I paid off my mortgage last week! I took a 30 year mortgage, but paid it off in 11 years for peace of mind. Feels great! 🎉
@SouthernHiker
Жыл бұрын
Sweet, congrats!
@kevinwelsh7490
Жыл бұрын
You would be better off to convert your real estate wealth into a stock portfolio
@robedmund9948
Жыл бұрын
WAY TO GO!!!!!!!!!!!
@jolkraeremeark6949
Жыл бұрын
@@kevinwelsh7490and live where?
@rlsjunior797
Жыл бұрын
@@jolkraeremeark6949 houses are overrated. Just have a nice stock portfolio and live in a cardboard box under a bridge.
@dusty4208
10 ай бұрын
Just turned. 56 and paid off my house last week. What a great feeling! Retirement just came a little sooner.
@videogarage9221
6 ай бұрын
In today's economy our GenX generation will probably never retire 100%. I have two paid off houses in CA and FL (rental property). Their combined annual property tax burden is over $17,000 combined (excludes insurance) Wrap that around your head.
@econ0003
3 ай бұрын
@@videogarage9221that statement doesn't make a lot of sense to me. I would think the rental property would at the very least cover that tax bill. If you have been regularly saving into retirement accounts you shouldn't have any problem retiring at a young age.
@habbadabbado5765
7 ай бұрын
Paying off the mortgage is the most liberating and rewarding thing you can do for yourself!
@bright2915
11 ай бұрын
I'm building a small 1,200 square foot home. I took out a 30-year mortgage and was planning on paying it off in 15. I just inherited enough money to pay it off as soon as the builder is finished. I feel awesome right now.
@MuzixMaker
10 ай бұрын
Invest the inheritance, you’ll come out far ahead.
@robgrey6183
7 ай бұрын
@@MuzixMaker Yeah, unless he loses his job, or has health problems and can't work. If that happens and he can't make his payments he loses the home to the bank. Then he can watch his investment portfolio while he lives under a bridge.
@MuzixMaker
7 ай бұрын
@@robgrey6183 he can make the additional principal payments from the dividends and keep his inheritance, which will also grow faster than the home price over the next 15 years.
@MuzixMaker
7 ай бұрын
@@robgrey6183 why did you delete my response you coward
@meengla
7 ай бұрын
@@robgrey6183 Right. Owning a home outright gives a lot of security. "Home is your castle". I think even in case of catastrophic medical expenses, they can't take away your home, right?
@jgg204
Жыл бұрын
Not being a debt slave to the bank, is the true path to freedom
@bracsim
10 ай бұрын
You still being a slave of the IRS, state taxes, county taxes and the rest of the scam, if you want I to know who owns your house stop paying property taxes, you will find out who the owner is and it won’t be you for sure.
@joeydego2
10 ай бұрын
@@bracsimYes but with taxes come the benefit of living in a community and enjoying its services. Paying a bank serves one purpose: to make banks rich.
@dominicclark5342
10 ай бұрын
And how do you do that when money is precisely monetized debt?
@lucacrespi88
10 ай бұрын
@@bracsim boo-hoo, keep bitching boy. You can always leave the country.
@jgg204
10 ай бұрын
@@dominicclark5342 simple. don't be a slave to your debt
@negativeonhand
Жыл бұрын
I paid off my house two years ago. Its truly awesome.
@samlocoaa1726
7 ай бұрын
Congratulations man, am on my way too
@allthingsnu4673
11 ай бұрын
You did a good job of explaining the value of a paid off home. I paid my home off early about 3 years ago and retired a year and a half ago. My home doesn't make me money, but it saves me money that I'd be spending now and in the future on a mortgage or rent. With private equity firms buying up a lot of apartments and homes to rent at exorbitant prices, I think the value of a paid-off home will be even more evident in a few years as it becomes harder for people to make payments. We are already seeing signs of it now in the increasing numbers of homeless people and those doing vanlife, for instance.
@sunrisetacticalgear2676
10 ай бұрын
We paid off our home a few years ago, and now save the equivalent amount in an account for property taxes and home improvements. It’s a great feeling to have the resources to pay for new Kitchen, new roof, yard improvements and whatever else comes up in the future.
@Cucumberflavoredmustard
10 ай бұрын
That's great. If you are planning to sell your home, improvements are a good idea. If you are planning to stay in your home for years to come...they are still a good idea in terms of your comfort and enjoyment, but not so much in a financial sense. Of course you want to make sure everything is in working order and clean, but if you are really looking to max out your moolah long term, start investing it instead. 10k on a granite counter will never outperform 10k in a conservative mutual fund.
@michaelakc
10 ай бұрын
I will 2nd that other response. A coworker just made 100k on his house. Meanwhile, a family member of mine will never be happy with her primary residence and has spent THOUSANDS over the years to redo the same things multiple times.
@RetrieverTrainingAlone
Жыл бұрын
As a retiree, when we downsized, the income from selling the home was tax free. Tax free (no capital gains) up to $500,000 for a couple filing jointly.
@asommer518
10 ай бұрын
Yes it truly is part of networth when used to advantage
@erikh9991
10 ай бұрын
My rich great aunt and her husband are on their 3rd free $500,000. They buy homes near the beach.
@blueblur1984
10 ай бұрын
A good point, but be careful depending on this in retirement. My father passed away suddenly and that deduction dropped to $250k for my mom. Life is uncertain.
@RetrieverTrainingAlone
10 ай бұрын
@@blueblur1984 $250k for one person tax free is a rare thing.
@123scanman
Жыл бұрын
It's funny but the effects of inflation over are time are very real. My parents have been in their house for over 67 years and it initially cost them $12,000. If they sold today their house would probably sell for about $1,000,000 (the average for Southern Ontario). They told me that near the end of the mortgage their water bill was more than the mortgage payment. So after paying their mortgage off (over 25 years) has allowed them to live the next 42 years mortgage free and more importantly "worry free".
@josephkelleher8820
Жыл бұрын
In my opinion if most people didn't include their paid off home in their net worth they would have very little net worth.
@X.MillennialResponder.X
Жыл бұрын
This is true, because most Americans don’t have a whole Lotta net worth, and most metrics are showing real estate as a portion of your net worth but we all know that the asset portion of the house that people have is just an best. Guess you can’t say that you will know the price of your house when you sell it as well as people don’t take consideration the portions of the house overtime that’s maintenance, that counts against the true asset value of the house because of all these unknowns I also do not put my house as part of my net worth. I think that this also flies in the face of if I want to sell my house to get into the asset portion of that again I would have to sell it and I don’t want to sell it so it is an asset to me or a liability and even when I pay it off, is it a asset or liability, I think in general I agree with her and people like the money guy Show it’s what you wanna do with your money and the end of the day I can buy and sell in the market and does not affect my actual life if I sell my house that affects my house my family, my everything therefore I don’t consider a house as an asset. You live in it when it changes is if you actually are investing in real estate, such as buying a property renting it out then I would include that in my net worth statement, but not the house that I live in. What you’re saying here is an opinion that is actually fact most people have very little net worth and so maybe that’s an issue in how we think of net worth as Americans if you consider that your house is worth 150 and you go to sell it and you only get 100,000 you’re ready Have negative net worth and you didn’t ever think about it at that point because you’ve always thought the asset was 150,000 this is a problem overall this is why I do not count it unless I can arbitrarily understand what the acid value is at? Any moment in time when I do want to go sell not what I think it is or what a real estate agent considers she could get for the housenot to mention all of the cost associated with buying and selling assets does make sense. I think this is something that has American people we need to wake up understand what true net worth is it’s not the house.
