When do you think you will be / are you Mortgage free?

ednwireland

Last November

FURET

FURET wrote: »

No mortgage, no debts. I'm completely opposed to debt and I'm solidly convinced that property is something most people should never buy unless they do so at zero interest and are definitely going to be in one area for a very long time. All my money is in cash (around 8% of what I have), and low-cost bond (20%) and stock (72%) indexes, all of which I manage myself.

Two things about mortgages in particular freak me out:

• The interest cost of the debt over prolonged periods. This often doubles the cost of the house, but it's something most people seem to not understand or care about (more a case of the former than the latter imho).
• The ball and chain aspect. I like to follow opportunities wherever they take me in the world. That becomes less possible when one owes a long-term debt on a home.

People who borrow for electronics and holidays are financially illiterate. Makes me glad that I own visa and mastercard stock, though.

Most people would have a very different outlook and plan for their life though so owning property rather than forking out for rent makes far more sense.

I would have no interest in moving around for instance (in fact I would hate the idea of it), I want to get into something permanent (or as permanent as is possible) in or commuting distance from my home area and buy/build a house and settle there for good. I detest paying rent and really look forward to having my own place which I can do as I please with from a decoration etc point of view.

FTA69

I live in London and realistically the only option available to me at this moment in time is part rent/part buy schemes. Doing these means you'll pay considerably more long-term than you would on a straight mortgage; and my average expenditure for a 1-bedroom flat would be £1000, half of which is rent. To get a mortgage under the help to buy scheme would involve a deposit of around £40k minimum, something that's beyond my reach as a solo man.

Realistically, the only option available would be buying with someone else or a partner and that's not a place I'm in at the moment. My rent at the moment is cheap enough by London standards and easily covered. However, the notion of shelling out on rent long after I retire is a pretty sh*t prospect and I'd be anxious enough to get something in the bag sooner rather than later.

It just seems that if you don't have access to vast amounts of capital already, buying a house is beyond your reach.

FURET

Nina Hissing Xenophobia wrote: »

Most people would have a very different outlook and plan for their life though so owning property rather than forking out for rent makes far more sense.

I would have no interest in moving around for instance (in fact I would hate the idea of it), I want to get into something permanent (or as permanent as is possible) in or commuting distance from my home area and buy/build a house and settle there for good. I detest paying rent and really look forward to having my own place which I can do as I please with from a decoration etc point of view.

That's all fair enough if people have really, truly thought about their goals and plan for life.

For me and my wife, we're both foreigners in our country of residence and we both like the idea of being expats and moving to another country if we fancy an adventure and want to give our child a breadth of experiences. Our jobs allow this flexibility and we're both on the same page.

We also made it a point before having a child that we would be absolutely debt-free, be established in our careers, AND have a net worth of six figures (euros).

This stems in part from our backgrounds. My wife came from quite an impoverished family and has really had to struggle to get where she is. Me, I was useless with money and completely unfocused when I was in my 20s and paid a fairly high price for it, but ultimately came out on top with a combination of luck, discipline, and careful planning.

So we plan every decision and have set ourselves an ambitious but highly achievable goal: financial independence by 2026. We have great fun too and deprive ourselves of nothing we need. But we do separate needs from wants. We don't scrimp on vacations (because they're the stuff of memories, and when our daughter is older, we're definitely going to Lapland one year and on Safari another time) and we like to eat out. But we don't spend money on bling, cars, branded clothes, and the latest versions of electronics. And we have a cast iron rule of never borrowing.

Buying a house would jeopardize our goals. We could buy one tomorrow for cash - but the total expense ratio of owning a house (in property tax, maintenance, and management costs while outside the country) would reduce the return on the investment. Our invested capital at the moment is highly liquid, non-taxable, has no maintenance cost, and has returned 10% in the year to date (though 9% year-on-year over long periods is more realistic). So it makes far more sense for us to not buy.

