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\"I know what the math says, but….\"

Home Personal Finance and Budgeting \"I know what the math says, but….\"

  • Donnie Donnie 
    Participant
    Status: Other Professional
    Posts: 770
    Joined: 01/11/2017
    Splash Refinancing Bonus

    If you didn’t prepay the costs of the conference, then AP is a form of leverage.

    #55028 Reply
    DMFA DMFA 
    Moderator
    Status: Physician
    Posts: 2137
    Joined: 06/24/2016

    Can’t believe it took me 5 pages to take a piece at this subject…

    If I was WCI, I’d probably have done the same thing.  He has the wealth and the room in his portfolio, plus the need/want to have flexible income (or no active income at all), so eliminating the debt is reasonable.  Plus he had invested in a “mortgage payoff fund,” presumably in equities, whose entire purpose was to end up going towards this end, and he sold it at what will probably be (proof will be in the pudding) a market high to pay it off.  While it’s true that a sell-off of 6-digits of equities might be labeled as “behavioral investing” if you think the market will crash, he’s basically just making an asset allocation shift toward a short-term fixed-income security while he fills back up the taxable account.

    I do detest the phrase “guaranteed gain” and recognize that it certainly is a moving target, but the time that it’s easiest to calculate what one has “gained,” or rather prevented from paying in finance charges, is the amount of interest saved compounded over the time saved from paying it.  He saved the finance charges on a 1.6% loan over what I estimate to be about 10-ish years (given his original loan was 2010 and refi’d a couple times after that).  It’s tough to tell exactly what number to use for his payoff, since it was done in steps, so I’ll use the $97,000 over those 120 periods at 1.6%, which is an additional $8,031.36 in finance charges over 10 years, or a “gain” of 8.28% over that time, the tenth root of which (to the 1/10 power) is roughly half of that – a 0.8% “gain” on it (less than a 1-year CD), thus again demonstrating the difference between the APR on a simple amortizing debt and the total amount of interest which can be prevented by paying it off in a lump sum as being about half when “converted” to CAGR.  (this is a moving target and kind of a dirty calculation depending on how his bank handles his mortgage; if the payment remains static when paid ahead, then the amortization schedule has a fewer number of periods and the “equivalent” CAGR slightly rises, but if the term remains static and the payment either drops or just isn’t due for a while changes how the amount will be)

    Now, it’s true he can dollar-cost average in the money back into his taxable that he would have otherwise paid to his mortgage, but that’s just building back up the sum that he already had earning (or losing?) in the market while his simple amortizing loan with no compounding interest (that’s interest-on-interest) was getting smaller and smaller.  So he loses area under the curve and would p much end up with half the CAGR if the would have had assuming linear gains (when are gains ever fully linear?) but possibly having less sequence-of-return risk…

    Yes, a loan at a real rate below inflation (despite historic lows recently) benefits the debtor, especially over time.  WCI even labeled paying off a mortgage in such a scenario “mathematical stupidity,” which even I as someone who generally opposes eliminating very low-interest debt think is a bit strong of a term.  But to have a debt when your income level is not static, or you plan on reducing your income (such as if he wants to retire), creates an obligation that’s best taken care of.

    This is probably not the advisable thing for everyone to do, especially at such an extremely low rate (1.6% is awesome), hence his having labeled it “mathematical stupidity,” and especially even more so when people do NOT have the massive investment portfolio WCI does, with tax-advantaged accounts maxed out beyond what many of us are even eligible for (max’d employed 401k to 54k, self-employed 401k to 54k, wife’s 401k to 54k, HSA, IRA, prob a DBP, idk, I’m not his accountant, I just retain things from his posts).  Most portfolios have room in them for low-percentage guaranteed gains, even in some cases “real” negative gains, like holding cash (think 529s close to college, or a near-retirement portfolio).  This $97k for the last of his mortgage, or even if you take the whole $275k from when he got started paying it off at the end of 2016, is a drop in the bucket in his overall portfolio which could reasonably be assigned to that.  For most of us, even those of us who are high-earning professionals, our money is almost certainly better placed in our tax-advantaged accounts or even in a taxable account to build the wealth we need with compound gains over time as opposed to preventing simple, low-percentage, non-compounding losses.