@duneme
Жыл бұрын
I agree! The Exception is the Few that do have a bunch of money in their 401K! Very few have more! Rental Houses A Business These are real possibilities though!
@johnjaco5544
7 ай бұрын
Speak for yourself
@JH-tj9jd
7 ай бұрын
It's an asset. Why wouldn't they include it?
@jerrylundegaard2592
7 ай бұрын
So what?
@hownwen
Жыл бұрын
My last mortgage payment was this month. It was an ARM mortgage 7% and climbing 🎉🎉🎉
@ErinTalksMoney
Жыл бұрын
Congrats on getting it paid off!!
@sandylamba2546
Жыл бұрын
Well said! Having a paid off home also gives homeowners the opportunity to invest more money.
@tomschmidt381
10 ай бұрын
My wife and I built our house in 1982 and paid off the mortgage in 2007. We don't really consider our home/land an investment. We built it because that is the way we wanted to live. It was a great feeling once we paid off the mortgage, one less expense to worry about. But as you said there are still considerable expenses once the mortgage is paid off. Having said we don't consider it an investment it does represent value we can tap if things become desperate and something to pass on to our kids when we croak.
@JohnBowl14690
10 ай бұрын
Exactly. A home is NOT an investment in a typical sense such as rental properties, stocks, bonds, gold, or a business. The huge difference is that a home is a NECESSITY. I NEED a home to live in, so I refuse to gamble and leverage my home...so I decided to pay it off. However, I DO NOT need any stocks. Stocks are great, but they aren't a necessity.
@Ryan.zelenski
7 ай бұрын
Really happy for you!
@Wengo2
4 ай бұрын
@@JohnBowl14690she now has her whole income to invest
@SgtSnausages
Жыл бұрын
Took a 15 year instead of the traditional 30. Paid it off on just under 9 years. The value of not having the stress of coming up with that monthly nut is incalculable.
@es330td
10 ай бұрын
Do you have a job with variable income? Most people who own a home have a regular predictable income. If you budget properly there is no "stress" of coming up with a payment, it simply comes in for having worked.
@peacefulmind8991
10 ай бұрын
I hear you. Unfortunately property taxes never go away and in some places can cost as much as rent. It’s insane. You never own anything. Always renting.
@patoh1679
10 ай бұрын
What state?
@billweir1745
10 ай бұрын
@@es330td It still sucks having a substantial amount coming out of your income consistently every month.
@YogiTheBearMan
10 ай бұрын
Nut?
@ordinaryhuman5645
10 ай бұрын
One thing people probably don't appreciate about having the house paid off is that you don't need to earn the income for mortgage or rent payments, which means you don't need to pay the payroll taxes on that income. That might be an extra ~30% of the housing expense that you don't need to deal with every year if you're in FIRE mode and in control of your income.
@mattcolver1
10 ай бұрын
When we retired 7 years ago we had a mortgage. However our 2 pensions and social security easily covered our living expenses so it was no big deal. We still had plenty of income left over to travel and do the things we wanted in retirement. However in the last year our property taxes went up 60% and our insurance also went way up. Those two costs that get us nothing enjoyable in return are now about $25K a year. So we plan to sell, move and pay cash for a house elsewhere where property taxes are lower and wildfire risk is less. That should allow us to do all the travel and other things we want to do in retirement. Moving is stressful. We had hoped to avoid it, but our state and local governments got too greedy and are forcing us and probably many other retirees out. Time to find a state that's not so greedy.
@galens2543
9 ай бұрын
Wow, in what state do you live? Is there a state that you think you might move to?
@mattcolver1
9 ай бұрын
Moving from Colorado to Utah.@@galens2543
@winder4850
Жыл бұрын
So many variables to consider. Decided to move during covid due to job loss for not taking the injection. Gain from previous house didn’t quite cover the cost of new place. I have a small mortgage that I just lucked into a 2.25% 30 year . It’s $600 a month. Makes no sense to me to pay that off ever. Yes I have enough to pay it off if needed.
@terrencemcphail5782
9 ай бұрын
u still paying half in interest regardless, i have a 2.5 an still gonna pay off early. look at ur amortization schedule u still giving away plenty money
@BrianNC81
Жыл бұрын
I'm happy we went with a 10-year fixed refi mortgage when rates were below 2% during the Covid. House will be paid off in my mid 40's. I think a paid-off house also takes away a lot of stress, if you lost your higher-paying job you could get by with a very basic income. We will still need to put away $500 a month to cover property tax and insurance when it's paid for.
@Aengel9
10 ай бұрын
I had a difficult time picking between paying off my mortgage and investing. I’m glad I did the later. I’ve been watching clips on youtube for months now and with professional help, I’m making outstanding progress.
@Niveen175
10 ай бұрын
I’ve put investing into consideration also. What do you think is the best approach for someone who is just starting out?
@Aengel9
10 ай бұрын
Herman Jonas is the brain behind my success. I've gotten into a plethora of assets with $13k spread across stocks (options and futures) for the short term and Roth IRA, index funds, and ETFs, for the long term. Now I sit back, and just reinvest at intervals while I handle my other businesses.
@Roymysterio
10 ай бұрын
Do not forget that when it comes to the stock market, prices can be erratic, rising and declining quickly, often in relation to companies' policies, which individual investors do not influence.
@Lfgyf
10 ай бұрын
How can I reach him, please? I've seen good recommendations of his work elsewhere. I need help with investing in stocks. I'm ready to pay for his services.
@Ferocious923
10 ай бұрын
Hermanw jonas (a Gma!L comm Is he taking commissions for his services? Yes, I’m I still making money in the process? Hell yes!
@wcollins4191
11 ай бұрын
I paid mine off 5 years ago @ 53 & I set myself up to retire @ 56 it was the best decision i ever made, I been retired 28 months now
@Shadow_Banned_Conservative
10 ай бұрын
That's awesome. Since I was 25 I planned to be able to retire at 55 if I want to. I'll probably stick around until 60 because I still love what I do and it pays very well. It just means more retirement funds and maybe a few more toys to enjoy when I don't have to go to work everyday. I bought my home with the intention of being able to pay it off early, by 55 so I wouldn't carry a mortgage into retirement. I made that goal early by 2.5 years, so that's another $120k+ in large mortgage payments that I don't have to make for those next two years. Then another 5 years of extra income, while being rent free that I'll be able to save and invest.
@4155abc
Жыл бұрын
I live in southern Missouri and paid slightly less than $25,000 for my home, which is on an acre of land. I paid cash for my house. Having my home paid off in full is a feeling of security. I can't imagine the stress of having to come up with money every month for rent or a mortgage payment. I know millions of people do it and don't give it a second thought until something happens. The main breadwinner could die or suffer a catastrophic illness or injury. The country could go into a depression like what happened in 1929. Any number of things could happen to destroy a person's financial security. I could have used my $25,000 as a down payment on something newer but I am glad that I got a house I could pay for in full. I am especially grateful that I did this because I have had times over the years where my financial situation has really taken a hit. With rent or a mortgage, it would have been very stressful. I am 100% debt free. No mortgage or rent, car loan, credit card debt, or any other kind of debt. I don't want to ever be in debt again.
@billfunk3168
Жыл бұрын
Just having property taxes and insurance a great spot to be in.
@Drew-l3r
Жыл бұрын
We are completely debt free as well! Feels great Have a great day 😊
@De-Centralized
Жыл бұрын
My wife and I have very comparable circumstances. She is a great partner in this. Slightlty sad is it took us until our early 50s to get there. Sooner would have been better.
