialpost.com/...ings-is-756000-according-to-poll-of-canadians
https://www.cnbc.com/2018/05/11/how-many-americans-have-no-retirement-savings.html

Old article but really had me thinking when I found out my grandmother's monthly room at a retirement home-with 1 meal a day was costing $5,500 a month.
https://seniorhousingnews.com/2015/04/27/why-senior-living-must-change-dramatically-by-2050/

I totally agree that Senior housing is going to be a huge issue that gets bigger and bigger and bigger. Yesterday I read the article below, which highlights some of the problems a few of our friends (who are only 10-15 years older than DH and I) are currently struggling with. When pensions got replaced with 401K plans, a huge retirement safety net was taken away. So many seniors have not saved enough and cannot afford housing on just Social Security. Scary!!!!
https://www.theatlantic.com/business/archive/2018/02/pensions-safety-net-california/553970/

 

[bigbabyblues]

We pay bi-weekly and pay extra then and extra amounts every month. I can’t find a calculator that will tell how quickly we will have it paid off. Do you have a good calculator to help me?

I don't know if it varies depending on interest rates and such, but we had a 30-year mortgage and pay bi-weekly, and our mortgage will be paid off after just under 18 years. It will be paid off in about 4 months, and I can't wait! I have no idea what it is worth now, I have no interest in selling it.

 

[bigbabyblues]

And contrary to CNBC there are many more suburban and rural areas in this country where it’s cheaper to buy a house than rent. The problem according to our realtor is that so many people in this country can’t even save enough to have a down payment to buy property. It’s sad and reinforces my belief that we don’t educate our children enough on financial issues. And there aren’t too many more important issues that will affect their future, their marriage and their happiness.

I live in a rural area, and the only rental properties here are either low-income/government assisted rental places, or houses that no one would want to live in, or trailers.

 

[Dakota731]

And we plan to leave our house to our children. I can’t imagine paying rent for fifty years and having nothing to show for it in the end.

 

[focusondisney]

And we plan to leave our house to our children. I can’t imagine paying rent for fifty years and having nothing to show for it in the end.

Exactly!

 

[QueenIsabella]

That's the thing--renting may make sense in some circumstances, such as someone who relocates frequently for their career. For most people, though, it's just throwing money away. At least with a mortgage, you have the house to show for it at the end of all those payments.

In our case, we have 27 years to go on our conventional mortgage. We've discussed paying it off--we could, at any time, but the interest rate is lower than what we make on the money, having it invested. DH plans to work another 10 years. I said, I want the mortgage paid off before you retire. Could be the week before, I'm fine with that.

I think people qualify mortgages separately because they're a different type of debt. Most people can't buy a house for cash. Most other debt doesn't gain equity/value. And if you got lucky with interest rates, you can actually make money by having a mortgage.

 

[SUSIEQ]

I can’t imagine paying rent for fifty years and having nothing to show for it in the end.

That's exactly the way we feel!!!

 

[Anthony1971]

To me Mortgage is still Debt... Good debt well maybe depending on your personal beliefs.
If a person rents over a lifetime AND invests the money he/she saves the otherwise maintenance of a house they will make out better -- there are always exceptions to this.... however it is rare a person will save the average 5-10% estimated of house value in maintenance every year or any year for that fact. In other words if you in fact can afford a 500K house but choose to rent unless you are socking away and not touching at least 25K a year you are not making out better. -- be aware the 5-10% take into account all the additional costs--higher insurance, interest, higher utility bills property taxes, remodels, replacement costs etc. you can argue you pay property taxes with rent but unless you are billed separate for this it is simply part of your use of the property.
Good debt--- well there are 2 parts for no-- 2018 being the standard deduction is much higher most people in lower cost areas will not exceed this in Mortgage interest as property taxes can no longer be written off so you will receive no benefit... Those in higher costs areas well if they have the income to live in those areas their write offs were already limited or not allowed at all for either --AMT tax limits all write offs with the exception of charitable donations so if you were making 300k a year in 2017 you received little/no benefit for either nor state taxes if you paid them. The phase out as it is called out begins in the low-mid 100 and ends in the lower 300 so again lesser/little/no benefit to have a mortgage in higher priced areas... Those in mid-priced areas will still benefit but still have less benefit than 2017 and ironically those who received no benefit in 2017 will make out better this year with the higher standard deduction if you were at the end of the phase out as that is all you are allowed on the end in 2017 plus any chartable donations.
In 2017 many people could benefit from having a Mortgage in 2018 not so much... which would also need to be added to back to money you are saving and not touching for those who say renting is the better option....

 

[DLgal]

And we plan to leave our house to our children. I can’t imagine paying rent for fifty years and having nothing to show for it in the end.

Can you imagine the power of compounding interest over 50 years when you put in a few hundred dollars a month into an investment? We save a lot of money by renting rather than buying in our high COL area...money we have invested over the past 18 years that we plan to keep investing for the next 30, while we rent. I guarantee you we will not have "nothing to show for it." We will have had a roof over our heads all our lives plus about $2M in fun money, give or take a bit. We're already well on our way there.

