What age did you become debt free and what opportunities did it create?

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cheese_breath
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Re: What age did you become debt free and what opportunities did it create?

Post by cheese_breath » Mon Jul 06, 2015 10:42 pm

TradingPlaces wrote:I hope I die with more debts than assets. Of course, I hope my assets are in trust, outside of my estate, and my debts are many and mighty. You can not collect from dead people.
I hope I die without any debts. I can't abide stiffing people out of money I owe them just because I happen to die before I pay them back.
The surest way to know the future is when it becomes the past.

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Re: What age did you become debt free and what opportunities did it create?

Post by 4nursebee » Tue Jul 07, 2015 4:28 am

I am not debt free.
Debt has helped my well being.
Our networth is much higher than when we incurred the debts.
4nursebee

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Re: What age did you become debt free and what opportunities did it create?

Post by Tanelorn » Tue Jul 07, 2015 5:04 am

cheese_breath wrote:I hope I die without any debts. I can't abide stiffing people out of money I owe them just because I happen to die before I pay them back.
I imagine many people would have a different opinion based on whether the parties owed are friends or relatives vs ones like JPM Chase, Bank of America, etc.

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Re: What age did you become debt free and what opportunities did it create?

Post by Traveller » Tue Jul 07, 2015 5:57 am

Tanelorn wrote:I imagine many people would have a different opinion based on whether the parties owed are friends or relatives vs ones like JPM Chase, Bank of America, etc.
I hope not.

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Re: What age did you become debt free and what opportunities did it create?

Post by Traveller » Tue Jul 07, 2015 6:03 am

I can't yet contribute to the OPs question as I still have a mortgage; however, the balance just dropped below $100k and I am very anxious to kill that thing entirely. Hoping to do so in 2 years (Independence Day 2017 is the goal). I've never had debt other than mortgages.

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Re: What age did you become debt free and what opportunities did it create?

Post by cheese_breath » Tue Jul 07, 2015 6:18 am

Tanelorn wrote:
cheese_breath wrote:I hope I die without any debts. I can't abide stiffing people out of money I owe them just because I happen to die before I pay them back.
I imagine many people would have a different opinion based on whether the parties owed are friends or relatives vs ones like JPM Chase, Bank of America, etc.
It's easy to think of JPM Chase, BOA, etc. as evil empires, but when you stiff them you're also stiffing the innocent stockholders. Since I hold both S&P 500 and TSM funds, I'm one of them.
The surest way to know the future is when it becomes the past.

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Re: What age did you become debt free and what opportunities did it create?

Post by bengal22 » Tue Jul 07, 2015 7:08 am

I am retired and probably will never be debt free.
I have a low rate(3.25%) mortgage that will be paid off in 11 years. I also use a credit card, that earns 1.5% payback, that I pay off every month(but its still debt). Never found affordable debt to be stressful. Never found affordable debt to consume any of my time. I have this suspicion that a lot of people that pay off mortgages early also have low-paying fixed income and are missing a lot of investment opportunities(stock/bond mutual funds). Just a suspicion. There is a cost to being too safe.
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Bustoff
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Re: What age did you become debt free and what opportunities did it create?

Post by Bustoff » Tue Jul 07, 2015 7:44 am

nyinca wrote: Re: What age did you become debt free and what opportunities did it create?
I think I was around 45 at mortgage pay off. Being debt free allowed us to squirrel away much more.

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Re: What age did you become debt free and what opportunities did it create?

Post by Grt2bOutdoors » Tue Jul 07, 2015 7:51 am

cheese_breath wrote:
Tanelorn wrote:
cheese_breath wrote:I hope I die without any debts. I can't abide stiffing people out of money I owe them just because I happen to die before I pay them back.
I imagine many people would have a different opinion based on whether the parties owed are friends or relatives vs ones like JPM Chase, Bank of America, etc.
It's easy to think of JPM Chase, BOA, etc. as evil empires, but when you stiff them you're also stiffing the innocent stockholders. Since I hold both S&P 500 and TSM funds, I'm one of them.
Those who bear the real costs over time are future borrowers. Lenders will price their products using many variables, one of them is borrower behavior, this will make it harder for some to borrow at ANY price. If they do manage to obtain a loan, the price will be much higher than it would have been.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: What age did you become debt free and what opportunities did it create?