@tetedur377
Жыл бұрын
@@De-Centralized Better late than never. My late wife left us in debt via a couple of credit cards and some other stuff. It could have been much worse, however. I started that debt-free journey late in life (2010), and I was still at almost a half million by the time I retired at the end of 2019. Took a hit in 2020, but I'm still in good shape. Sooner WOULD have been better, but it is what it is.
@economicdevelopmentplannin8715
Жыл бұрын
@@billfunk3168 property taxes, utilities, groceries, and an unlimited bus pass...
@peterlloyd6337
Жыл бұрын
I'm speaking from the U.K. At nearly 64 I'm thinking semi / full retirement. Have paid off the mortgage in full so own the house we live in outright. Ideally I wouldn't wish for a mortgage through retirement. The house fully paid for is an asset that if needs be in future could generate some ready cash if I was to downsize later in life in retirement. Five years ago my old asset manager said I should consider a material mortgage on the house and place the spare money on the investment market i.e. stock exchange effectively. Low loan interest rates and overall good high investment returns - i.e. make the lender work for you effectively. I said no - I'm too old to gamble the house on the stock exchange effectively. Boy did I make the right decision as roll the clock 5 years forward and as now loan / mortgage interest rates are far far higher and investment returns have suffered.
@shamod07utube
Жыл бұрын
I was always told NOT include a home in your net worth but never understood why growing up. The way you explained this makes it so simple and easy to understand. Excellent points!
@ErinTalksMoney
Жыл бұрын
Glad it was helpful!
@pickmeaname
10 ай бұрын
I go back and forth about paying off my 3.25% (8 year loan). While it'd be great to get that off the table, it also increases my cash & investment liquidity by maintaining the mortgage.
@MuzixMaker
10 ай бұрын
I do the same. Don’t be house poor.
@JimmyGrids
Жыл бұрын
One can turn home ownership into an income generating asset by acquiring a multifamily home - then ever Erin could include its equity into her net worth calculation. Mortgage payment stays fixed, but the rent you can charge increases over time. Over the last 15 years, one of the units in our 3 family home now gets more than 250% rent than it did when we bought it 15 years ago, and we are likely charging below what the market would support.
@Cucumberflavoredmustard
10 ай бұрын
Owning them outright, we can charge a little below what the market will support for our units too. When prospective tenants ask us "what's the catch?" we say that what we want in turn for a little lower rent, is to never be late with it. We also don't want to get early am calls for simple fixes like light bulbs or if your kid put a hole in the wall. If you damaged it, you fix it promptly. Call us for the big stuff.
@jaywatson9476
11 ай бұрын
On point. I am retired and fully own my house. You are absolutely correct in regards to having multiple streams of income vs just relying on home ownership 😉. Life is good for this old retiree 😊❤....
@shrapmetal
Жыл бұрын
I think if the goal is to reach and secure the chances of maintaining financial independence as much as possible and not just to maximize making money then paying off your home makes sense.
@Dave-sw2dm
10 ай бұрын
Bought my first home (1000 square feet) when I was 23. Used the equity for a down payment on my second home (1500 square feet) when I was 33. Added a 500 square foot addition myself. Paid off at 48. Looking at early retirement now.
@SunRise-ul7ko
Жыл бұрын
Living in Sydney Australia, the housing market has been out of control since the mid 80's. With a city that has 4 immigrants for every Australian born birth, there has been massive growth. My 2 million dollar house has doubled in price in 8 years & since I live in it, its capital gains tax free.
@bradbriggs5347
11 ай бұрын
So are you saying that the immigrants are bad or good ?
@SunRise-ul7ko
11 ай бұрын
@@bradbriggs5347 Bad. People can't afford families, because housing takes a working couple 30 years to pay off. One wage can't support a family of 5 to 7 children, like 100 years ago. The system is rigged. You replace what families once did, with government services. One of these services, replacing reproduction, with immigration. Other services like welfare dependency, has replaced what families used to do. Families used to be your pension in old age. Big government & high taxation is out of control. Remember income tax didn't even exist in the USA, Great Britain & Australia before the 1920's.
@paulfly3121
10 ай бұрын
@@bradbriggs5347 I don't think anything was said about that one way or the other. Sydney has been growing like mad for decades now is the point. A colleague of mine at work came to the US from Sydney partly because home prices/values were so crazy he felt he was being priced out of the market and couldn't afford to live there any longer. This despite making what many would consider a really good income.
@bradbriggs5347
10 ай бұрын
@paulfly3121 I felt it was a fair question, I live in a northside beach side Brisbane suburb and we have had a landslide of immigrants from nsw, I was wondering if it was a ultimately a good thing or a bad thing, sorry if you thought it was racist but that says more about you than it does me
@SunRise-ul7ko
10 ай бұрын
@@bradbriggs5347 What's better, having your own family & a legacy. Or making housing unaffordable, so you can't afford a legacy. Low birthrates are a government policy. Immigration is a government policy. No such thing as low birthrates, before woman got the vote. When you have a section of society that overwhelmingly vote for provision & security, this is ultimately the result. Total & absolute demographic replacement.
@bhilbert11
4 ай бұрын
Erin, One of your best videos! I was strongly on the "home is not an investment" club for several years. I am thankful for my investments and the peace of mind they provide. What I failed to consider previously was that a home while not an investment it would be an asset and would lock in many living costs. Houses and rents have doubled in my area over the last 8 years. Had I purchased a home I would have had a better place to live and would have locked in some of my housing expenses. Thankfully people can have setbacks, make some mistakes, and still win the money game if you stay the course.
@grindingpennies
Жыл бұрын
Rent can go up, so can property taxes for owners. Having a paid off home can help lower the emergency fund requirements since the equity can be leveraged to help. Having a plan to pay off the loan before retirement is direction I took. I plan on retiring in 20 years, and all my debts should be paid off by then. That said, I do plan on having enough invested to cover all current costs. If I were to stop working right now, I have about 20% of the income (dividend, interest, rent, etc.) needed; meaning I would have to sell shares to cover the additional expenses or drastically cut costs. Owning a home gives options in the long run, and to me that's what wealth does - gives options.
@josephkelleher8820
Жыл бұрын
In my opinion taking out a home equity line of credit is a bad idea but some people might disagree with that.
@tetedur377
Жыл бұрын
@@josephkelleher8820 I did that for home improvements, except I borrowed against my 401K. Even though there was interest, I was paying myself back from borrowing my own money.
@rossta3949
Жыл бұрын
@@josephkelleher8820those people would be wrong and broke.
@ron9665
Жыл бұрын
6:01 So after 11 years you would have paid around $310,154 to rent and have no equity to show for it. I've hear it said that if you plan to live somewhere for more than 5 years, it almost always pays to buy (obviously this would not apply to all market areas).
@triciabrown1462
Жыл бұрын
We bought our house 18 years ago and paid it off 10 years ago. We saved so much in interest. Even paying a little extra each month saves $thousands and years as long as your mortgage is set up so overpayments go toward the principal.
@DaveM-FFB
Жыл бұрын
Great video. You're one of a small number of financial KZitemrs who actually get the fact that financial security is all about cash flow. btw - At age 60, life expectancy is 82 and 85 for men and women respectively. The fact that some folks die super early (from accidents or violence) brings the average down several years. But if you make it to 60 you have to plan for 20 to 25 more years.
@Iffy50
Жыл бұрын
I never thought to look up life expectancy at age 60, but it's very relevant, thank you! (since life expectancy at birth is much less). BTW I found a CDC life expectancy table and it gives very complete data. www.cdc.gov/nchs/data/nvsr/nvsr71/nvsr71-01.pdf
@ariston5433
10 ай бұрын
We paid off our 30 year mortgage in 17 years. We sold our home at the top of the market last year and moved to a different state and paid cash for a bigger home with more land that costs less. The insurance on my new home is now half of what it was in Texas ( high prices due to hurricanes, flooding). Florida and Texas have high home insurance prices as well as car insurance especially in the large cities. We got tired of the traffic and weather too.
