[quote=UCGal]As I hinted at in the retire early thread, I have a hard time factoring in the home equity into “wealth” calculations. You can’t spend a house and if you want to live in it, you can’t sell it. Home equity is only wealth when your ready to sell. If the bulk of your wealth is in an illiquid asset that you’re unwilling to sell, are you really wealthy?[/quote]
Optimally it shouldn’t be your entire portfolio but it can be factored in, long term. Many people downsize at some point as their lifestyle changes or as they retire. A popular plan is to dump your large house and your mortgage and buy something small for cash with the equity. Yardwork, cleaning, stairs, people get sick of these things at some point. At a certain age, you stop hosting the holidays and you go to your grown kids house for the holidays or to visit the grandkids. You don’t need to be rich to follow this plan, many regular people do it in their 60’s or 70’s, I think that’s how pheonix was created.
Maybe I’m out of step with most people here because I’ve always been a bit of a nutjob about retirement saving bordering on mental illness. I plan on changing my ways. I went to a funeral of a friend this week who was far worse than me, he lived on about a third of his income, drove crappy cars, wore cheap clothes, had no children or wife and didn’t live to spend a nickel of the more than 2 million he had saved for retirement. It’s been said before, that living within your means is not about living within someone else’s means, it’s about living within your means. The person that makes 50k and gets by on 30k, bravo, but the guy that makes 100k or 200k and lives on 30k, maybe that person needs some balance to their life. As paramount just said, it’s been tried before, but you can’t take it with you. I’ve studied almost every world religion and text, none made reference to net worth or fico score in the afterlife. Plan, make sure you have enough to be comfortable, but also find a way to enjoy your good fortune along the way, regardless how much it is.