    I’m not a very psychological person.  I don’t buy into this whole “weight on the shoulders” or “slave to the lender” philosophy.  My liabilities are what they are, and so are my assets.  When eliminating a liability gives more benefit to the whole picture as opposed to building an asset, either vis-a-vis overall net worth or the other issues with debt (such as for reduction of income, retirement, going part time, etc), I’ll do it.  All that matters to me for the time being, since I’m appropriately insured, still a long career ahead of me, and don’t have a large investment portfolio (not much time behind it…), is how much my liabilities will cost me in finance changes and how much my assets will earn me in compound gains over time.  The liabilities are like an inverse fixed-income security (I mean, what’s a bond, right?) with a fixed amount due over a fixed time.  When that amount becomes a reasonable amount for a part of my portfolio to gain, I trade the asset to eliminate the liability with the basic “equivalent gain” being the finance charges prevented.  This is exactly what WCI did when he traded his equities (specifically earmarked for this) for his mortgage – just like there’s room for cash, TIPS, etc in most investors’ portfolios.  If looking at oneself as a “debt slave” is what it takes for a site reader to make adequate financial decisions, then good, the end justifies the means imo.  I’d rather arrive at my decision with calculation instead of emotion, but it’s the end effect that counts – what’s my overall scenario, my balance sheet, etc.

    So I’ll go reason by reason; while I doubt WCI (or anyone) really cares what I think, we’re all here to share ideas, and I’m not about to drag my muddy shoes all throughout his (now paid-off) house.

    1. Meh.  Who’s really borrowing if they’re getting sub-inflation gains on a shrinking principal?  But you’ve got to eliminate the obligation if your ability or desire to meet it might stop (i.e. not needing income).
    2. Psychology and behavior, K, sure
    3. +/-, this is kinda fungible, you could have had the cash flow coming from what you already had invested, and a bit more a matter of perspective than a mathematical truth, but still a decent argument
    4. I totally agree
    5. I agree but do concede this could be considered “behavioral investing”
    6. Def true, good problem to have
    7. Also def true
    8. What I said give your massive net worth
    9. Yep, that whole thing comprised what I imagine to be < 5% your net worth
    10. Not sure how to rate this, but I think this whole “debt-free scream” think is pretty silly and is far more psychological than rooted in appropriate mathematical finance, but no one gets to tell you how to raise/teach your kids but you

    You choose your message for your site and obviously for your own financial life.  I totally agree with you that this was not only a reasonable but probably a good move for you, even from a mathematical perspective.  I’m not sure I would have pitched it as “mathematical stupidity” and then gone right ahead and done it anyway, nor might I have included all the psychological impetus you did, but you’ve readily stated over and again in your article that your circumstances are not par for the course and it made sense to do so.  You’re also in a bit of a bind in that a core pillar of your message here is the elimination of debt, which makes it very difficult to condone having any debt (even well-structured, near-zero or negative “real” debt), even if it might be the best application of money, lest you give the impression of inconsistency to novices who might not understand how the nuts and bolts work.

    tl;dr – I disagree with some minutiae but agree with most of the post.  Congrats, man.  Huge fan and always will be.

    "I like money." - Frito Pendejo (Idiocracy)

    [Not a financial professional (yet), lawyer, or employee of The White Coat Investor]

    #55047 Reply
    Avatar Complete_newbie 
    Participant
    Status: Physician, Small Business Owner
    Posts: 804
    Joined: 01/03/2017

    I don’t think anyone begrudges WCI for making money on the blog, and I have no idea why anyone would. I think he does a very good job of trying to disclose potential conflicts of interest. That said, even if he is conflicted, who cares. Everyone who is paid for doing something is conflicted. It is the nature of capitalism.

    WCI, regarding millionaires’ views of debt, I think you are a bit myopic by focusing on doctor millionaires whose net worth is largely the result of accumulated savings rather than returns on investments. People in the business world who are worth millions do not take such a view of debt. Taking the next step between $5-10M and $10-50M+ of net worth typically requires leverage.

    Click to expand…

    If your goal is to take the “next step” and your income is only that of a typical working physician, then I agree you’re going to need leverage to get there.

    I disagree that that is my next step nor that of the vast majority who have any concept of “enough.”

    I also disagree that significant leverage is needed to get in to the mid to high 7 figure range, but that’s just my personal experience speaking.

