cbad could compromise and payoff his starter house then rent it out as an investment. He can then move up and leverage away to build wealth. As time goes by and his earnings increase, that would not be too much money tied up in his house.
For the financially disciplined, cash flow and leverage are fine. For most people cash will burn holes in their pockets and disappear anyway.
People do many stupid things with their money such as borrowing for cars, vacations, weddings, electronics, etc.. In a broader context, paying off a house is pretty wise to me.
Yes, leverage is good but you need to know how to use it. My cousin buys everything on credit and pays off the bill before the interest accrue. She even plans the delivery of her appliances to the day so the bill goes on next month’s statement. She and her husband make lists, sit down at the dinner table and discuss everything before bed. Thanks to leverage, they built a good fortune from middle class salaries and good investments.
HLS I read an economist (can’t remember his name) whose research shows that worldwide debt is growing much faster than our productive ability to service that debt. Somewhere down the line, the economic machine will seize-up. That’s what is happening to US housing right now.