@SeriousSchitt
7 ай бұрын
Haha, here in New Zealand, if you live in a weather prone area “everyone’s” insurance goes up to pay for it! The North Island has been hit really hard in the last year or do, with cyclones, flooding etc, yet all our home insurance premium payments went up because of it, and I live in the lower half of the South Island where the weather’s more stable!
@queenchioma3244
2 ай бұрын
Which state did you & your family move to that had lower property taxes? I’m in Florida and want to explore other states for better options in homeownership
@ridzwanramli5007
11 ай бұрын
I took a 35 yr home financing 7 years ago. I am planning to fully settled it next year, after which I will be concentrating in building savings for the kids educations as well as for my retirement. I believed in consistency and high level of discipline when planning for retirement. Whether or not you plan to settle your mortgage early is irrelevant.
@oldhag2881
6 күн бұрын
Employers really hate employees who know they can walk away anytime. I'm 63. It's a great feeling knowing that, if I decide to, I can finish my working life being The Helpful Hardware Guy.
@mcarlo52
Жыл бұрын
I've been fully retired for about three years now and whether or not to include my home in the net worth doesn't mean much. I can't use the home as an income stream unless I give up some ownership, which is not ideal. Including the home in net worth may make one feel better about their financial situation but may also give a false sense of security about retirement readiness. That being said, I usually included the home in my net worth if someone asked because it's technically correct to do so.
@Youtuberkt
Жыл бұрын
Why is it a false sense of security? If at retirement, they need money they can always sell
@mcarlo52
Жыл бұрын
@@KZitemrkt True, but not ideal if one has to start renting when the house was payed off.
@Youtuberkt
Жыл бұрын
@@mcarlo52 they would have been doing that regardless if they didn’t own that home. This is only a problem if the house didnt appreciate much and/or the alternate opportunity cost of that investment was high
@mcarlo52
Жыл бұрын
@@KZitemrkt I meant it this way: if one owns their home with no mortgage and it’s worth, say, $200k and they have $50k in saving their net worth is $250k. If they need $10k additional to live on, they may think they could last 25 years. Even if they sell the house, they can’t go that long because they’ll have to use some of that for rent. That’s what I meant by a false sense of security.
@chrisbaker2669
Жыл бұрын
I think owning a home greatly increases your networth because it reduces your expenses which is actually better than an income stream of the same amount because savings are not taxed.
@hanwagu9967
Жыл бұрын
networth isn't correlated to reduction of expenses or income stream. Plus, your home may appreciate 4.5% over time, but that is reduced by inflation over time and you have no flexiblity with home equity.
@chrisbaker2669
Жыл бұрын
@@hanwagu9967 I disagree net worth is totally coordinated with reduction in expenses or increases in income
@dariogomez8721
Жыл бұрын
Except property taxes.
@tuan2u
11 ай бұрын
@@dariogomez8721 In many jurisdictions, some people are exempt from property tax. Senior citizens and military veterans of certain tax brackets are exempt. Also, if you do pay property taxes, it's usually less less than the increased worth of your home year over year in the long run. Now, maintenance cost will definitely decrease your networth. Writing a $20k check for a new roof or major repairs will put some dents in the networth
@Ryan-ep8yu
11 ай бұрын
@@hanwagu9967homes and people's situations are all unique. You can't just say home ownership is a bad investment. I put 0% down, my home has appreciated 50% in 3 years. And I can rent it out currently for ~140% of my mortgage. It's an investment that will pay for itself. As long as I put the extra rent into an account to pay for expenses on the house, I will never have to pay out of pocket for it while renting.
@joemiller8029
Жыл бұрын
Love the hair! Long time. Better, brighter future? If you have a roof over your head, and running water AND a toilet in your house, you are living the dream compared to the rest of the world. If you don't have to go outside to use the bathroom and fear a snake biting your butt, you already have a blessed existence on this planet! Love the simple things in life and having your needs met and you will be much closer to being happy.
@RedEyeC
11 ай бұрын
When I see and listen to someone who is as young as you appear, and they are on top of the game - I have renewed faith that our country will be okay. 😉 March, 1994 - the date our mortgage was completed.. Since then our property tax has quadrupled though 😮💨
@tetedur377
Жыл бұрын
I'm 67, with a mortgage, and I have no idea when (or if) it's going to be paid off. Frankly, Scarlett, I don't care. Here's the thing: I refinanced in 2015; about 6 months before my wife passed. Now, even though she was an annuitant, her income wouldn't pay for an apartment in a small town. I've always believed, and I've preached it, that couples should never buy more house than one of their incomes could support. Most people don't listen to me, but I listened to me, and my mortgage costs just under $1,100.00 a month. The house across the street - admittedly a bigger house (mine is 1100 sq. ft.), just rented for $2,200.00 a month. With the mortgage, utilities, and everything (except eating out), it costs me right around $24,000.00 a year to live. I gross $60,000.00 in retirement. So nope, don't care about paying off my mortgage.
@JohnBowl14690
10 ай бұрын
If I made $60K per year and had $1100 payments in retirement income, that would leave me about $2800 net per month after paying mortgage. That's reasonably comfortable for me, and in your situation, I probably wouldn't pay off the mortgage either. However, in many other situations, I think paying off the mortgage makes tons of sense.
@billwilliams5889
10 ай бұрын
When you start paying on a 30-yr mortgage, print off the amortization schedule that shows the principle and interest for each of the 360 payments. Then take a look at how much interest you would save by making extra payments. That will set you on a course to pay off the mortgage ASAP !
@terrencemcphail5782
9 ай бұрын
exactly why i laugh when people claim they investment give them more money cant compare simple interest to amortization. 3 percent on a 100k is 3k 100k pay off early will save u like 20 to 45k over time and investment is not gurantee
@batyushki
Жыл бұрын
About the same time we paid off our mortgage, we also started renting a room in our house to a trusted tenant. We plan to expand to two rooms, which will essentially reverse our mortgage: we'll be receiving as much income from the rooms as we were paying for the mortgage. There are social benefits to having more people around in retirement too. I would say that the empty homes of retired people can become significant income generators for those willing to try.
@michaelcoughlin8238
11 ай бұрын
I have an entire second floor I could rent out. 3 bedrooms and a full bath. I just can't bring myself to do it. Having strangers coming and going... there's no kitchen up there so they would have to eat out or have deliveries all the time which results in more trash, etc. Glad I don't need the income. If I had the income, I would probably use it to buy a rental house.
@dennistyler9852
10 ай бұрын
Back in the day, my Mum would rent to a friend ( usually temporary). Some people called them boarders. It helped both parties out.
@Shadow_Banned_Conservative
10 ай бұрын
I think you're going to see a lot of that in next generation's retired folks, but it's going to be out of financial necessity rather than social benefits.
@macmcleod1188
11 ай бұрын
Paid my house off at 45. Retired at 51. Taxes have increased about 50% faster than budgeted. Have repair insurance ($500 a year). The ACA made it happen. I've done some gig jobs since. Barely retired before layoffs at my company. Was set to tell them I was retiring on Jan1st, they laid us off the prior august with an effective date of December 31st. The value of a paid off house is nearly incalculable. My friends rents have more than doubled. And they built up no equity. Renting is great if you move frequently.