Post by Grt2bOutdoors » Tue Jul 07, 2015 7:57 am

Bustoff wrote:
nyinca wrote: Re: What age did you become debt free and what opportunities did it create?
I think I was around 45 at mortgage pay off. Being debt free allowed us to squirrel away much more.
How much more? That is questionable. Let's say you are in a 30 year mortgage, in year 5 you pay off the entire mortgage - then yes, since you are mainly paying interest during the first 15 years of that term, you are saving all of that interest for which you see only a portion of in the form of a tax deduction. However, if you are in year 23 of a 30 year mortgage, most of your mortgage payment is being used to pay principal - you are taking your liquid savings and converting it into permanent equity ("semi" - if the real estate market moves against you, could face equity erosion), only a small portion (say 25% or less of the actual mortgage payment is interest).
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: What age did you become debt free and what opportunities did it create?

Post by randomguy » Tue Jul 07, 2015 8:30 am

feh wrote:Paid off our mortgage in our late 30s. Simply enabled us to save more for retirement.
Over a shorter period of time though. If instead of paying off the mortage, you would have invested the money, odds are you would have more money in the end. Obviously this is in general and your specific case (paid off the house between 2000-2008 versus paying it off between 1991-1999) will give different results.

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Re: What age did you become debt free and what opportunities did it create?

Post by Nummerkins » Tue Jul 07, 2015 8:45 am

I paid off my mortgage at 29 shortly after getting married. My wife and I are fortunate to not have any student loans -- she was able to go to school cheaply as a staff member's child and I did not go to college. I have never carried credit card debt* or a car loan. I can thank my parents for teaching me fiscal responsibility.

The opportunities created are many. We are now able to save about 25-30% of our income and use the rest to cashflow things we want like remodeling parts of the house, hobbies, vacations and giving. If one of us is laid off or quits our job it simply does not matter. This was a big item for me as I was in a stressful job I was not enjoying. Instead of being slaves to money we make it work for us and it becomes a second thought.

*I used to play the 0% credit card arbitrage game having balances many times my income. When the rates dried up this was all paid back as though I never had it.

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Re: What age did you become debt free and what opportunities did it create?

Post by Carefreeap » Tue Jul 07, 2015 8:50 am

TradingPlaces wrote:
Carefreeap wrote:
TradingPlaces wrote:I hope I die with more debts than assets. Of course, I hope my assets are in trust, outside of my estate, and my debts are many and mighty. You can not collect from dead people.
r

I hope you are kidding.

When my mom got sick my biggest hope was that she died before her house went into foreclosure. Picking up the pieces and dealing with collection agencies because your parent was in debt and didn't have enough to pay them is not fun.
Only if you want to recovering anything out of the estate.
It wouldn't have mattered. They still would have tracked me down. Even after writing to the creditors and explaining the upside down estate status I got threats to open up the Trust et cetera. It wasn't until I cancelled my mother's phone service and moved out of the country that they stopped hassling me. My brother, who was not the Trustee or executor, was also contacted. So was my father who had been my mother's ex husband for 10 years at that point.

Don't do this to your family. The grieving process is difficult enough without having to deal with debt collectors.

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Re: What age did you become debt free and what opportunities did it create?

Post by BW1985 » Tue Jul 07, 2015 9:13 am

TradingPlaces wrote:I hope I die with more debts than assets. Of course, I hope my assets are in trust, outside of my estate, and my debts are many and mighty. You can not collect from dead people.
This outlook strikes me as rather sad.
"Squirrels figured out how to save eons ago. They buried acorns. Some, they dug up, for food. Others, they let to sprout, in new oak trees. We could learn from squirrels." -john94549

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Re: What age did you become debt free and what opportunities did it create?

Post by vitaflo » Tue Jul 07, 2015 10:23 am

am wrote:I have no debt. If I did, even 2.875 mortgage would be unacceptable. Sure it is low compared to possible future returns, but if you have a mortgage in the hundred of thousands, you are still giving away thousands every year to a bank for the sole purpose of giving you a loan. If you do not need the loan, than seems like a bad deal. I do my own investing, seems similar to giving an advisor money to do it for me. Yes, I know, potential returns of stocks are higher, but reality may be different. I know of no easier way to make thousands than to pay off a mortgage which I did the first chance I got.
That's fine but realize it's a purely psychological decision, not a financial one. People often look at the interest on the loan but forget about the large benefits from it. Namely the mortgage interest deduction. A 2.875% interest mortgage, after the tax deduction and inflation is basically a zero (or sub-zero) rate loan. Over 30 years, if you don't think you'll do better in the market with that money, then there is no reason to ever invest at all.