    Click to expand…

    WCI has helped countless MDs, and please don’t take this the wrong way. I have a hard time believing this – if this were the case, you wouldn’t be doing the conference and it would be free.

    Click to expand…

    The conference is actually the biggest financial risk this business has ever taken, but it still doesn’t involve any leverage.

    Click to expand…

    Eh…proves the point. No need to take risk, but there is still risk being taken. Underlying motivation is anybody’s guess but its not “enough” mentality.

    #55095 Reply
    Avatar Complete_newbie 
    Participant
    Status: Physician, Small Business Owner
    Posts: 804
    Joined: 01/03/2017
    Earnest refinancing bonus
    I’m not a very psychological person.

    Click to expand…

    A very analytical person – for sure. Great explanation and a great response.

    #55097 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4482
    Joined: 05/13/2011

    Can’t believe it took me 5 pages to take a piece at this subject…

    If I was WCI, I’d probably have done the same thing.  He has the wealth and the room in his portfolio, plus the need/want to have flexible income (or no active income at all), so eliminating the debt is reasonable.  Plus he had invested in a “mortgage payoff fund,” presumably in equities, whose entire purpose was to end up going towards this end, and he sold it at what will probably be (proof will be in the pudding) a market high to pay it off.  While it’s true that a sell-off of 6-digits of equities might be labeled as “behavioral investing” if you think the market will crash, he’s basically just making an asset allocation shift toward a short-term fixed-income security while he fills back up the taxable account.

    I do detest the phrase “guaranteed gain” and recognize that it certainly is a moving target, but the time that it’s easiest to calculate what one has “gained,” or rather prevented from paying in finance charges, is the amount of interest saved compounded over the time saved from paying it.  He saved the finance charges on a 1.6% loan over what I estimate to be about 10-ish years (given his original loan was 2010 and refi’d a couple times after that).  It’s tough to tell exactly what number to use for his payoff, since it was done in steps, so I’ll use the $97,000 over those 120 periods at 1.6%, which is an additional $8,031.36 in finance charges over 10 years, or a “gain” of 8.28% over that time, the tenth root of which (to the 1/10 power) is roughly half of that – a 0.8% “gain” on it (less than a 1-year CD), thus again demonstrating the difference between the APR on a simple amortizing debt and the total amount of interest which can be prevented by paying it off in a lump sum as being about half when “converted” to CAGR.  (this is a moving target and kind of a dirty calculation depending on how his bank handles his mortgage; if the payment remains static when paid ahead, then the amortization schedule has a fewer number of periods and the “equivalent” CAGR slightly rises, but if the term remains static and the payment either drops or just isn’t due for a while changes how the amount will be)

    Now, it’s true he can dollar-cost average in the money back into his taxable that he would have otherwise paid to his mortgage, but that’s just building back up the sum that he already had earning (or losing?) in the market while his simple amortizing loan with no compounding interest (that’s interest-on-interest) was getting smaller and smaller.  So he loses area under the curve and would p much end up with half the CAGR if the would have had assuming linear gains (when are gains ever fully linear?) but possibly having less sequence-of-return risk…

    Yes, a loan at a real rate below inflation (despite historic lows recently) benefits the debtor, especially over time.  WCI even labeled paying off a mortgage in such a scenario “mathematical stupidity,” which even I as someone who generally opposes eliminating very low-interest debt think is a bit strong of a term.  But to have a debt when your income level is not static, or you plan on reducing your income (such as if he wants to retire), creates an obligation that’s best taken care of.

    This is probably not the advisable thing for everyone to do, especially at such an extremely low rate (1.6% is awesome), hence his having labeled it “mathematical stupidity,” and especially even more so when people do NOT have the massive investment portfolio WCI does, with tax-advantaged accounts maxed out beyond what many of us are even eligible for (max’d employed 401k to 54k, self-employed 401k to 54k, wife’s 401k to 54k, HSA, IRA, prob a DBP, idk, I’m not his accountant, I just retain things from his posts).  Most portfolios have room in them for low-percentage guaranteed gains, even in some cases “real” negative gains, like holding cash (think 529s close to college, or a near-retirement portfolio).  This $97k for the last of his mortgage, or even if you take the whole $275k from when he got started paying it off at the end of 2016, is a drop in the bucket in his overall portfolio which could reasonably be assigned to that.  For most of us, even those of us who are high-earning professionals, our money is almost certainly better placed in our tax-advantaged accounts or even in a taxable account to build the wealth we need with compound gains over time as opposed to preventing simple, low-percentage, non-compounding losses.