@JHA6100
Жыл бұрын
Erin, as always, well done! All so,important. We are fortunate and are debt-free, retired, and living off investments. Soon we will draw SSI which will reduce our dependency on investment yet we will still have that. We were able to purchase multiple residential rentals over the years, and we DO include the rental inventory in our net worth, not our primary residence even though we understand this truly is part of our net worth. Thank you!
@peace2all
10 ай бұрын
We paid off our home when we were in our early 40’s, and then put all the monthly savings towards retirement. Peace - John
@dc1674
10 ай бұрын
I disagree. I include home becuase my plan is to sell it and rent/travel later on.
@huhhuhhuh4069
Жыл бұрын
Including home equity is technically correct when calculating net worth as it is part of the official definition. Practically speaking, it is useless and just inflates the numbers, or even misleads people into thinking they are in a far better position than they are in. If I included my house in my net worth, then I am worth at least 7 figures but I am struggling everyday lol.
@bigshoe84
Жыл бұрын
So when doing the calculations if you are not including your home equity do you also not count the amount you still owe in the liabilities column?
@huhhuhhuh4069
Жыл бұрын
@@bigshoe84 those are included
@hanwagu9967
Жыл бұрын
@@bigshoe84 if you aren't including the asset then you should also not include the asset's liability either. What we are really talking about here is investable assets, not net worth.
@bigshoe84
Жыл бұрын
@@hanwagu9967 That was my thought also
@slmunney7760
11 ай бұрын
Great video. Could not agree more. I don't include home value in my net worth statement and also deduct my mortgage. This could be overly conservative, but as Erin says, the home is not an income producing asset and I will eventually have to pay off the mortgage. True financial value of home ownership is accumulating equity to minimize housing costs in retirement.
@carolinel2530
11 ай бұрын
Don't kid yourself. Unless you're a multimillionaire, we are all one medical crisis away from financial ruin.
@donaldlyons17
10 ай бұрын
Yeah and for some it means a multi-millionaire!!
@markislivingdeliberately
6 ай бұрын
Keep in mind, we could all die tomorrow. That doesn’t mean you shouldn’t plan on living past then.
@brassj67
3 ай бұрын
Depends which country you retire in but for the US, I definitely agree with you
@jessehullinger2227
2 ай бұрын
You could find good insurance and start a health savings account to prevent this
@kckuc310
Жыл бұрын
My house has been paid off for a decade and it feels good. Foreclosures rarely happen with a paid off home, it’s the mortgage that gets people in trouble. It’s a huge risk factor people don’t account for. People with mortgages don’t view it as a risk until it’s to late.
@rockystaatz521
Жыл бұрын
Actually some are going to be taxed out of their homes soon and without any extra income without working hours or worse
@rossta3949
Жыл бұрын
@rockystaatz521 What's the percentage of people that get taxed out of their houses? I would say 99 percent less than those still have a mortgage.
@auomi8762
Жыл бұрын
There’s a person on my street that has a paid off home, however, over the years taxes have risen so much that the person is now paying more in taxes than the mortgage
@kckuc310
Жыл бұрын
@@auomi8762 so they have both, I’m saying if you have taxes only it’s better then a mortgage on top of it.
@rockystaatz521
Жыл бұрын
@@rossta3949 you are probably correct except for some fixed income , still have a mortgage because my money makes more than my mortgage but taxes have raised the payment to an unexpected amount with utilities going up at the same time. When the taxes quadruple in just 3 years that’s not something you can plan to cover in almost every range
@JBoy340a
Жыл бұрын
A lot of good points. We paid off the mortgage on our primary residence early about 12 years ago. Now, going into retirement we have few fixed expenses beyond food and utilities. We invested and budgeted for retirement assuming that SS would not be there for us. However, it looks like it might be around for a few more years. So thing financially things are better than expected.
@Shadow_Banned_Conservative
10 ай бұрын
I hold similar beliefs to you. I don't think SS will be there for most of us who did the responsible thing and saved for our own retirement. As bad as government spending and debt is today, I plan on seeing both my SS and my Medicare being means tested and limited based on having my own retirement income.
@ws775
10 ай бұрын
Social Security will always be there as long as there is a dedicated funding for it with the FICA payroll tax. It might come up a little short but they will fix that when the time comes.
@Shadow_Banned_Conservative
10 ай бұрын
@@ws775You put a lot more faith in our government to make good on their promises than I do.
@tonyflaminio2719
11 ай бұрын
Dear Finance is Personal, LLC I think your message is spot on as usual. Make sure you are investing beyond your mortgage. We never included our home in our net worth, but I assume that’s for two big reasons. 1. We we’re saving aggressively beyond our mortgage. 2. We like you grew up in the midwest with affordable housing. If you are not or able saving aggressively you are probably counting your home in your net worth. We paid off our house at age 45, but the watch out was how much our house still cost us as you said. Our house now makes up 5% of our net worth. Thanks Erin for your advice and input. Tony
@CalmerThanYouAre1
Жыл бұрын
Definitely a very interesting aspect of FI planning for sure. Having a paid-off house is the right call for the vast majority of people entering retirement, especially those with low enough mortgage balances to not be able to take advantage of the mortgage interest deduction. Although, that could be changing. The standard deduction could be getting chopped in half in 2026, which would open up that deduction for a lot more families to take. Either way, income taxes, ACA subsidies, SS tax and Medicare IRMAA penalties, Roth conversion strategies, etc. all have to be taken into account before making the call to keep the mortgage in retirement or not. Definitely not a trivial issue or easy calculation. Personally, I’m planning to keep mine as long as I’m working due to being in a high tax bracket and getting the mortgage interest deduction. The high mortgage interest also pushes SALT taxes into deductibility. The net cost savings is much better than the mortgage interest savings from paying the mortgage down early. However, I’ll definitely have a plan to be mortgage free for my primary residence when entering retirement, or shortly thereafter, since those tax benefits will no longer make sense.
@pls5201
Жыл бұрын
Went into retirement with a paid off home. But to get rid of stairs I bought a new condo by assuming a VA mortgage at 2.25%. I can manage it and I am fine with it.
@RA-bg3pe
Жыл бұрын
Met my goal of being mortgage free last month...exactly 18 years to the day from when I closed on the house in 2005. Feels great! Better news? Im already 9 months down the road of saving up a sizeable down payment to buy my next home. Keep up the great content.
@anniealexander9616
Жыл бұрын
Congratulations!🎉
@ErinTalksMoney
Жыл бұрын
Great job! 👏
@jonathanfoster2263
Жыл бұрын
I plan on retiring at the end of next year, I have decide that my last task before i retire is paying off my mortgage. Even with the 2.3750% rate i have now I will feel better not having the $10'000 hit on my expenses for 10 more years. It will also mean market downturns will have a much lower affect on our finances.
@ErinTalksMoney
Жыл бұрын
I hope you enjoy your retirement!
@jdgolf499
Жыл бұрын
Do you need to pay off the mortgage to make ends meet, or you just don't want to havenit? If you have no problems making rhe payment, why not put that money into any number of accounts that pay 5% or higher, that doesn't tie your money up, and has no penalty to take it out. You are getting 3% above what the mortgage is. If those rates go down below the 2.375%, then pay off the mortgage.
@randolphh8005
Жыл бұрын
Renting after retirement is only for the wealthy!….or the poor. If you just want a nice comfortable retirement, pay off an appropriate primary residence. Having no debt in retirement is priceless! We know, as we did just that. No worries, no concern about market crashes. We can easily live off of JUST Social Security, but we also have investments to fund all the fun stuff.
