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Discussion Starter · #1 ·
Say, you knew that you were going to earn $150,000 salary for the next five years, but then your job would be gone and it is very doubtful that you will ever make nearly that much again, what would you do? How would you invest/save those 5 years? And where would you live? You can live anywhere (that you can afford) as your job is flexible like that.

I'm very curious what others would do. Thanks for playing!
 

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I've been saving 50% of everything I make since I was 18 in boot camp, and would continue to do that on $150,000 per year. I never assume that what I have today I will also have tomorrow. I might invest some of it in more traditional things like stock, but I would also invest some of it in education. With $150,000 for 5 years and some careful planning, there is no reason not to be able to find work making that same wage afterwards (though, again, it's best to assume for the sake of safety that you won't). If the job you're doing is going to disappear, then use some of that to fund an alternate education towards a career that won't.
 

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There is going to be too much volatility in the stock market and real estate for the foreseeable future, so I would steer clear of those. I would put something into retirement, set aside something for education, then put the rest towards a business opportunity where I would bankroll the venture until the job ended or the business took off. Like find a couple partners and start a vegan food truck. I hate working for other people, so I would try to get out of that situation as soon as possible and into something where I had ownership.
 

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Discussion Starter · #5 ·
Quote:
Originally Posted by nomad888 View Post

I've been saving 50% of everything I make since I was 18 in boot camp, and would continue to do that on $150,000 per year. I never assume that what I have today I will also have tomorrow. I might invest some of it in more traditional things like stock, but I would also invest some of it in education. With $150,000 for 5 years and some careful planning, there is no reason not to be able to find work making that same wage afterwards (though, again, it's best to assume for the sake of safety that you won't). If the job you're doing is going to disappear, then use some of that to fund an alternate education towards a career that won't.
Wow 50% is impressive. I will probably be too busy to go to school in the next 5 years, but I could save $ and go after that although nothing else I'm interested in pays much. I'm okay with that. I just need to save and invest well, now.
 

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$150K per year doesn't go quite as far as one would think. However I'd continue on as I have, live very modestly, pay down the home mortgage, buy more rentals, and invest a good portion of it in stocks.
 

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Quote:
Originally Posted by delicioso View Post

Wow 50% is impressive. I will probably be too busy to go to school in the next 5 years, but I could save $ and go after that although nothing else I'm interested in pays much. I'm okay with that. I just need to save and invest well, now.
I'm guessing no wife and kids? However, impressive none the less.
 

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Discussion Starter · #8 ·
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Originally Posted by Mojo View Post

There is going to be too much volatility in the stock market and real estate for the foreseeable future, so I would steer clear of those. I would put something into retirement, set aside something for education, then put the rest towards a business opportunity where I would bankroll the venture until the job ended or the business took off. Like find a couple partners and start a vegan food truck. I hate working for other people, so I would try to get out of that situation as soon as possible and into something where I had ownership.
My goal is to live off of investments and do volunteer work 5 years from now. I'm not really the entrepreneur type. I'm very invested in the stock market and love the volatility.
 

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Discussion Starter · #9 ·
I've been considering renting my home out, letting someone else pay my mortgage of $2,000 a month, and go live somewhere exotic, fun, warm and cheap for a while. I should be able to get $2,500 and that is pretty much break even. I really don't want to sell it, though.
 

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Lottery tickets! Buy lottery tickets!
 

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Discussion Starter · #13 ·
Reasons Why You Don't Want To Pay The Mortgage Off Early
There are those that say that while it's a nice idea to pay your mortgage off early, there are reasons why you shouldn't.

Liquidity of your assets and flexibility: One argument against paying off the mortgage that makes some sense to me is the idea that putting all your extra cash into your mortgage means you're going to have a lot less liquidity in your assets, and if a situation were to arise where you needed money fast, your money would be all tied up in your house. This argument is the reason why I suggest that people first save up a sizable emergency fund, and invest and save first.
Higher returns by investing your money: Many people argue that you would get higher returns on your money if you simply invest it. If you can get 7-8% on your money, you will end up coming out ahead. On the other hand, there is risk with investing as well, and there aren't guarantees.
Inflation works for you: As inflation goes up by 3-4% annually, by not paying off the mortgage and paying it over time, you're essentially paying less for the same amount of house every year. You pay the same today to live in the house that you do 30 years from now.
Tax deduction: You can deduct the interest you pay on your mortgage, on your taxes. Taken by itself it isn't a good idea to keep a mortgage, but when taken in concert with the rest, it might be the straw that broke the camel's back.
So for some people it seems that just holding onto their mortgage ends up being the preferable option. For a story of someone who didn't pay off their mortgage early, read this post: Why I Didn't Pay My Mortgage Off In Full

http://www.biblemoneymatters.com/sho...rly-or-invest/
 

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Reasons Why Paying Off The Mortgage Early Is A Good Idea

There are a lot of people who think that paying off your mortgage early is a great idea, and is an indicator that you're heading down the right path. Here are some of the reasons they give for paying extra.

