Mortgage your home to buy investments?

[too-old-now]

The peak earning time has increased in demographics over the years, to now be in this older age group...In the 60's, the peak earning time was 35-44.

Of course, the reason the peak earning time in the 60's was younger, had to do with the makeup of the workforce. Back then, more jobs in an agricultural or manufacturing sector were compensated by piecework - the more you do the more you get paid. Thus, the 35-44 sector had the right balance of skill/experience, as well as strength/stamina, to earn more than than their counterparts.

In the 60's, we used to wearn pins that said "don't trust anyone over 30", in the 70's it was "don't trust anyone over 40", and in the 80's it was "don't trust anyone"

[BzyBee DH]

So what was it in the 90's?

In the 00's?

Don't trust anyone under 35? LOL


(i.e. the kids from 60's are now under 35.....)

[livingalmostlarge]

Sunk costs are sunk costs. Whether you put $1k into a car and then another $1k comes up it doesn't matter. That $1k already spent is sunk costs.

Anyway though I think it would be a more relative argument to ask people if they could pick between paying off a mortgage or allowed to keep it invested? I don't know if it elicits the same reaction as mortgaging a paid for home. Because mentally/psychologically the money is a lump sum, the house isn't paid for etc.

Also most people peak earnings were said to be 45-55, but it's increasing. Do I couple earnings with savings? I don't know, fortunately my parents and in-laws are able to retire early 50s without struggle. And they do it living a very comfortable lifestyle.

Do I think the same will apply to DH and I? Probably not. We didn't have kids early, strangely that's part of the equation. When have kids earlier, they don't remember the leaner years and then you finish up fast with the kids. But then the flip side of the coin, you spend your 50s travelling the world, but not doing some of the trips a 20-something is doing. Your body aches and you aren't in the same shape.

So maybe the balance is having taken your kids all over while growing up, retiring a bit later, so when you were 30s/40s you were enjoying your money more. Also whose to say you won't die before 60? My aunt will be lucky to hit that with MS, they took early retirement at 50 when she stroked out into a coma. Now they blow any money they want, after all she may not be here tomorrow. My uncle says whatever she wants to do they do! Perspectives change depending on circumstances.

[MaryMary]

To me wealth position is independent of income...I do not like using income as a yardstick - it encourages the thought that because I make more, I can spend more.

While that is mathematically true, I would rather it be - because I make more income, I can save more....I would like to divorce or de-couple income and spending.

People who see us in real life, probably think of us as struggling - due to coupon usage, only buying bargains, including the clothes we wear....So I do not think of status symbols at all. But, I am a contrarian!

The point is that I separate income from lifestyle. That is probably the biggest change we made over the last 6 years...To not think how much do we afford, but rather how little can I pay!

I believe in modesty in all areas - but, perhaps, we've taken it too far!

You sounded like spendagolic trying to recover, tricking yourself into thinking you do not have money so nothing to spend.. .. . "I do not have money to spend, I will not spend money I do not have".. LOL

My own mantra a bit different: "yes I can spend more, but why should I, much better deals are out there and up to me to find it." This put me in control, not my money.

Coupons, bargains and simple clothes is an image from Danko's book, but not of struggling people. :wink068: But you said you've taken modesty too far, do you miss your Armani suit and gold cigarette lighter? Did BzBee make you sell your Maserati?
Seriously, I never believe in extreme measures without extreme necessities, the pendulum in the far points is the least stable, has the most of energy to swing back and hurt badly..
I do believe in extreme deals! :Wave:

Anyway though I think it would be a more relative argument to ask people if they could pick between paying off a mortgage or allowed to keep it invested? I don't know if it elicits the same reaction as mortgaging a paid for home. Because mentally/psychologically the money is a lump sum, the house isn't paid for etc.

my arguments on the topic were based on above assumption. These are very different approaches psychologically.

[BzyBee DH]

We use cash in envelopes - so no threat of over spending. We take out each the $ each week according to our budget.

I meant the prior communication to stipulate why I don't like to couple income to spending....I believe these should be de-coupled. I don't feel deprived.

Why did I say too far??
People who see what we do - think we might be too far left-field. I am comfortable with our plan and why we are doing it...The casual observer thinks we are nuts, really nuts.

[MaryMary]

People with larger stable incomes may not spend more, but might be more comfortable taking risks in investments. To attach this to the topic of conversation, they might be more prone to carrying low cost debt vs. higher return investments.
[quote=BzBee BH]People who see what we do - think we might be too far left-field. I am comfortable with our plan and why we are doing it...The casual observer thinks we are nuts, really nuts.[/quite]

If these thoughts ever cross your mind you might be not as comfortable as you are trying to convince yourself. Nothing wrong with it as long as you know it is temporary and your natural life is near.

[BzyBee DH]

The issue relates to my faith.

I believe in being a witness to others of my faith.

When I am seen as very far off-center, one has to overcome that obstacle before there is a relationship.

I'll give an example that the board members can relate to -
When people discover the intensity of our couponing, the savings, etc - they are inquisitive...We answer a few questions, talk about it, etc.

But just like we were, pre-couponing (pre-2004!), some think that something is not right....There is some trick, etc.....It does not "feel" or "seem" right to get the stuff for that cheap....

Then, we are commonly, summarily dismissed. Or we are the oddballs. Or admired - but from a freakish distance.....

That's what I am talking about. It is almost a sense of ostracism.

That is just couponing!

Imagine having 0 debt. (8/2012 for home payoff, no other debts)
Living on 1/3 of your income. (Investing, and paying extra on mortgage with the rest)
Having enough earnings in your investments in 2007, to be able to live on them (excluding mortgage) at 37 years old
Using cash for just about all purchases (yes, the greenbacks)
Only buying clearances...(more like the 75%+ type clearances)
Buying next year's Christmas gifts with this year's 90% off after Christmas sales

Together, these frugal things all add up - and we are truly "weird".

We aren't changing.

[BzyBee]

I think DH, what you mean is that what we do is so far from what people think is normal, that we almost feel that we have to excuse the behavior. When it is time to go out for dinner our first question is which restaurant coupons do we have? We almost always split meals (due also to large portion sizes). We buy underwear with coupons, we have 50+ boxes of cereal, I have a BRIEFCASE full of coupons. These are things that most people do not do and do not consider 'normal'. They think we are weird.
They do not choose between spending and investing...they spend first and wonder why they have so little invested. HR told DH he is the only 1 in 400 employees who is anywhere near maxing out his 401K contributions to IRS limits. We are the weird ones.

Any discomfort we feel is based solely on the reaction of others, not on our own level of comfort based on our SOL. We are content, feel that the sacrifices now are worth the rewards later. We don't live like misers, but we spend like misers...LOL

We are not recovering shopaholics...but we used to be 'normal'.

[ChrisLeigh]

I would not take money out of my home to invest... If you've paid off your mortgage (whether on schedule or early), you probably have "extra" money in your budget that you can use to invest! So there would be no need... and if your income has decreased and you don't have "extra" money in the budget, you probably shouldn't be taking out of loan to invest....