 

[pineapplepalms]

With most kinds of debt like credit card or education debt, it's essentially cash debt without an asset tied to it. However, money is not the only thing that holds value. I think having a mortgage is different because it's tied to an asset that is worth something and can also appreciate significantly over time, potentially much more significantly than other kinds of investments. For example, we also live in a high cost of living area, and even starter homes here have appreciated half a million or more in the last 5 years, which would have been much more difficult to attain through investing alone. We know an older family that made $1.5 million+ selling their home that they've owned for decades (in completely run-down, total renovation needed condition), and they can now live off those gains extremely comfortably in a lower cost of living area.

 

[QueenIsabella]

Can you imagine the power of compounding interest over 50 years when you put in a few hundred dollars a month into an investment? We save a lot of money by renting rather than buying in our high COL area...money we have invested over the past 18 years that we plan to keep investing for the next 30, while we rent. I guarantee you we will not have "nothing to show for it." We will have had a roof over our heads all our lives plus about $2M in fun money, give or take a bit. We're already well on our way there.

You will have nothing to show for the rent. You may invest other money--as do many people--and that money may grow. But, the rent is gone. And unless you one day purchase a house, you will be using that "2M fun money" to also, um, PAY MORE RENT.

 

[_19disnA]

I guess it depends on your definition of 'debt'. To me it is anything where you owe money, be it a car loan, house mortgage or perhaps money you own on a college loan or credit card. Whether debt is 'good' or 'bad' probably depends on who you are trying to impress with the original statement. Who goes around bragging to friends/neighbors/relatives that you are 'debt free' (and then qualifies how they define 'debt')???? Unless you do, I don't really see much point in how you define it.

Whether you choose to rent/buy your primary residence depends on a number of factors such where you live, how long you plan to live there, how much you can afford to spend.....etc. There is no one answer that fits every situation.

 

[DLgal]

You will have nothing to show for the rent. You may invest other money--as do many people--and that money may grow. But, the rent is gone. And unless you one day purchase a house, you will be using that "2M fun money" to also, um, PAY MORE RENT.

I consider "rent" to be a bill like any other. I have to pay for electricity...I get power to my home. I pay for a car, it gets me from place to place. I pay for insurance...it protects us from potential tragedies. I pay rent...it puts a roof over my head. It's not like I am throwing several thousand dollars a year into the toilet and flushing it. I get to live in a nice house, in a nice community, with great amenities, amazing schools, in one of the best cities in the US to raise a family. I get safety and security. I get the flexibility to pick up and move when I have to, without the stress of having to sell a home. I get the freedom from responsibility when something breaks or when the landscaping in the back becomes an overgrown jungle and the professionals need to be called in to trim back the 15 rose bushes. I pay my steady rent and nothing more, no matter what happens.

To your second point, we will have a military pension that will provide for us for life. We won't need to dip into our investments at all for basic living expenses. It will literally be fun money, or money that our kids will inherit upon our deaths. Our plan (when we finally retire in old age) is to buy a house with cash in a low COL area, using a tiny fraction of the money we have made by investing. Or, depending on the job my husband lands after he retires from the military in 2 years, we will bank his pension check every month and save up until we can actually afford to buy one of these overpriced homes.

 

[focusondisney]

Can you imagine the power of compounding interest over 50 years when you put in a few hundred dollars a month into an investment? We save a lot of money by renting rather than buying in our high COL area...money we have invested over the past 18 years that we plan to keep investing for the next 30, while we rent. I guarantee you we will not have "nothing to show for it." We will have had a roof over our heads all our lives plus about $2M in fun money, give or take a bit. We're already well on our way there.

Yes, but you are an exception. Most peole’s employers don’t give them $3800 tax free housing allowances. Most people have to pay that out of their net income.

 

[FQLover]

Gee, why would I care how any of you define your personal debt/lack of debt status? And why would I care whether you, a family that is of no relation to me or mine, rent or own a home? And why would you care about how I use the term "debt' for myself or whether I rent or buy?

I think it is because somehow other people's choices threaten our own comfort with our choice. Or somehow we feel that we have to come out "better than" those who have debt, have a mortgage, do not have money in the bank to pay it off anytime we want, will not have a house at the end of time to bequeath to children, are "throwing money in the toilet," or will not have $2 million in the bank,.....whatever! Man, stop the judging.

Let's give the benefit of the doubt here to people who make different life and financial decisions than we do. So many variables we can never know.
And it can come across as know-it-all, from either side of the fence, or "better than." That is like the Budget Board ethos of many years ago. Most of us here now don't care for that sort of thing.

 

[Nebraska_Disney]

It really depends on the areas you live in. In my town, my house would rent for $1500-$1800 a month. My mortgage is $1300 a month. Even with what we pay more in insurance, I am "winning" by owning the house over renting it. Yes, I have put money into areas of our house to maintain it nicely, but that also only helps to appreciate it. In a few short years, I'll be paying around $500 a month to live there when I am the clear owner vs the same person who is paying $1600 a month on a house rental. I'll take that $1,100 a month and invest it and I but it does well over the next 15 years until I retire AND......I still own the house !

 

[crisi]

I'm debt free except for a mortgage.

My debt on my mortgage is less than 5% of my investment portfolio. I could pay it off any time I want. And as to compound interest - I do way better on dividends and dividend reinvestment than I pay in mortgage.

Debt free a part of a total financial picture. You can be debt free and in lousy financial shape (my 20 year old son - who has no savings, lives at home - but is debt free). Or you can have debt and be in awesome financial shape.