    I’m not a very psychological person.  I don’t buy into this whole “weight on the shoulders” or “slave to the lender” philosophy.  My liabilities are what they are, and so are my assets.  When eliminating a liability gives more benefit to the whole picture as opposed to building an asset, either vis-a-vis overall net worth or the other issues with debt (such as for reduction of income, retirement, going part time, etc), I’ll do it.  All that matters to me for the time being, since I’m appropriately insured, still a long career ahead of me, and don’t have a large investment portfolio (not much time behind it…), is how much my liabilities will cost me in finance changes and how much my assets will earn me in compound gains over time.  The liabilities are like an inverse fixed-income security (I mean, what’s a bond, right?) with a fixed amount due over a fixed time.  When that amount becomes a reasonable amount for a part of my portfolio to gain, I trade the asset to eliminate the liability with the basic “equivalent gain” being the finance charges prevented.  This is exactly what WCI did when he traded his equities (specifically earmarked for this) for his mortgage – just like there’s room for cash, TIPS, etc in most investors’ portfolios.  If looking at oneself as a “debt slave” is what it takes for a site reader to make adequate financial decisions, then good, the end justifies the means imo.  I’d rather arrive at my decision with calculation instead of emotion, but it’s the end effect that counts – what’s my overall scenario, my balance sheet, etc.

    So I’ll go reason by reason; while I doubt WCI (or anyone) really cares what I think, we’re all here to share ideas, and I’m not about to drag my muddy shoes all throughout his (now paid-off) house.

    1. Meh.  Who’s really borrowing if they’re getting sub-inflation gains on a shrinking principal?  But you’ve got to eliminate the obligation if your ability or desire to meet it might stop (i.e. not needing income).
    2. Psychology and behavior, K, sure
    3. +/-, this is kinda fungible, you could have had the cash flow coming from what you already had invested, and a bit more a matter of perspective than a mathematical truth, but still a decent argument
    4. I totally agree
    5. I agree but do concede this could be considered “behavioral investing”
    6. Def true, good problem to have
    7. Also def true
    8. What I said give your massive net worth
    9. Yep, that whole thing comprised what I imagine to be < 5% your net worth
    10. Not sure how to rate this, but I think this whole “debt-free scream” think is pretty silly and is far more psychological than rooted in appropriate mathematical finance, but no one gets to tell you how to raise/teach your kids but you

    You choose your message for your site and obviously for your own financial life.  I totally agree with you that this was not only a reasonable but probably a good move for you, even from a mathematical perspective.  I’m not sure I would have pitched it as “mathematical stupidity” and then gone right ahead and done it anyway, nor might I have included all the psychological impetus you did, but you’ve readily stated over and again in your article that your circumstances are not par for the course and it made sense to do so.  You’re also in a bit of a bind in that a core pillar of your message here is the elimination of debt, which makes it very difficult to condone having any debt (even well-structured, near-zero or negative “real” debt), even if it might be the best application of money, lest you give the impression of inconsistency to novices who might not understand how the nuts and bolts work.

    tl;dr – I disagree with some minutiae but agree with most of the post.  Congrats, man.  Huge fan and always will be.

    Click to expand…

    I didn’t actually sell any of those equities in the mortgage pay off fund, although I gave a big chunk of them away. I paid off the mortgage with new money. It’s all fungible, of course.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #55115 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4482
    Joined: 05/13/2011

    I don’t think anyone begrudges WCI for making money on the blog, and I have no idea why anyone would. I think he does a very good job of trying to disclose potential conflicts of interest. That said, even if he is conflicted, who cares. Everyone who is paid for doing something is conflicted. It is the nature of capitalism.

    WCI, regarding millionaires’ views of debt, I think you are a bit myopic by focusing on doctor millionaires whose net worth is largely the result of accumulated savings rather than returns on investments. People in the business world who are worth millions do not take such a view of debt. Taking the next step between $5-10M and $10-50M+ of net worth typically requires leverage.

