I know MANY people like flyer mentioned, that made millions but were too aggressive and lost it all (and more as some took on leverage). The fact remains that MANY people out there have a NEGATIVE net worth.
Matt, I TOTALLY agree with your strategy for all the reasons you mentioned. There are VERY FEW investments out there where you can be guaranteed 4.75% TOTALLY risk free.
I know I won’t sell my property. Even when the kids move out and go to high school I’ll simply rent out the house probably with short-term vacation rentals and I’m confident I’ll do well. Or even if I did a longer term lease I’m confident I’ll be able to rent it out.
All my properties I hold mortgage free and I could care less what prices are doing in the interim while I own them. I don’t listen to the “noise” or stress about interest rates, values, sales, inventory, etc. The only thing I care about is cash flow on the rentals. That’s the only thing important to me and I don’t plan on selling them.
I also totally agree (as usual) with flyer’s point as well about trying to totally be on the path by the time you are 50 in trying to be more financially secure. I realize it’s not feasible for many people but it should be a personal goal of more people out there.
Many people make a ton of money but they spend all that money (and more) on a lavish lifestyle, expensive cars, etc. In my experience, I’ve seen that most people that make a lot of money think they will make a lot of money forever for all eternity…but the older you get, typically the harder it is to make money.
And the true danger is I’ve seen a LOT of people that as they get older and make less, still want to live that lifestyle when they made a lot of money. So they do whatever they have to do to continue to live it. Including using their credit cards, taking personal loans, cashing out retirement savings, or taking equity loans out of their homes. It’s a slippery slope.
Like flyer, my goal was to be totally financially secure by the time I hit 50 and part of that plan was not having a mortgage for the reasons flyer and UCGal mentioned.[/quote]
Excellent post, ER. Just wanted to X2 the points above, and especially the part about young people thinking that their income will always go up.
What too many people in their 20s and 30s don’t realize is that they’ve probably already seen the greatest increase in the trajectory of their income-earning capacity for their lifetime by the time they hit 40 (sometimes, earlier than that). It’s just too easy for everything to go wrong at the very moment when you can’t afford to take any losses, like when you’re ~50 and lose your job.