We will some day buy a place, but we don't know where, and it's unlikely we'll live in it 12 months per year. We would hope to spend at least half the year in the tropics when we're older and have a decent apartment to live in in the west. But we won't ever borrow to buy.

Galwayguy35

I got my house at the height of the boom, had to put a lot of my own money into buying it along with the mortgage, if I knew what was coming I would have held off for a few more years and could have bought outright with my savings.

Hindsight is a great thing.

Slicemeister

2024 latest.

FURET

FURET wrote: »

That's all fair enough if people have really, truly thought about their goals and plan for life.

I think its almost a given for the majority of people that their plan for live is to settle down in a place and live there for the rest of their lives.

Now that I would be in a position to get a mortgage if I had a few years guaranteed in a place that wasn't the place I plan to eventually settle down Id still be seriously looking at buying rather than paying rent.

FURET wrote: »

So we plan every decision and have set ourselves an ambitious but highly achievable goal: financial independence by 2026. We have great fun too and deprive ourselves of nothing we need. But we do separate needs from wants. We don't scrimp on vacations (because they're the stuff of memories, and when our daughter is older, we're definitely going to Lapland one year and on Safari another time) and we like to eat out. But we don't spend money on bling, cars, branded clothes, and the latest versions of electronics. And we have a cast iron rule of never borrowing.

Funnily enough I was having a conversation recently about this and I would be of the opposite, I much rather putting my money into something like a car or electronic items which will give me use over a much longer time than two weeks away which is over before it starts. I'd also prefer at least part financing something like a car rather than burning a lot of savings on it.

FURET wrote: »

Our invested capital at the moment is highly liquid, non-taxable, has no maintenance cost, and has returned 10% in the year to date (though 9% year-on-year over long periods is more realistic). So it makes far more sense for us to not buy.

You are looking on it as an place investment though whereas for me a house is first and foremost a place to live. Most of the money I have in savings is set aside for a house deposit I basically consider the money already spent in my head and would never use if for something else.

FTA69

I think its almost a given for the majority of people that their plan for live is to settle down in a place and live there for the rest of their lives.

For you it is, and as such a mortgage makes sense. You're determined to live in the one place, that's highly unlikely to change and as such you probably would be wasting money on rent. However there are lots of people working in cities such as Dublin, London or else further abroad whose career requires them to be somewhat transient and to go where the work is. In their case renting suits them quite well.

FURET

Nina Hissing Xenophobia wrote: »

You are looking on it as an place investment though whereas for me a house is first and foremost a place to live. Most of the money I have in savings is set aside for a house deposit I basically consider the money already spent in my head and would never use if for something else.

It's true that I would look on a house as an investment right now, because I wouldn't expect to live in it myself for the foreseeable future.

But even if I were going to live in it, I would still see it as a cost in terms of ongoing maintenance and a tax liability. As an asset, it would be highly illiquid and there is no guarantee that it would be worth more after 20 or 30 years than the money I had put into it, after costs, taxes and inflation. It might be worth more (and probably would be) - but it would almost certainly have yielded less than the gain I would have made from the same money had the money been deployed into low-cost stock and bond indexes over the same period. And that's only measurable cost. There is also the opportunity cost of not being able to move to take up a potentially much higher-paying job elsewhere because one is tethered to a property. That said, there are ongoing rental costs for those who don't buy. But in aggregate, there's no doubt that for me at least I'm going to come out waaaaaay ahead by not buying.

Funnily enough I was having a conversation recently about this and I would be of the opposite, I much rather putting my money into something like a car or electronic items which will give me use over a much longer time than two weeks away which is over before it starts.

This is totally a matter of preference. But it's amazing the amount of people (and I'm not saying you're one of them) who consider a car to be an asset. A car is always a cost. It produces no new money; it doesn't spit new euros out of its exhaust pipe like stocks do. It is always a liability and my mantra is that I don't feed liabilities by putting money into them whenever I can avoid it.

I'd also prefer at least part financing something like a car rather than burning a lot of savings on it.