    Click to expand…

    If your goal is to take the “next step” and your income is only that of a typical working physician, then I agree you’re going to need leverage to get there.

    I disagree that that is my next step nor that of the vast majority who have any concept of “enough.”

    I also disagree that significant leverage is needed to get in to the mid to high 7 figure range, but that’s just my personal experience speaking.

    Click to expand…

    WCI has helped countless MDs, and please don’t take this the wrong way. I have a hard time believing this – if this were the case, you wouldn’t be doing the conference and it would be free.

    Click to expand…

    The conference is actually the biggest financial risk this business has ever taken, but it still doesn’t involve any leverage.

    Click to expand…

    Eh…proves the point. No need to take risk, but there is still risk being taken. Underlying motivation is anybody’s guess but its not “enough” mentality.

    Click to expand…

    Well, there’s one vote for selling the website and going mountain biking. Don’t think I don’t think about that often.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #55117 Reply
    Avatar beagler 
    Participant
    Status: Physician
    Posts: 259
    Joined: 07/08/2017

    There is satisfaction and accomplishment from building something. Having your own conference and making new personal connections sounds great! Turning a profit doing so is just a bonus. Why would one hang it up if having fun while growing something meaningful?

    Let’s ask WCI what he doesn’t enjoy about running WCI? My guess is dealing with comments expressing whining, overconfidence (what from doctors? never;) and (now that his net worth climbing rapidly) jealousy. He said he can handle the fire from whole life agents. But might be tougher coming from compatriot docs you’re trying to help and educate.

    Solo Internist, Midwest

    #55160 Reply
    Avatar janettebournes 
    Participant
    Status: Physician
    Posts: 191
    Joined: 03/05/2017

    I don’t think anyone begrudges WCI for making money on the blog, and I have no idea why anyone would. I think he does a very good job of trying to disclose potential conflicts of interest. That said, even if he is conflicted, who cares. Everyone who is paid for doing something is conflicted. It is the nature of capitalism.

    WCI, regarding millionaires’ views of debt, I think you are a bit myopic by focusing on doctor millionaires whose net worth is largely the result of accumulated savings rather than returns on investments. People in the business world who are worth millions do not take such a view of debt. Taking the next step between $5-10M and $10-50M+ of net worth typically requires leverage.

    Click to expand…

    If your goal is to take the “next step” and your income is only that of a typical working physician, then I agree you’re going to need leverage to get there.

    I disagree that that is my next step nor that of the vast majority who have any concept of “enough.”

    I also disagree that significant leverage is needed to get in to the mid to high 7 figure range, but that’s just my personal experience speaking.

    Click to expand…

    WCI has helped countless MDs, and please don’t take this the wrong way. I have a hard time believing this – if this were the case, you wouldn’t be doing the conference and it would be free.

    Click to expand…

    Strongly disagree.

    Perhaps WCI is doing the conference as a natural extension of the blog, the book, the forum and that is to gather like-minded people to further the message and “help those who wear the white coat get a “fair shake” on Wall Street”

    I certainly don’t think less of WCI for charging a reasonable fee, nor do I see him as a snakeoil salesman trying to extract maximum money from me to pad his bottom line.

    I apologize if this comes off as antagonistic but your posts just seem to rub me the wrong way. For someone who started off as a “complete newbie” asking for help, your attitude seems to have veered off very quickly. A lot of your posts seem to almost express envy that WCI beat you to the blogging punch. You seem to exhibit a lot of disdain for the “conservative” nature of physicians and mock those of us who have taken to heart and benefited from WCI’s advice. Yeah it’s boring. A lot of it seems like common sense. But there’s a reason why WCI has gotten such a large following and that is because it works.

    You’ve mentioned on multiple occasions now how the conservative nature of WCI’s following has soured you and that you only occasionally drop in to glean some wisdom from the more aggressively positioned members of the forum. It makes me wonder why you continue to come back to a place that you claim to have outgrown?