Basically it's a shell game. You're paying the bank $20 so that you can get $100 from someone else. I'd take that deal every time, but I understand people who want to feel like they don't owe anyone anything. It is a powerful motivator, even if they numbers don't always add up.

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Re: What age did you become debt free and what opportunities did it create?

Post by Bustoff » Tue Jul 07, 2015 11:05 am

Grt2bOutdoors wrote:
Bustoff wrote:
nyinca wrote: Re: What age did you become debt free and what opportunities did it create?
I think I was around 45 at mortgage pay off. Being debt free allowed us to squirrel away much more.
How much more? That is questionable. Let's say you are in a 30 year mortgage, in year 5 you pay off the entire mortgage - then yes, since you are mainly paying interest during the first 15 years of that term, you are saving all of that interest for which you see only a portion of in the form of a tax deduction. However, if you are in year 23 of a 30 year mortgage, most of your mortgage payment is being used to pay principal - you are taking your liquid savings and converting it into permanent equity ("semi" - if the real estate market moves against you, could face equity erosion), only a small portion (say 25% or less of the actual mortgage payment is interest).
Uh ... no it's not. Being debt free allowed us to squirrel away much more. The poster asked about the opportunities created for us, not everyone else.

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Re: What age did you become debt free and what opportunities did it create?

Post by BW1985 » Tue Jul 07, 2015 11:15 am

vitaflo wrote:
am wrote: A 2.875% interest mortgage, after the tax deduction and inflation is basically a zero (or sub-zero) rate loan. Over 30 years, if you don't think you'll do better in the market with that money, then there is no reason to ever invest at all..
Then I'll ask why do banks even offer these loans? Why don't they just invest that money instead of loaning it to you or I @ 3%?
"Squirrels figured out how to save eons ago. They buried acorns. Some, they dug up, for food. Others, they let to sprout, in new oak trees. We could learn from squirrels." -john94549

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Re: What age did you become debt free and what opportunities did it create?

Post by Carefreeap » Tue Jul 07, 2015 11:48 am

BW1985 wrote:
vitaflo wrote:
am wrote: A 2.875% interest mortgage, after the tax deduction and inflation is basically a zero (or sub-zero) rate loan. Over 30 years, if you don't think you'll do better in the market with that money, then there is no reason to ever invest at all..
Then I'll ask why do banks even offer these loans? Why don't they just invest that money instead of loaning it to you or I @ 3%?
Because they are borrowing it from someone else at <.50%

In the old days banks typically would make a 2% spread between what they borrowed and what they lent. But nowadays they really make their money servicing the loans and just sell all the loans to FNMA and Freddie Mac.

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Re: What age did you become debt free and what opportunities did it create?

Post by ssquared87 » Tue Jul 07, 2015 12:01 pm

28 and almost there.

I bought a road bike last year, had the cash to pay but ended up financing it for 0% for 12 months. Just made my last payment last week and it felt great! The extra $425 I'll have every month will be going towards investments.

Still have 3 years and $18k left on my car. Again, had the cash but the financing was 1.9% and BMW made the first two payments, so financing was cheaper. Even if I get no returns in the market from the money I would have used to pay for the car, the extra $1k I got from BMW makes up for the finance costs.

Although I saved money by financing, its a much better feeling not having to worry about payments. I don't have an urge to retire early, or to buy a house, but when I get to a comfortable point financially, I want to dabble in starting my own businesses and being more entrepreneurial. Being debt free will allow me to do that without much worry.

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Re: What age did you become debt free and what opportunities did it create?

Post by ssquared87 » Tue Jul 07, 2015 12:09 pm

Carefreeap wrote:
BW1985 wrote:
vitaflo wrote:
am wrote: A 2.875% interest mortgage, after the tax deduction and inflation is basically a zero (or sub-zero) rate loan. Over 30 years, if you don't think you'll do better in the market with that money, then there is no reason to ever invest at all..
Then I'll ask why do banks even offer these loans? Why don't they just invest that money instead of loaning it to you or I @ 3%?
Because they are borrowing it from someone else at <.50%

In the old days banks typically would make a 2% spread between what they borrowed and what they lent. But nowadays they really make their money servicing the loans and just sell all the loans to FNMA and Freddie Mac.
Exactly. Most banks do not hold mortgages on their balance sheets, so they do not make any profit on spreads. The underwriting fees are where the bank makes money.