This viewpoint is very common, but seldom makes any financial sense when you look at the numbers. This 2-page thread on the banking forum (which I did not participate in), where someone says that they have 21k in savings but wants to borrow 9k, explains why it makes no sense. I think in many cases (not necessarily yours) the decision to borrow when one already has ample savings can be wholly explained by a failure to understand the important principles of compound interest and opportunity cost.

I think its almost a given for the majority of people that their plan for live is to settle down in a place and live there for the rest of their lives.

I'm just not convinced that most humans are capable of thinking outside the box. From pure anecdotal observation I think most people just assume that they should do a thing because it's what most people do, and it never occurs to them to look at novel options. I'm not saying everyone really wants to be an expat or anything like that (most definitely don't). But there's definitely a lack of imagination out there. My brother was recently saying he'd love to be a primary school teacher but can't be, because he doesn't like Irish. So he has completely written off the idea. I asked him why he was confining himself to Ireland. He's a young, single, native English speaker with one of the best passports in the world. He's in demand. But he never thought of it because his perspective was unconsciously limited. Now he's giving it serious thought.

FURET

FURET wrote: »

It's true that I would look on a house as an investment right now, because I wouldn't expect to live in it myself for the foreseeable future.

But even if I were going to live in it, I would still see it as a cost in terms of ongoing maintenance and a tax liability. As an asset, it would be highly illiquid and there is no guarantee that it would be worth more after 20 or 30 years than the money I had put into it, after costs, taxes and inflation. It might be worth more (and probably would be) - but it would almost certainly have yielded less than the gain I would have made from the same money had the money been deployed into low-cost stock and bond indexes over the same period. And that's only measurable cost. There is also the opportunity cost of not being able to move to take up a potentially much higher-paying job elsewhere because one is tethered to a property. That said, there are ongoing rental costs for those who don't buy. But in aggregate, there's no doubt that for me at least I'm going to come out waaaaaay ahead by not buying.

I suppose again I would be looking at it from a totally different angle. I wouldn't be looking at money I had used to buy a house as money that could be invested somewhere else as to me having my own house would far outweigh that. That money is earmarked for a house deposit and nothing else (well I wouldn't use all my savings, always good to keep some cash).

Similar for moving to make more money, sure I don't even own a house and I still have no interest in leaving Ireland even though I could without doubt make more money abroad but to be honest it wouldn't make up for living away. That said I should be in fairly well paid employment going forward which I would be perfectly happy with rather than very well paying employment and living in a place I don't want to be.

FURET wrote: »

This is totally a matter of preference. But it's amazing the amount of people (and I'm not saying you're one of them) who consider a car to be an asset. A car is always a cost. It produces no new money; it doesn't spit new euros out of its exhaust pipe like stocks do. It is always a liability and my mantra is that I don't feed liabilities by putting money into them whenever I can avoid it.

I'd look on it as an asset to a degree as when you sell it you get money back which you spent on it and that can be put towards your next car. I like cars so always have a good one.

You say you don't like putting money into liabilities but whats the point in investing and investing to make money and not spending it on things you want and enjoy, I never understood that. Its part of living a comfortable life.

FURET wrote: »

This viewpoint is very common, but seldom makes any financial sense when you look at the numbers. This 2-page thread on the banking forum (which I did not participate in), where someone says that they have 21k in savings but wants to borrow 9k, explains why it makes no sense. I think in many cases (not necessarily yours) the decision to borrow when one already has ample savings can be wholly explained by a failure to understand the important principles of compound interest and opportunity cost.

There are many reasons its makes sense to me to borrow rather than use all of your savings. I just dont think its a good idea using up savings, the fact its costing you to service the loan is beside the point as keeping the lump of your savings to me for unexpected events or more important things like house deposits is more important than increasing the value of your savings.

For example, say I am buying a car for 20k and have 20k saved, at most I'd be spending 10k of that savings and borrowing for the rest. If I spend the 20k and then a few months later I need 5k for something unexpected you are fecked.