    Perhaps you would be better served with your own blog and book about maximizing leverage, shooting for the stars entrepreneurial spirit, hitting 8 digits by 40, and leaving all the Boglehead/WCIers in the dust? I’d be more than happy to funnel viewing volume your way if you cared to share your gameplan as WCI has done instead of speaking in vague generalities. 🙂

    #55181 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4482
    Joined: 05/13/2011

    I thought vague generalities was Crixus’s terrain.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #55210 Reply
    Liked by lilsnappa, hatton1
    Avatar erictait 
    Participant
    Status: Physician, Other Professional
    Posts: 57
    Joined: 01/20/2016

    StarTrekDoc  – In our jurisdiction I can easily see what properties have mortgages and which do not. As more municipalities digitize their records you can pull that data from the comfort of your personal computer.

    As I was setting up our own portfolio structures what I did was sit with a successful plaintiff’s attorney and ask him to theoretically sue me.

    He walked me through exactly what he would look for and how he would go after it.

    That’s why I went to an asset protection firm that only does asset protection.

    What most people don’t realize it that LLC are usually written with boilerplate language from attorney’s offices that make them defective when it comes to asset protection because it still allows judges the leeway to force payment through the charging order.

    There are ways to specifically avoid this.

    And god forbid someone did their LLC’s through legal zoom, then they most certainly are lacking in the asset protection side.

     

     

    Eric S. Tait M.D., MBA
    President
    Vernonville Asset Management
    http://www.vernonville.com
    1-877-668-3311

    #55487 Reply
    Avatar Complete_newbie 
    Participant
    Status: Physician, Small Business Owner
    Posts: 804
    Joined: 01/03/2017

    I don’t think anyone begrudges WCI for making money on the blog, and I have no idea why anyone would. I think he does a very good job of trying to disclose potential conflicts of interest. That said, even if he is conflicted, who cares. Everyone who is paid for doing something is conflicted. It is the nature of capitalism.

    WCI, regarding millionaires’ views of debt, I think you are a bit myopic by focusing on doctor millionaires whose net worth is largely the result of accumulated savings rather than returns on investments. People in the business world who are worth millions do not take such a view of debt. Taking the next step between $5-10M and $10-50M+ of net worth typically requires leverage.

    Click to expand…

    If your goal is to take the “next step” and your income is only that of a typical working physician, then I agree you’re going to need leverage to get there.

    I disagree that that is my next step nor that of the vast majority who have any concept of “enough.”

    I also disagree that significant leverage is needed to get in to the mid to high 7 figure range, but that’s just my personal experience speaking.

    Click to expand…

    WCI has helped countless MDs, and please don’t take this the wrong way. I have a hard time believing this – if this were the case, you wouldn’t be doing the conference and it would be free.

    Click to expand…

    Strongly disagree.

    Perhaps WCI is doing the conference as a natural extension of the blog, the book, the forum and that is to gather like-minded people to further the message and “help those who wear the white coat get a “fair shake” on Wall Street”

    I certainly don’t think less of WCI for charging a reasonable fee, nor do I see him as a snakeoil salesman trying to extract maximum money from me to pad his bottom line.

    I apologize if this comes off as antagonistic but your posts just seem to rub me the wrong way. For someone who started off as a “complete newbie” asking for help, your attitude seems to have veered off very quickly. A lot of your posts seem to almost express envy that WCI beat you to the blogging punch. You seem to exhibit a lot of disdain for the “conservative” nature of physicians and mock those of us who have taken to heart and benefited from WCI’s advice. Yeah it’s boring. A lot of it seems like common sense. But there’s a reason why WCI has gotten such a large following and that is because it works.

    You’ve mentioned on multiple occasions now how the conservative nature of WCI’s following has soured you and that you only occasionally drop in to glean some wisdom from the more aggressively positioned members of the forum. It makes me wonder why you continue to come back to a place that you claim to have outgrown?

    Perhaps you would be better served with your own blog and book about maximizing leverage, shooting for the stars entrepreneurial spirit, hitting 8 digits by 40, and leaving all the Boglehead/WCIers in the dust? I’d be more than happy to funnel viewing volume your way if you cared to share your gameplan as WCI has done instead of speaking in vague generalities. ????

    Click to expand…

    Nice.

    Actually I have a lot of respect for WCI but for the reasons majority don’t come here to read: entrepreneurship, taking risks, and having an awesome life outside. I am more envious of his mountaineering skills than anything to be frank. Heck his pictures got me started doing some hiking and I like it! Blogging? eh may be in the beginning I may have thought this way but it is not for everyone and its anything but passive.

    I do return from time to time to read what Zaphod has to say or Vagabond etc. Some posters are different on here and much smarter than me so I benefit.