@Navs126
Жыл бұрын
Goals 👏
@tetedur377
Жыл бұрын
Same, except my house isn't paid off. As I said above, my mortgage is half what an apartment (or some houses) go for. My 3 year old Tundra is paid off, and other than utilities, I could live off just Social Insecurity. It would be tough, but thankfully, I have an annuity, plus income from investments. Although I lost money (around $30K) in 2020, I'm still not doing badly, since most of those investments aren't in the stock market.
@justthebrttrk
Жыл бұрын
Disagree partially. Your living situation should reflect your lifestyle needs. My wife and I travel a lot, so having a lot of home maintenance would be a pain. So, we rent and will rent for the foreseeable future.
@hanwagu9967
Жыл бұрын
being house rich is not security.
@missmaryjanegreen
Жыл бұрын
So you are assuming the Republikkkans aren’t going to gut your SS entitlements?
@ed5308
Жыл бұрын
Owning a home is not only security but when you rent you not only have the inevitable rent increases but you are at the mercy of the landlord. Until you have been asked to find a new rental because the landlord decided to sell or worse move a family member into the house to get ride of you. I bought a house for 290K about 20 years ago and paid if off five years ago. The property taxes keep going higher and higher and the costs of maintenance and utilities are also skyrocketing. I know I could not afford to rent this place at today's market prices.
@shawnbrennan7526
10 ай бұрын
Lots of people like to argue that the math says you are better off investing instead of paying off a (relatively) low-interest mortgage. That is generally true. My advice is simply to have a plan to at least pay off your mortgage a few years before you retire. That allows you to make better decisions with your retirement nest egg and not need it to generate as much each and every month.
@MuzixMaker
10 ай бұрын
Depends on how much of a nest egg you have left and how much income it can produce.
@n-da-bunka2650
7 ай бұрын
Great video and well positioned. We paid off our home in 18 years so had zero payments for the past 5 years. Decided to buy a new waterfront home about a year ago and the prior home paid for all but $100K so we owe less than 10% of the properties current value. Both of us are still working so payments are minuscule but we can also sell an investment property to fully pay it off should we like. We agree that a paid off home gives one great comfort.
@FurryHippoFinance
10 ай бұрын
The "Modern Day Millionaire" to me just seems like garbage since for a majority of individuals (me included) is due to an increase in home value over the last 10 years. Being a financial counselor, I see the impact of going into retirement with a mortgage and it has always been a bad scenario for the borrower. Great video!
@volvo8938
Жыл бұрын
I bought my house in cash in 2021 for 500K on a double lot, I pulled out 400k at less then 3% and bought some rental properties in cash in Detroit and invested the rest in the stock market. Everyone has their own path. I saved every dollar when I first started working and now it has paid off. im in my early 30s
@johnl9135
7 ай бұрын
I think it is a lot of people dreams to have a paid for house. Just imagine how much you will be saving each month with no rent or mortgage. Now I see my big brother has a paid for house that he'd bought years ago for around $250k. He is not just now don't have to worry about paying for mortgage, his house now worth almost $900k the last time I'd check. It's crazy.
@economicdevelopmentplannin8715
Жыл бұрын
your primary res is def an asset. you can rent out extra rooms 'today'. Your CHOICE not to do this, doesn't preclude it from being an asset. You're just CHOOSING not to monetize the asset. Choosing not to monetize an asset doesn't make something suddenly a non-asset.
@cashflow68
Жыл бұрын
I agree that my free and clear is not included in my net worth. The only time I care is if I plan on selling. I use cash flow as a measure of true assets. Im currently living off of my dividends until I apply for my maximum SS in 3 years. Thank you for the video.
@roburb73
Жыл бұрын
100% agree on not including your home in net worth - it doesn't generate income!! I tell people all the time, you're never "free and clear" from paying on your primary residence. I've listened to so many Ramsey followers say they're struggling to pay the increase in taxes and insurance. They focused on paying down a 3% mortgage and not investing. 🤷
@user-tb7rn1il3q
Жыл бұрын
It is part of your net worth. You can always sell and downgrade to a less expensive property.
@roburb73
Жыл бұрын
@@user-tb7rn1il3q , Sure, having to sell your home because you failed to invest and have no income is a great position to be in... said no one ever! It doesn't produce income unless leveraged or sold. It was explained that we all know it's part of the true definition of net worth. Did you come here to highlight something we already stated?
@danh2716
Жыл бұрын
"100% agree on not including your home in your investible assets - it doesn't generate income." Fixed that for you. Your home equity belongs in your net worth just like the value of that can of soup in your pantry is part of your net worth.
@greggpurviance7252
Жыл бұрын
@@danh2716 yes it is. In the dystopian future how much will the can of soup go for? Maybe more than gold or your money making investments
@vulpixelful
Жыл бұрын
@@greggpurviance7252 This is peak paranoia. And if money making investments are worthless, then no one will need to collect on debts because our money would be worthless. So that's not really relevant
@Summitauto
Ай бұрын
Paid my mortgage off 2 months ago. Refinance from a 30 year to a 15 year in 2012. Took 12 more years to pay it off, but I really didn't go at it like a lunatic until about 2 years ago. I paid off one of my autos, took that money every month to pay off my wifes car. Then took all that money to pay off my truck. After getting a small raise at work in addition to my youtube income I started making an extra full payment a month on my house. Between 22 and 23 I paid off $49,000 in principal, and then finished it off this year. The first month I didn't have a mortgage I bought a new water softener for the house. 1 car and 1 student loan to go. 41 years old. My goal was to have my house paid by 40, but I couldn't quite make it happen. I have KZitem to thank for making this dream possible. Now that the house is paid off I am going to max out my Roth 401K and adding more contributions to my kids college funds and add on to my garage and see where it goes from there.
@davidgroff4723
10 ай бұрын
I think of a home as a utility. It keeps me out of the weather. It's not part of my balance sheet unless I'm locking to sell it.
@JennyLouRN
22 күн бұрын
A good reason not to include your house in your net worth, is that unless you are going to sell it, it has no value. You have to keep it in order to have a place to live, and you still have to pay property taxes and insurance and house repairs, which usually increase each year. However, owning a home means you will have a place to live, and you can factor slightly less $$ in your retirement budget.
@philipem1000
7 ай бұрын
I had to retire in 2008; laid off aged 58/9 no job prospects. I owned two rental properties but lost all equity in them and I had used them primarily for tax writeoffs. I moved into one sold the other and used what little I got to partially pay the mortgage on the one I was in. Then I took small withdrawals from the IRAs over a period of time to pay down the rest of the mortgage until I got to the point where the HELOC on it was enough to pay off the mortgage; that lowered my payments a LOT and gave me the ability to pay the Heloc down with money from my Social Security. Once it was completely paid off the sense of security and well being I got became incredible. I've always lived below my means and I am saving money to this day while living off the SS. THe RMDs get reinvested but knowing I will never run out of money is literally priceless. I may be of relatively moderate means but I'm as wealthy as I ever need to be and the feeling of security is unmatched.