My last car I could easily have bought outright but I borrowed against savings in the credit union and got a low interest loan for half the cost leaving me with much more savings intact.

FURET

Nina Hissing Xenophobia wrote: »

I'd look on it as an asset to a degree as when you sell it you get money back which you spent on it and that can be put towards your next car. I like cars so always have a good one.

I'm afraid this is one of those times when two opinions are not equally valid. You might think a car is an asset, but it isn't. The fact that it retains some diminishing value is irrelevant. An asset is something that produces completely new money on top of the principal. A car doesn't do that. I do own BMW, Daimler, Volkwagen, Renault, Rolls Royce, Peugeot, Toyota, Nissan, Tesla, Fiat, Porche, Hyundai, and GM stock though, and I thank you for your custom.

You say you don't like putting money into liabilities but whats the point in investing and investing to make money and not spending it on things you want and enjoy, I never understood that. Its part of living a comfortable life.

Most people don't understand it in fairness, and you're not alone. This is oftentimes the simple difference between understanding what money is actually for vs. understanding just one of the things you can do with it - i.e. spend it. My life is extremely comfortable despite my aversion to consumerism though.

Personally, there are two reasons why I'm not a big consumer. In the first case, I simply do not derive satisfaction from things such as cars and the latest gadgets. They don't contribute to my enjoyment of life. I'm lucky to be wired like that. Reading, research, snorkeling, conversation and eating out are some of the things that do great things for me though.

You ask me why I invest if I don't spend. My answer is as follows: Every time I invest, I am buying my freedom from having to work, and freedom from stress and worry about bills. Most importantly, I am buying myself choice. The choice to travel whenever I want; the choice to work or not work; the choice for my wife and I to do whatever we want, basically.

FTA69

Nina Hissing Xenophobia wrote: »

I'd look on it as an asset to a degree as when you sell it you get money back which you spent on it and that can be put towards your next car. I like cars so always have a good one.

Yeah but it's not an appreciable asset though; in other words as the months go on your car's worth is less and less. Yes, it's possible to buy a car and sell it for more than you bought it for but in general the value of it decreases. When you buy a new car you lose a huge percentage of its value the minute you drive out of the dealership.

This is different to something such as stocks which may increase (often considerably) or even a property which also has the potential to increase. A car is by no means an asset and should be looked at as a sometimes-necessary expenditure as opposed to an investment.

FURET

FTA69 wrote: »

Yeah but it's not an appreciable asset though; in other words as the months go on your car's worth is less and less. Yes, it's possible to buy a car and sell it for more than you bought it for but in general the value of it decreases. When you buy a new car you lose a huge percentage of its value the minute you drive out of the dealership.

This is different to something such as stocks which may increase (often considerably) or even a property which also has the potential to increase. A car is by no means an asset and should be looked at as a sometimes-necessary expenditure as opposed to an investment.

In addition, the fact that it's possible to find millions of people who also think a car is an asset is no reason to agree with them. Banks famously consider cars to be an asset - small wonder, when banks have a vested interest in convincing people that a new car is a sensible purchase (and thereby generate profits lending to consumers).

jester77

Mine is linked to my retirement, but will have it long paid off by then.

FTA69

FURET wrote: »

In addition, the fact that it's possible to find millions of people who also think a car is an asset is no reason to agree with them. Banks famously consider cars to be an asset - small wonder, when banks have a vested interest in convincing people that a new car is a sensible purchase (and thereby generate profits lending to consumers).

I could never fathom how people buy new cars to be honest, fair enough if you're minted but I know people who were on a modest wage who saved every conceivable penny and then took out a loan just to splash out on a new car. And I'm not talking about something like a BMW either, but rather €15k odd for a new Yaris. They could spend a third of that and get a better car that gets them from A to B. It always struck me as the greatest waste of money imaginable.

privateBeavis

25 yrs left on mortgage but reckon I'm just out of negative equity now so that's something :-)

FURET

FURET wrote: »

You ask me why I invest if I don't spend. My answer is as follows: Every time I invest, I am buying my freedom from having to work, and freedom from stress and worry about bills. Most importantly, I am buying myself choice. The choice to travel whenever I want; the choice to work or not work; the choice for my wife and I to do whatever we want, basically.