    So lets get to the meat here. I am not as eloquent as you. Sometimes what I type is crass, but you are right I guess I am mocking people here. Sorry about that. I see a dichotomy sometimes when WCI posts and I question that. May be Eric tait agrees with me and he can elaborate, but since he is NOT anonymous he has to consider his reputation. But he certainly thought I had a fair point. Notice that you are up in arms but WCI had a more reasonable response above. Hmmm wonder why?

    I can pick many things that WCI says that are correct and factual but the “bend” is interpreted like “oh yea that makes sense, great, awesome” by the majority but to me its more like “sure, but …” If his message is 100% consistent all the time to you great. To me its not and I question that. Sorry you and many don’t like my tone or attitude. Don’t read if you don’t. This is how I am.

    Not sure why I wasted this time even replying, but notifications tab had a reply so felt compelled.

     

    #55920 Reply
    xraygoggles xraygoggles 
    Participant
    Status: Physician
    Posts: 79
    Joined: 10/26/2018

    I somehow ran across this thread searching for something, and thought I would bump this.

    Very insightful posts in here, lot to learn.

    I have really only heard the “pay off debt ASAP” side of the equation; it’s nice to hear the other (contrarian?) side, and then decide for yourself.

    “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

    #238489 Reply
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 6084
    Joined: 01/12/2016
    medical school scholarship sponsor

    Wow, forgot about this.

    Yes, basically many on this forum are crazy and if you do not fear all debt with a sledgehammer approach, you’re also betting it all on the super bowl, i kid i kid but we know the arc of the forum is long and bends toward super frugality.

    If you read this and other things, it basically boils down to (imo) life stages. It makes way more sense to accumulate young (and to not rack up unproductive debt ofc) and deleverage as you get older.

    There are absolutely times when crushing debt makes sense, but none of those should include “emotions” or any other such nonsense. Its more like insurance, freedom to do whatever/wherever (personal or professional), take more risks in other things, etc…I would love for someone to put together a more objective list of great reasons to pay down debts since they exist and make more sense.

    I am going to crush my own debt the next couple years (outside of mortgage ofc, I havent gone crazy) and will be doing it so I can have minimal fixed costs to consider and be able to do whatever I want in life and maybe do something crazy. You never know. Ofc, if the market goes bad I will switch to dumping it into the market.

    #238704 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2857
    Joined: 09/18/2018
    Im just saying the doctor, not the average joe mind you, should not worry excessively about what will ultimately be a rounding error in their life. All they have to focus on is income, expenses, shoveling it away and trying not to make big mistakes. I simply enjoy arguing.

    Click to expand…

    Compliments on you debating skills. I get you point about it’s purely math. I get your point about the unknowns of inflation, housing values and market returns and a fixed/variable interest.  To my way of thinking, a mortgage is in a different risk category than investments. Part consumption but it typically has a stable if somewhat increasing value. At some point common sense comes into the equation. As long as a mortgage is = or < 2 times earnings, what does it matter for a residence? Taxes and retirement savings leaves spending, which means one can consume it or add to investments. A doctor and simply afford to make bigger mistakes because the shovel is so big. Behavioral wise, I think its most effective to have a target on a mortgage that is more than just “paying it off”. Some use kids going to college and others use a specific age or loan term. Paying it off is a behavioral goal much like wanting to cross the $1mm or $2mm or $5mm threshold. Whatever one plans, retirement can come sooner or later. By the way, some can choose to spend it, they will have less at retirement, but what does it matter if you still have more than enough for your needs.

    #238723 Reply
    Liked by Craigy, Zaphod
    Avatar StarTrekDoc 
    Participant
    Status: Physician
    Posts: 1966
    Joined: 01/15/2017

    Wow….Phoenix rises. Two years wiser? Deeper into FI and still have our primary mortgage. We have taken on two new car loans of 0.9% and 1.9% to let the banks finance our cars while we continue to index away as a mild leveraged bet.

    Still waiting for the drop for the next real estate opportunity. Meanwhile rents on our properties have risen about 10% and nice cashflow there continues.

    Debt isn’t bad if done correctly. Debt to finance more consumption?…..danger Will Robinson

    #238736 Reply

Reply To: \"I know what the math says, but….\"

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