@CaedenV
11 ай бұрын
It's hard to take an apples to apples comparison between home ownership vs renting seriously. 1) If your lifestyle or job situation is more transient, then home ownership is a horrible idea. It takes a solid 5 years to begin to break even with home ownership, and a full decade to really feel any home ownership advantage. If you don't want to stay in the same place for 10+ years, don't buy a home. It likely won't work in your favor unless you are flipping the home you live in. 2) few people rent homes that they would buy... I mean, if they wanted to buy it, they wouldn't rent. The average home rental is cheaper than a home you buy. The average apartment rental is cheaper than a condo you would buy. Yes, if it is between renting a $400k home vs renting it, then buy it. But if you travel a lot, or move a lot, or get bored of your surroundings, then you can rent a series of much cheaper homes and come out way ahead. Yes, you could also buy a cheaper home (that is what we opted to do), but most people who buy want to buy as big as possible, while people who rent tend to rent smaller because it isn't their investment. So it is never an apples to apples comparison. 3) when you rent your maintenance bills are built into your rent costs. This keeps your costs fixed. But if you buy and you have roof damage, or the hvac dies... That can be a massive lump sum bill that can set a young home owner back years. The renter has a much more certain budget. 4) Home owners tend to not just maintain their home, they tend to make improvements and customizations that is often a large hidden cost. That isn't to say that renters don't... They just tend to make much smaller superficial customizations that are much cheaper, and less perminant. 5) Related, home owners take a lot more pride in their home, and tend to not only buy a bigger home than a renter will rent, but they fill that extra space with nicer and more perminant furnature. When renting and you know you are going to likely move, you don't buy that solid oak dining room set... That is heavy and won't travel well lol. 6) In the event that you do have an apples to apples comparison, you need to consider the down payment and mortgage rate of the house, vs a lump sum investment and compounding interest on your investment. If you have a 2% mortgage, then yeah... That home loan is nothing compared to the rise in home value, and the home value is massive compared to the down payment, so it is likely a good investment. Buuuut, if you are facing an 8% interest payment on a mortgage vs an 8% average return in stock investment... That becomes a harder judgements to justify. An 8% compounding return vs an expected 3% rise in rental costs can supprisingly land in the renters favor more often than you would imagine. On top of that, the average home appreciates in value at 2-6% per year in all but the hottest of markets. So if you can rent small early on and invest the difference in what you would have bought, then that may well be a fantastic tradeoff sacrificing a few years of home ownership to invest more money earlier for a better return. Now, I'm playing a bit of devils advocate here. I'm a home owner, and wouldn't have it any other way. I never want to move, and I like working on my home, so I'm a prime candidate for home ownership instead of renting. But I will never question the motive for renting over buying because it is often the better choice for most people. Your big 3 expenses in Life are your home, your transportation, and your health. Renting is a great way to keep costs low and steady on one of your largest 3 costs, so it is a great tool to help mitigate risk and costs so that you can invest more earlier... Assuming you are renting a smaller home than you would purchase.
@BudgetingTheBacon
11 ай бұрын
Paid off our home Aug 9, 2023 and finally picked up the Deed, earlier this week. It was the best feeling ever to have documents stating I own my home free and clear. Yes we still have taxes on the property, but I’m going to monitor those and protest as needed to keep the home value lower than the County states it is for us.
@jodag3475
10 ай бұрын
Taxes can be negotiated? What argument would you tell the home value assessors to convince then to lower the taxable value?
@BudgetingTheBacon
10 ай бұрын
@@jodag3475 my brain and writing it out didn’t catch up, lol. I can’t negotiate the taxes, but the home value of the property I can do so (basically protest what my county states my home value is). If they agree to a fair market value based on evidence provided that in turn lowers my property tax I have to pay them. I’ve done this by looking at comps of other similar homes in my immediate area to see what they were assessed at, the fact I have no home upgrades, and what is fair in terms of home value. I input the info on the online website and receive a real time answer of if my “offer” was accepted, rejected, or rejected with a negotiated property value. I can accept or reject it and choose to take the case further up. Some pay an adjuster to come out an appraise their home (do a detailed assessment) and use that info to protest the property value of the home. They cost average $500 and then you go through the process above. Hope this answers the question, but if not let me know.
@frankish5314
Жыл бұрын
Unless you intend to sell your house ( we don't) then its value is not relevant. I love not having a mortgage however. I also don't include the value of pensions. Pensions are a wonderful vehicle for providing income that does not require capital to make it, but unless you do some kid of net present value (i.e funny math) of that pension, well then it doesn't fit.
@sunnycowellmusic
11 ай бұрын
💯 We have a fully paid off home that was bought during the Great Recession for a bargain so while the value of the home has tripled or quadrupled the property taxes are still assessed very low (at approx. the $100k price we bought it for). Having a paid off home in our early thirties with this additional hack of low property taxes has helped us achieve FIRE quickly. But since we don’t want to actually retire, we have the privilege of being able to work in public interest careers, travel a lot, donate to causes we care about and still invest 50% of our income with the goal of getting to Fat FIRE status.
@hainesjw
11 ай бұрын
yeah, I disagree but understand and respect you not including your primary residence in your “net worth” as you use it for your own planning. In my own case, our primary residence (large single family residence in expensive area) was by far our most valuable asset. We downsized in 2021 and bought a townhome for about 1/3 as much, and rolled the rest of 20-years-of-equity-growth into a rental property-both financed at under 3.75%. If we’d excluded our primary home, it would have looked like we were not-at-all prepared for retirement until 2 years ago, at which point, , AND we now essentially have a nearly-fixed price “rental” to live in. Thank you for helping people get financially literate!
@khaldounsamman9128
4 ай бұрын
One other option to consider is that in retirement selling your home and investing it can generate passive income to pay for a good portion of your rent. Also, when you get older, maintaining your home gets more expensive because you become dependent on paying people to maintain and fix things that in your younger years you used to do yourself. Thirdly, the longer you stay in the house the more likely you'll have to replace expensive things in the house, like roof, furnace, AC, siding, or a sagging garage that may need replacing. All these things add up. Fourthly, subtracting property taxes, home insurance, and extra cost of heating and cooling a home compared to an apartment which is much less. So when you subtract those extras or forthcoming costs of staying in a house and moving into an apartment, the actual cost of renting may be paid off via the interest you made in investing it into the market. Just a thought to consider for those older folks. If you're younger with a paid off house, this would be very different.
@BlueGatr-fp6xz
10 ай бұрын
The words 2nd mortgage was a 4 letter word to me. I paid mine off 9 years ago. Financial freedom was my best way to go
@rlg222
10 ай бұрын
You bring up some good points. Just from my short financial education journey that basically started in 2018, I think if your young enough, paying off your home wouldn't benefit as much as if you're in retirement age. This seems to be a big subject and can be subjected to a degree as I've heard some different angles. I've even heard some say your home is not an asset. Terms like cash is trash and cash is king. They never taught financials for real life in HS. I hated to hear this but, they want us to just be slaves to the system. I think the number one problem with any mathematics here is the word "variables". If you wanted to use statistics that could help. Here is one scenario as example as it reminds me of the movie "Happy Gilmore" You own your paid off home, but you never paid your property taxes, the IRS comes to take your paid off home from you.
@mikebridges20
Жыл бұрын
Erin, another great video. That statistic you showed at 9:27 showing the net worth of people 65 and up going DOWN is sobering. Our house is paid off, and I have to say it really allows us to decouple from the constant change of the market, and really has improved our quality of living. (our investments are doing fine as well). Thanks for the thoughts!
@Erginartesia
Жыл бұрын
Net worth @65+ group is going down [hopefully] because they are now in decumulation phase… that should be part of the plan. A great calculator to help figure out your own projections is New Retirement. I still keep spreadsheets, but New Retirement is where I do my “what if” research.
@mikebridges20
Жыл бұрын
@@Erginartesia Perhaps, but the numbers that Erin showed are desperately low. 4% of even $94,500 is barely $300/month.
@kevinkanter2537
Жыл бұрын
@@Erginartesia I have used my own tax-estimating spreadsheets but will probably get the trial version to run some full scenarios. did you get the version allowing ROTH conversion scenarios?