See I would rather spent money while I'm young and enjoy it than be worrying about retirement or making sacrifices so that I could stop working rather than keep working and have money for buying the stuff I want. Well actually that's not fully correct as owning a house is very much an advantage when you get older as you will have it paid off and thus not be paying rent and have more of your pension in your back pocket.

I love cars, electronics etc and I really really want my own house. These are the things I would like to spend my money on. I would also like to invest money and hopefully make more money on it but that would be money left over after I've got the things I want.

FTA69 wrote: »

I could never fathom how people buy new cars to be honest, fair enough if you're minted but I know people who were on a modest wage who saved every conceivable penny and then took out a loan just to splash out on a new car. And I'm not talking about something like a BMW either, but rather €15k odd for a new Yaris. They could spend a third of that and get a better car that gets them from A to B. It always struck me as the greatest waste of money imaginable.

Because they don't want a car someone else has had. Its so much nicer to have a car untouched by anyone else and at the end of the day its what they want to spend their money on so why not. There are also the warranty and reliability advantages if you keep yourself in up to date cars, never worrying about breaking down or being hit with a big repair bill etc.

Also if no one bought new cars where would we get second hand ones??

I'm really looking forward to the day when I can buy a brand new car I have to say.

FTA69

Because they don't want a car someone else has had. Its so much nicer to have a car untouched by anyone else and at the end of the day its what they want to spend their money on so why not.

They could roll their money up, stick it in a bong and smoke it for all I care, what we're discussing here is it necessarily a good idea in a given situation. A car is a car, you could get a second hand Merc for a lot cheaper than you could a brand new piece of sh*t like a Ka. The woman I know who bought the Yaris, she hadn't a pot to p*ss in. She was on about leaving the country to get a job and never bothered, instead stayed in her dead-end position in Cork only was 15k lighter so she could drive around in a new motor.

Money like that could contribute toward a deposit of a house, getting trained up to do something else or else setting themselves up for a higher-paid position abroad. Spending it on a new (and sh*te-looking) car was a monumental waste of money that gained her f*ck all bar a "new car" smell.

Also if no one bought new cars where would we get second hand ones??

Just because others do it doesn't mean you have to.

I'm really looking forward to the day when I can buy a brand new car I have to say.

If you're in the position to do so then by all means do, but it's not an asset as you said rather a very costly outgoing that will return little back. Similarly if you were buying one at the expense of your house deposit or getting into debt over it you'd be a fool to do so.

FTA69

FTA69 wrote: »

T
Similarly if you were buying one at the expense of your house deposit or getting into debt over it you'd be a fool to do so.

I would use some savings toward a car yes (be it new or second hand) but I would mostly finance as I have in the past and get a loan. I very much believe in sensible borrowing (sensible as in borrowing what you can afford to repay). Also new cars can be got at very low rates nowadays with PCP finance so if I were to be buying a new car that would be another option.

To be honest its not really relevant at this moment in time as I would be holding off on buying a new car until I have a house anyway and I'm not really ready to buy as yet (due to both location and nature of employment).

Ruu

I think I've found Wibbs.

