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educate me 401-k

  1. #2201
    Angry Gumball RandyO's Avatar
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    Re: educate me 401-k


    Quote Originally Posted by csmutty View Post
    I just hate debt.

    It's really just a mental thing.

    Like the people who think their life will be complete once they get married and buy a house.
    you forgot the Chevy in the driveway

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  2. #2202
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by gumby View Post
    If there was ever a time to be free of debt, itís right now
    How so? With mortgage rates in the 2's and 0% incentive rates on consumer purchases, I'm not sure there is ever a better time to borrow!

    Quote Originally Posted by Bonk! View Post
    Everyone's situation is different. Their focus is on younger people who face major financial upheavals and haven't had the chance to build up savings. It may well make sense to go ahead and pay down the mortgage once all those financial upheavals have been overcome.
    Yes. The focus is on younger people. But I think it applies to middle-aged people too. The leverage is time. Right now throwing money into investments and beating loan interest rates is not hard. For anyone with saving horizons in the tens of years some low interest debt is harmless. As with everything, moderation is the key. Nobody is advocating borrowing to your eyeballs. But a mortgage and maybe a >1% car loan with some aggressive savings isn't very risky right now.

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  3. #2203
    Your Father csmutty's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    How so? With mortgage rates in the 2's and 0% incentive rates on consumer purchases, I'm not sure there is ever a better time to borrow!
    I think he is talking about the uncertainty of the job market and the risk associated with debt without having cash to back it up.

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  4. #2204
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    That's why you don't spend what you borrow, you save it. Borrow the $ but at the same time build up and maintain a healthy emergency fund. If/when the job disappears reverse the flow.

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  5. #2205
    Your Father csmutty's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    That's why you don't spend what you borrow, you save it. Borrow the $ but at the same time build up and maintain a healthy emergency fund. If/when the job disappears reverse the flow.
    Ideally yes. Depends on what your risk level is and how you want to live life. I'm trying to get better about it but am also focusing on maintaining a good balance of living life and being financially responsible.

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  6. #2206
    Lifer
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    Re: educate me 401-k

    So you think I should borrow money against my house, put it under a mattress in case I lose my job? If I do lose my job then I use that cash to pay for daily stuff plus a now increased mortgage amount? Then, if the economy recovers and I get a job, use whatever is left to invest in an overheated market? Or, because I am "middle aged" I can't find a job or now afford to pay back this new loan, and lose everything. I am definitely a fiscal conservative, but this makes me go hmmmmm.

    Market lesson #1: NEVER invest what you can't afford to lose.
    Market lesson #2: buy low, sell high.
    Market lesson #12 (or so): in time the market will always go up. The length of that time is never known.

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    Last edited by Bonk!; 10-17-20 at 12:59 PM.

  7. #2207
    Lifer Chippertheripper's Avatar
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    Re: educate me 401-k

    Middle aged? You’re retirement aged.

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  8. #2208
    Super Moderator TheIglu's Avatar
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    Re: educate me 401-k

    In other news, watch out if you ever pay off your mortgage. My local bank (credit union) started wacking me with a $25/month "service fee" once my mortgage was paid off.

    They offer "free" checking, but my account type has been grandfathered and isn't listed anywhere to check the rules. No terms of service or fee disclosure on their website. Fuckin banks. HATE banks.

    Guess I'll find out from them Monday why I'm being charged to let them hold $10k of my money while paying virtually nothing in interest.

    Then they can find out I'm closing all my accounts immediately. Fucking banks. HATE banks.

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  9. #2209
    Burns retinas nhbubba's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by Bonk! View Post
    So you think I should borrow money against my house, put it under a mattress in case I lose my job? If I do lose my job then I use that cash to pay for daily stuff plus a now increased mortgage amount? Then, if the economy recovers and I get a job, use whatever is left to invest in an overheated market? Or, because I am "middle aged" I can't find a job or now afford to pay back this new loan, and lose everything. I am definitely a fiscal conservative, but this makes me go hmmmmm.

    Market lesson #1: NEVER invest what you can't afford to lose.
    Market lesson #2: buy low, sell high.
    Market lesson #12 (or so): in time the market will always go up. The length of that time is never known.
    What I'm saying is don't neglect your savings for the bragging rights of not having a mortgage. Your lesson 12 is a lot of why.

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  10. #2210

    Re: educate me 401-k

    Clay that’s fucking ridiculous. $25/month is steep at this time and age. Even with shit rates free checking is a standard nowadays.

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  11. #2211

    Re: educate me 401-k

    Quote Originally Posted by nhbubba View Post
    What I'm saying is don't neglect your savings for the bragging rights of not having a mortgage. Your lesson 12 is a lot of why.
    I THINK what he’s trying to say is if you lose your job and have no mortgage you’re in a better spot than having no job, having a big mortgage and have your money in retirement accounts.

    Back to your comment of healthy balance. That’s the key. Everyone has different risk tolerance and risk perception. Realistically speaking you can NEVER lose by paying of your mortgage. Sure you could have made gains somewhere but you can’t lose.

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  12. #2212
    Lifer gumby's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by csmutty View Post
    I think he is talking about the uncertainty of the job market and the risk associated with debt without having cash to back it up.
    Exactly. It’s been 30 weeks straight that more than 800,000 Americans have filed for unemployment. Hard to imagine.

    Quote Originally Posted by tsorfas View Post
    I THINK what he’s trying to say is if you lose your job and have no mortgage you’re in a better spot than having no job, having a big mortgage and have your money in retirement accounts.

    Back to your comment of healthy balance. That’s the key. Everyone has different risk tolerance and risk perception. Realistically speaking you can NEVER lose by paying of your mortgage. Sure you could have made gains somewhere but you can’t lose.
    A poll was conducted last week that’s hard to stomach.
    47% would be unable or have difficulty paying an unexpected $250 bill.
    I’m fairly confident if these folks were given the option of a low interest mortgage or no mortgage at all they’d take the latter.

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  13. #2213
    Lifer gixxer72's Avatar
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    Re: educate me 401-k

    Quote Originally Posted by gumby View Post

    A poll was conducted last week thatís hard to stomach.
    47% would be unable or have difficulty paying an unexpected $250 bill.
    I.
    That is fucking sad.

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  14. #2214
    Lifer Chippertheripper's Avatar
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    Re: educate me 401-k

    Welcome to America.

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    Cliff's Cycles KTM
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