@kevinkanter2537
Жыл бұрын
@@mikebridges20 that's why most readers here are not the "median" . looking up net worth (w/o equity) for $250k would be 61% and $500k is 73% -- however according to the Census bureau 'satisfaction' survey 88% of retirees are satisfied with their income. also in every cohort before retirement the expected retirement savings are >> than real retirement savings. Perhaps it is our historical heritage -- remember that we all 'settled' here ... ( ok, bad joke on a tragic situation )
@mikebridges20
Жыл бұрын
@@kevinkanter2537 Thanks for your reply. 2 questions: what do you mean by "equity", and where do I find those statistics you reference? Thanks again, and have a good one.
@dwaynemauk566
2 ай бұрын
My wife and I are making more than double house payments. When we realized we're not getting a "tax" break on the interest, and looking at retiring in 12 years, thought we'd better get moving and pay off the house. So throwing everything we can at both 403(b) and house. So far, so good.
@Thecolchicum
Жыл бұрын
Hey Erin Thanks for the video I disagree with the method you calculate the cost of the paying for mortgage since your calculation is time independent - I mean as if the 30 years loan started right with the retirement- Let's say a person is only 5 years away from paying off the home, and they want to retire, it certainly doesn't cost them $800 000 more in savings. Besides, they can get a roommate, it probably wont cover the monthly house payment but every dollar helps I calculate my personal wealth as two different values : the money in stock market and money + house eq together. One value tells me what will grow in stock market next year while the other one tells me how far I am paying off the house I love your videos, #keepgoing
@LofiLotus14s
Жыл бұрын
personally, I calculate my net worth both ways. although I agree that a primary residence is not an income generator in the classic sense. I track it similarly to a long-term stock position. This way, the appreciation is accounted for in my annual statement. great video as always.
@Erginartesia
Жыл бұрын
That sounds very practical. I don’t do an actual annual statement, but I probably should, and keep a paper copy of it in my financial journal binder. I have been using Quicken for several years, and with that multi-year data, I often use historic data to project out.
@danh2716
Жыл бұрын
At the expense of being a little pedantic. What you're really doing is calculating your net worth, and then your non-residence investment assets. Home equity is part of net worth, whether a person adds it during a calculation or not.
@LofiLotus14s
Жыл бұрын
@danh2716 yes, however, IMO this is a situation we're the more knowledge the better.
@jerrylundegaard2592
7 ай бұрын
A voice of reason in a sea of the unthinking. Well said.
@brianiswrong
3 ай бұрын
For us being morgage free means 3 things. 1) when our income drops we have a bigger buffer from bills going up and our income being static,as our biggest monthly bill is our council tax bill at £145 per month and our gas/ electric at £120 per month (we have an electric car) in the uk 🇬🇧. 2) just the feeling in our head that in the worst case scenario we have an asset that could be turned in to cash and fund what ever the emergency is (obviously with lots of strings attatched) A sort of (really, really rainy day fund) 3) the money we spent on our morgage ( £328 per month) is now paid into a pension fund ,so we are no better off,but it feels like our outgoings are going to help us more in retirement rather than the here and now.
@CalicoCooperFan
Жыл бұрын
I think home ownership's importance and role in wealth building varies by different segments of the population. We've talked about how most Americans lack financial literacy. In lower income families that aren't as savvy financially, homes represent their primary wealth building asset. I'm not saying it should be that way, but it is. That's likely due to either lack of financial literacy or mistrust of our financial institutions. ( Some races are heavily underbanked due to bad experiences with banks in their country of origin and essentially put their cash in shoeboxes at a higher rate than others.) I do count my home value as part of my networth. If I ended up in a bind and had to sell it, it's money that could keep me afloat. My retirement accounts, bank accounts, and home equity are all working in concert to build my networth.
@ImtihanAhmed
7 ай бұрын
I think a lot of it has to do with age. If you’re relatively young and plan to work for 10+ years, probably best to keep paying the mortgage and invest the difference since the market will usually have a much higher return compared to the interest paid on the mortgage. Then as you get closer to winding down on your career, you’ll have the roi from the investments to pay extra towards the mortgage. But the peace of mind would be worth it.
@d.s.5807
10 ай бұрын
We are in the process of deciding to pay off our home. We could pay it off tomorrow if we want to but the interest rate on the house is 3.35 and we can get 5.5 in a CD or a little over 5% in treasuries so we have a major decision to make. We will continue collecting interest until we pay our taxes next year due to the tax consequence being substantial from the sale of a commercial property which we choose not to reinvest via a 1031.
@vulpixelful
Жыл бұрын
Invest early and often, and you'll have excess in retirement to maintain your housing costs, including maintenance. People with a paid off home can still lose it if they don't pay their taxes or if they can't keep up the maintenance and the city declares it uninhabitable. A _lot_ of seniors get behind on maintenance, hide the issues from their grown children, then end up losing their paid off house.
@morebeer7673
Жыл бұрын
Similar situation is increasing property taxes. If it's an affluent neighborhood, the home values can increase yearly and that equates to higher taxes. If you're on a fixed income after retirement you may not be able to keep with the tax bill and end up losing your home. I've sen that happen several times.
@mra95662
10 ай бұрын
My home is a duplex. Rental income pays for it. I was about to pay it off in a large lump sum, but decided to continue to carry the debt and manage tenants. Invest the cash in total stock market index fund.
@robstubbs1176
10 ай бұрын
We paid off our house years ago. Sometimes I forget the benefit that provides for us. I am grateful to have had the chance to do so. (Think, hard work & sacrifice).
@JennyLouRN
22 күн бұрын
A house payment also increases by the rate of inflation each year: property taxes and insurance!! Your principal & interest on the mortgage stay constant.
@SweetPotata10
Жыл бұрын
I always felt including my home over inflates my net worth, especially it is just an estimated, time stamped of unrealized value. I do include my mortgage though to be conservative.
@aboucher2110
Жыл бұрын
I just have my house listed at my purchase price so it doesn’t have a big effect on my NW, just my mortgage payments.
@JBoy340a
Жыл бұрын
Agree. I stick to assets that are cash or can be easily coverted to cash when I calculate net worth. I explicitly leave off the home because you still need a place to live.
@duanejahn2368
7 ай бұрын
I have a mortgage rate of 2.25%. I've thought about paying off the house, BUT, I'm getting over 5% in my conservative investments. In total, I'm getting 2.75% more on my savings over my mortgage rate. Unless, interest rates go below 3%, I see no reason to pay off the mortgage.
@greggpurviance7252
Жыл бұрын
Then don't call it "net worth." Use or come up with a new creative term.
@danh2716
Жыл бұрын
Right? Net worth mean assets minus liabilities. That's what it is, regardless of how a person wants to think about their finances. There's a reason terms like "investments" "invested assets" "liquid assets" etc. exist. Use the word you mean, don't use other words, and then insist on them meaning something else.
@dannyknapp515
6 ай бұрын
I’ve always liked being homeowner and not throwing money away renting . Bought the home at 26 years old paid it off at 42 years old used that money to pay off all loans and now ready to retire at 60 with no payments except taxes and a few utilities
@LennysHobby
7 ай бұрын
I hear this very common argument about not including primary home in net worth. Yes, it's a use asset, and some people don't see themselves selling it as an investment. But that kind of falls apart because, all assets have to be sold for you to reclaim that value. Equities are also something that "well, you only get that money if you sell it and don't have it anymore". ...Yes. That's, that's how all of this works.
@turdfurgason8476
9 ай бұрын
My wife and I opened a Roth each in October. We invested the 13,000 max total. The accounts are worth 14,800+ less than 3 months later. Glad I did not put that to a 2.6% mortgage.
@chemquests
Жыл бұрын
I include my home because I’m planning to downsize once the kids move out and will use part of the equity towards retirement. There’s no way I’m living in this house in retirement.
Пікірлер: 1,3 М.