Guangxi Man Spends 5 Years Carrying “House” on Shoulders Throughout Journey Home

With suntanned skin and wearing Liberation shoes, Liu Lingchao is walking forward quickly while carrying a 1.5 meters wide, 2.2 meters tall “house” on his shoulders. After walking about 50 meters, he puts down his “house”, retraces his steps picking up discarded water bottles, sorts and places them in several woven bags, then lifts up his “house”, repeating this over and over again. 38-year-old Liu Lingchao is from Guangxi province Liuzhou city Rong’an county Tantou town. 20 years ago, he left his hometown to find work in the Guangzhou and Shenzhen area. After the idea of returning home came to him 5 years ago, he made a 60kg simple house like this, and departed from Guangdong walking towards his hometown. Along the way, Liu Lingchao refused to to accept anyone’s help, relying only on collecting discarded waste for a living, carrying his “house” forward on his journey by day, and camping out by the side of the road at night. He has already worn out three such “houses”, and today only has about 20 kilometers more before arriving home. This reporter learned that there indeed is such a person from the town of Tantou in RongAn county, whose family lives in Longcun village in Longcheng. From Xinhua (Photos: Li Hanchi)

http://www.chinasmack.com/2013/pictures/chinese-man-spends-5-years-walking-home-carrying-house-on-back.html <--pics here.

Quite incredible!

Smidge

18 more years.
I'll be so old and decrepit by then I wont even be able to find my way home to it

FloatingVoter

I own the place outright. Grew up under the shadow of a mortgage. Chips fell in my direction and no worries regarding debt.
I still have a fear of owing anybody anything no matter how small.

ratmouse

28 years!

Ratzo Rizzo

I'm one of the lucky ones to be debt free. I own my own modest home, have a 13 year old car and have no mortgage or debts. There have been times in my life when I had nothing, borrowing money to pay bills, etc. As an ex girlfriend of mine once remarked that I had to scrape together the pennies just to go for a pint! These days being that bit older and wiser I appreciate what I have and feel quite fortunate and content. Never sweat it, you will get there eventually...

Boots234

Just about to pay our first installment of the mortgage for our new home in a week's time! Only 29 years and 11 months to go until we are debt free (or 359 payments!)

The_Captain

FTA69 wrote: »

They could roll their money up, stick it in a bong and smoke it for all I care, what we're discussing here is it necessarily a good idea in a given situation. A car is a car, you could get a second hand Merc for a lot cheaper than you could a brand new piece of sh*t like a Ka. The woman I know who bought the Yaris, she hadn't a pot to p*ss in. She was on about leaving the country to get a job and never bothered, instead stayed in her dead-end position in Cork only was 15k lighter so she could drive around in a new motor.

Money like that could contribute toward a deposit of a house, getting trained up to do something else or else setting themselves up for a higher-paid position abroad. Spending it on a new (and sh*te-looking) car was a monumental waste of money that gained her f*ck all bar a "new car" smell.



Just because others do it doesn't mean you have to.



If you're in the position to do so then by all means do, but it's not an asset as you said rather a very costly outgoing that will return little back. Similarly if you were buying one at the expense of your house deposit or getting into debt over it you'd be a fool to do so.

Assuming you can buy a brand new Yaris for €20k, the same money could buy you a 2010 C-Class Merc.

But when you factor in maintainence costs, tax, insurance petrol costs and depreciation, the Yaris works out significantly cheaper in the long run.

FTA69

Or you could buy a second hand Yaris for cheaper and use the capital you've just wasted for something far more productive like a house deposit or investing in yourself.

FTA69

FTA69 wrote: »

Or you could buy a second hand Yaris for cheaper and use the capital you've just wasted for something far more productive like a house deposit or investing in yourself.

Its not waste if you are buying something you want and enjoy.

The_Captain

FTA69 wrote: »

Or you could buy a second hand Yaris for cheaper and use the capital you've just wasted for something far more productive like a house deposit or investing in yourself.

Investing in yourself?

Sounds like something you'd find on a cat poster

FURET

Nina Hissing Xenophobia wrote: »

Its not waste if you are buying something you want and enjoy.

See, I think what you've said above is fine and dandy if you have the cash to do it and you have all important bases already covered into the future.

But most people don't have the important bases adequately covered. Most people are probably living paycheck to paycheck and would be in pretty dire straights if they lost their job and were still jobless four months later.

When people don't have truly sufficient funds, such a purchase would be not just frivolous, but also dumb.