Paying less interest on the mortgage: When you pay extra on your mortgage principal it ends up meaning you'll shave months or years off of your mortgage, and you'll save thousands of dollars in interest. For example, on a 300,000 dollar mortgage over 30 years, with an interest rate of 5%, you'll end up paying over 309,000 in interest. Cut that to a 15 year mortgage and you're only paying 143,000 in interest. The more extra payments you make, and the faster you pay, the less interest you'll have to send to the mortgage company!
Less risk, more peace of mind: With less debt on your balance sheet, you have less risk in your life. You'll have less to worry about when your only bills are food, taxes and other necessities. Add to that having the burden of debt removed from your shoulders. The psychological benefit of being free of debt isn't to be underestimated.
More freedom: When you don't have a mortgage payment you'll have more freedom. Don't want to take a job - you don't have to because your monthly debt obligations are next to zero. Instead do something you love! Want to have one spouse be a stay at home parent? Do it! You can afford it!
Eliminating debt is a sure thing: While investing in the stock market isn't a sure thing -having a paid off house you can live in IS.
Extra money to save, invest and give: When you have a paid off mortgage you'll have a lot more money left over every month that you can use to save invest and give. Can you imagine how fast your nest egg would grow if you had no debt obligations -including a mortgage?
 

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Discussion Starter · #16 ·
Quote:
Originally Posted by Forster View Post

Reasons Why Paying Off The Mortgage Early Is A Good Idea

There are a lot of people who think that paying off your mortgage early is a great idea, and is an indicator that you're heading down the right path. Here are some of the reasons they give for paying extra.

Paying less interest on the mortgage: When you pay extra on your mortgage principal it ends up meaning you'll shave months or years off of your mortgage, and you'll save thousands of dollars in interest. For example, on a 300,000 dollar mortgage over 30 years, with an interest rate of 5%, you'll end up paying over 309,000 in interest. Cut that to a 15 year mortgage and you're only paying 143,000 in interest. The more extra payments you make, and the faster you pay, the less interest you'll have to send to the mortgage company!
Less risk, more peace of mind: With less debt on your balance sheet, you have less risk in your life. You'll have less to worry about when your only bills are food, taxes and other necessities. Add to that having the burden of debt removed from your shoulders. The psychological benefit of being free of debt isn't to be underestimated.
More freedom: When you don't have a mortgage payment you'll have more freedom. Don't want to take a job - you don't have to because your monthly debt obligations are next to zero. Instead do something you love! Want to have one spouse be a stay at home parent? Do it! You can afford it!
Eliminating debt is a sure thing: While investing in the stock market isn't a sure thing -having a paid off house you can live in IS.
Extra money to save, invest and give: When you have a paid off mortgage you'll have a lot more money left over every month that you can use to save invest and give. Can you imagine how fast your nest egg would grow if you had no debt obligations -including a mortgage?
They admit at the end that it is probably better not to, but it just makes people feel good. That is a stupid reason to do it.
I can feel just as good knowing that I could pay off my house if I chose to, but don't because it doesn't make financial sense.
 

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Yep, I'm almost there, mortgage should be paid in full in 3.5 years, just in time for my last to graduate from college. Haven't had any other personal debts of any kind for over a decade. To be fair it is the last thing I've gone after as saving for retirement and saving for cars ahead of time came first.
 

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Quote:
Originally Posted by delicioso View Post

They admit at the end that it is probably better not to, but it just makes people feel good. That is a stupid reason to do it.
I can feel just as good knowing that I could pay off my house if I chose to, but don't because it doesn't make financial sense.
It frees up a lot of cash though. I could pay mine off right now but with 3 kids in college I'd rather have the liquidity right now, but I will be able to drop and extra 10k in January and another 10k in Jan of 13 and that will pay it off in 2 years after the second paydown.
 

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Discussion Starter · #19 ·
You'd probably have more money if you hadn't paid off your house, but I guess that is not important to you?
I just refinanced and don't care if I ever pay my house off. It's all about low interest and low payments for me.
 

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Originally Posted by delicioso View Post

You'd probably have more money if you hadn't paid off your house, but I guess that is not important to you?
I just refinanced and don't care if I ever pay my house off. It's all about low interest and low payments for me.
I've got plenty of liquidity even with paying the mortgage down, but my net assets are higher now than they would have been otherwise because the rate of return on my savings would almost assuredly been less than what I would have been charged on the mortgage. Way, way ahead of the game because I got rid of consumer debt.
 
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