Comments on: Bothering me…. http://www.jeanchatzky.com/homepage/bothering-me/ Thu, 02 Sep 2010 22:59:12 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: susannewton http://www.jeanchatzky.com/homepage/bothering-me/comment-page-1/#comment-59 susannewton Sat, 21 Mar 2009 03:34:42 +0000 http://www.jeanchatzky.com/?p=771#comment-59 What about renting vs. owning a home in your thirties? We own a home, but we've accrued so much debt with fixing things (replacing the boiler, replacing the sewer line, etc.) that we're now paying a high HELOC. We wonder about selling this house and using the proceeds to pay off the HELOC and another credit card. Then renting for a while til we've saved up more and have time to find the right house. This is a starter house, and not one we want our kids to grow up in. Thoughts?? What about renting vs. owning a home in your thirties? We own a home, but we’ve accrued so much debt with fixing things (replacing the boiler, replacing the sewer line, etc.) that we’re now paying a high HELOC. We wonder about selling this house and using the proceeds to pay off the HELOC and another credit card. Then renting for a while til we’ve saved up more and have time to find the right house. This is a starter house, and not one we want our kids to grow up in. Thoughts??

]]> By: MaBean http://www.jeanchatzky.com/homepage/bothering-me/comment-page-1/#comment-57 MaBean Thu, 19 Mar 2009 04:45:25 +0000 http://www.jeanchatzky.com/?p=771#comment-57 I'm a CFP and I CONSTANTLY battle with my colleagues on it. I have yet to have a client pay off his or her home and regret it. Period. In 15 years, I have never seen "invest the difference" work. #1Having a mortgage in retirement increases how much you have to save to retire-- it's insane. #2 The market is NOT a static increase of 8% every year- which has a huge impact on the real math beyond "invest the difference". Paying down debt is very static on a fixed rate mortgage. For Round 2, run a Monte Carlo simulation and trust me, investors are much better off with a smaller investment nest egg and no debt, than a larger nest egg and debt. Makes me nuts... but then again, this is why I'm still in business and growing while my broker friends are in a panic! Go get 'em (although I will say, this is one of the few this I disagree with him on...) I will throw in one additional twist-- I'm also a fan of people renting versus owning their dream house in retirement- the condo in FL, not the family homestead. They never keep them long enough to make it profitable. One spouse dies or becomes seriously ill, a child moves (with the grandkids) across country, you can't do your own repairs and maintain it, if you live in a retirement community and pass it on to your kids at death they may be forced to sell at a discount if they can't live in it, etc, etc. Having the chunk of change from selling your primary home, in a conservative investment, automatically paying your rent gives retirees a lot more flexibility during an uncertain period of their lives. Feel free to argue amongst yourselves... I’m a CFP and I CONSTANTLY battle with my colleagues on it. I have yet to have a client pay off his or her home and regret it. Period. In 15 years, I have never seen “invest the difference” work.
#1Having a mortgage in retirement increases how much you have to save to retire– it’s insane.

#2 The market is NOT a static increase of 8% every year- which has a huge impact on the real math beyond “invest the difference”. Paying down debt is very static on a fixed rate mortgage. For Round 2, run a Monte Carlo simulation and trust me, investors are much better off with a smaller investment nest egg and no debt, than a larger nest egg and debt.

Makes me nuts… but then again, this is why I’m still in business and growing while my broker friends are in a panic!

Go get ‘em (although I will say, this is one of the few this I disagree with him on…)

I will throw in one additional twist– I’m also a fan of people renting versus owning their dream house in retirement- the condo in FL, not the family homestead. They never keep them long enough to make it profitable. One spouse dies or becomes seriously ill, a child moves (with the grandkids) across country, you can’t do your own repairs and maintain it, if you live in a retirement community and pass it on to your kids at death they may be forced to sell at a discount if they can’t live in it, etc, etc. Having the chunk of change from selling your primary home, in a conservative investment, automatically paying your rent gives retirees a lot more flexibility during an uncertain period of their lives. Feel free to argue amongst yourselves…

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