[quote=flyer]I agree with all of you “younger” guys, because I was doing the same thing when I was your age, but, building wealth then seemed to be less of a challenge than it it today.
Also agree that paying off a home while you are younger, and in the wealth-building mode, might not be the best thing to do–especially if you don’t have your ultimate nestegg, medical coverage, etc., etc., covered for the balance of your life–and that “number” will be in the millions for anyone in their 30’s and 40’s–if you want to live well.
Going back to the OP, I’d guess most of the 21% have everything covered, so it’s probably not a problem[/quote]
Flyer, I totally agree with you that today it’s much more difficult to make money than in previous years. And I’ve always believed the older you get, the tougher it is to make money (at least the more traditional way being an employee).
The world is a much different place now than decades ago. Heck, when I was growing up I remember my dad always pushing the idea of working forever for a company, getting a pension and social security. Living a debt free life, having your house paid off as soon as possible and taking advantage of the power of compound interest even being fairly conservative.
I remember my next door neighbor. Amazing guy. I grew up cutting his lawn and shoveling his snow, etc. This guy went to the military out of high school for 20+ years and got a pension. Then he went to work for a Fortune 500 company for 20+ years and got another pension. Then when his wife died I think he got her social security and pension as well and of course when he was in his late 60’s he got his social security as well. This guy was getting something like 4 or 5 pensions a month! It was amazing! Things like this don’t exist anymore.
Now fast forward a few decades and pensions are like dinosaurs and for the most part they don’t exist or totally vanishing. The days of working 20-30 years for the same company is pretty much gone and even if you did, you won’t get a pension. Before the “company” would take care of you if you did the time. Now no one will really take care of you.
And for some of us, we don’t even believe social security will be available for us when we need it. I’ve paid a small fortune to social security and I’m not even sure it will be around for me by the time I’m eligible. Either that or they will keep pushing the minimum age up.
Like you said, it’s much more difficult to make money today. Heck, I remember a few short years ago just sticking money into CD’s and making 5.5%. Man I miss those days.
[quote=flu]
Agewise, I’m not an old fart. Physically I feel like an old fart.
Actually, I wish I took slightly more diversified risks when I was younger, when I could afford to take them…Either I was too scared on some or too reckless on others…Balance would have been the key.
These days, it’s more like a game for me… I mean i enjoy trying to earn more in different ways. And oh yeah, I hate losing….:)[/quote]
I DREAD birthdays and getting older. I always have. I hate birthdays and the type that ask employees NOT to celebrate it. It’s depressing getting older but having kids really helped on the outlook of getting older.
I do agree it’s important to take diversified risks when you’re younger. That’s the time to do it.
[quote=CA renter]
But in your scenario, the person with the paid off house still has the house at the end of that 7.3 years, and will NEVER have to make mortgage/rent payments for as long as he lives in that paid-off house. As his employment prospects pick up going forward, more of his income can go toward investments at a time when prices will probably be exceedingly low as a result of a multi-year depression (which is what it would be if he were totally unemployed for 7+ years) — exactly when you want to be getting back into investing.
Additionally, if the house were a nicer house, it could be rented out and the owner could easily downsize into a tiny apartment in a flyover state, giving him extra income for however long it takes to find employment and move back to his home area.
At the end of the 10.8 years with the “investor,” he is totally broke, has no home, and will be saddled with housing payments for at least 30 years (in most cases), preventing him from having that extra money for investments when it’s most valuable.[/quote]
My game plan has always revolved around despising debt. I know there is good debt and bad debt but I’ve hated debt of any kind. I graduated college with a 6 figure + debt and it was a horrible feeling for me. Many of my friends had wealthy families paying not only for their tuition but everything else. I was always envious of them. Fortunately I’ve always had great jobs, worked hard and made great income.
I guess one of my goals was always to pay off my house as quickly as I could. I’m sure it’s not for everyone but I’ve always loved the feeling of NEVER having another mortgage payment again. And although real estate is more expensive in San Diego vs. other places around the country, man I LOVE LOVE LOVE Prop 13! Some of the property tax rates in other places is insane! Yeah, you can buy a house cheaper in places in Texas but (a) you’re stuck in Texas and (b) you could end up paying more property taxes in Texas (some areas are as high as 3% a year).
My philosophy is San Diego is a wonderful place to be retired and own a paid off place to spend your glory years. Yeah, the taxes here are horrible in California but it’s as close to paradise than most places around the world. And I’ve been to many many cities around the world.
I have a friend that is exactly in the situation you mentioned CA Renter. He has a really nice townhouse in La Jolla. He was in exactly the situation you described. He lost his job but found another one in Dallas and is renting his place out for a VERY NICE amount. His house is also paid off. His plan is to return to San Diego again when he permanently retires.
