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Subject:  Re: Do you have a rational home equity policy? Date:  1/27/2005  4:03 PM
Author:  2gifts Number:  44229 of 94551

I think the "big picture" is about building wealth, not necessarily being out of debt. I laugh to myself when I see the Dave Ramseys and other "experts" talking about how much interest you save by paying down a mortgage quickly. They don't ever address the opportunity cost of doing so.


We all use different measuring sticks and different criteria for our lives. In my case, I don't happen to think that opportunity cost is everything, nor do I agree that the big picture is about building wealth. That may be true for you, but there are probably more than a few like me that measure other things in the big picture like having my health, being able to put my children through the college of their choice, and being able to retire early, all of which are my goals. To do that, though, it doesn't mean that I have to funnel every extra dollar into investments to simply make more money.

There is that sleep-at-night factor where I want to know that I will simply always have a place to sleep and the wherewithal to be able keep it. It doesn't mean that I have to maximize every investment dollar particularly if I am already meeting the goals which I have set for me.

Having a larger pile at the end is not my goal. I want a sufficient pile with a little breathing space, that allows me to buy some toys along the way, pay down the mortgage so that it will be paid by the time the kids are out of college, be financially independent, and generally do a few other things besides work and save. I am on that path, so there is no need to try to accelerate it or add any risk with which I may not be comfortable.

That is not to say that the way you view things is wrong. It is just different than the way I view things. But different is fine as long as that is adequate for each of us.

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