The mortgages are packaged into CDOs with many other mortgages and sold to investors. Those investors are willing to lend at low rates of return because mortgages are seen as much lower risk than corporate bonds or equities due to the collateral and the fact that many different mortgages in varied geographic areas are packaged into a single CDO. Assuming that the lending standards are high and loan documentation isn't forged, the risk is probably fairly low. If 5-10% of loans in a CDO default investors will still have a nice return. The problem during the housing crises was that the risk models investors used assumed housing prices would never decrease, and risk was underestimated because loan documentation was forged so many of the loans were much riskier than investors were led to believe.

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Re: What age did you become debt free and what opportunities did it create?

Post by mptfan » Tue Jul 07, 2015 12:37 pm

vitaflo wrote:A 2.875% interest mortgage, after the tax deduction and inflation is basically a zero (or sub-zero) rate loan.
This is not necessarily true. Some people (including me) do not get a tax benefit from paying mortgage interest.

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Re: What age did you become debt free and what opportunities did it create?

Post by IlliniDave » Wed Jul 08, 2015 4:01 am

vitaflo wrote:
am wrote:I have no debt. If I did, even 2.875 mortgage would be unacceptable. Sure it is low compared to possible future returns, but if you have a mortgage in the hundred of thousands, you are still giving away thousands every year to a bank for the sole purpose of giving you a loan. If you do not need the loan, than seems like a bad deal. I do my own investing, seems similar to giving an advisor money to do it for me. Yes, I know, potential returns of stocks are higher, but reality may be different. I know of no easier way to make thousands than to pay off a mortgage which I did the first chance I got.
That's fine but realize it's a purely psychological decision, not a financial one. People often look at the interest on the loan but forget about the large benefits from it. Namely the mortgage interest deduction. A 2.875% interest mortgage, after the tax deduction and inflation is basically a zero (or sub-zero) rate loan. Over 30 years, if you don't think you'll do better in the market with that money, then there is no reason to ever invest at all.

Basically it's a shell game. You're paying the bank $20 so that you can get $100 from someone else. I'd take that deal every time, but I understand people who want to feel like they don't owe anyone anything. It is a powerful motivator, even if they numbers don't always add up.
It's risk aversion. I've yet to meet a person who got into financial difficulty because they had too little debt. I don't think it is illogical to make decisions that limit your downside risk at the expense of some amount of upside potential.

Sure, you can have more stuff faster through borrowing, and if things work out benignly you can wind up with more in the end, but things can get messy. There's a certain amount of psychological consideration there certainly, but there's also a certain amount of prudence in such a course (debt aversion). That many of us gain peace of mind and satisfaction from being debt-free is in a sense a bonus that comes from a lower risk financial posture.

Personally, I've got some contradictory traits. As an investor I am fairly risk tolerant and maintain a fairly high equity allocation. But at the same time I am much happier when I don't have personal debt. The former feeds off the latter somewhat.
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Re: What age did you become debt free and what opportunities did it create?

Post by carolinaman » Wed Jul 08, 2015 5:43 am

We paid off our mortgage when I was about 47. We had no other debt. I did pay as you go for daughter's 4 years of college. We also paid for her wedding the same year she graduated from college. It was as if I got a big pay raise after those 2 events were done. I did use HELOC to finance several cars and a lot for building, but always was very aggressive in paying them off. Since paying off mortgage, I have always been in position where I could pay off any debt that I had with savings if I had to.

I did use my HELOC to buy back 5+ years in our pension, a cost of $63k when I was in my mid 50s. Financially, this made a lot of sense, but I was very stressed about owing that much even though I knew I could cover the debt with other funds if necessary. Again, we aggressively paid it off in about 4 years.

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Re: What age did you become debt free and what opportunities did it create?

Post by randomguy » Wed Jul 08, 2015 6:51 am

IlliniDave wrote:
It's risk aversion. I've yet to meet a person who got into financial difficulty because they had too little debt. I don't think it is illogical to make decisions that limit your downside risk at the expense of some amount of upside potential.
There have been several posts on this board about people having liquidity issues who had 15 year mortgages and were paying extra towards principle. That is one way you end up in financial difficulty.

In then end on average, the invest versus pay off the mortgage tends not to matter much unless you either hit or miss a 10 year bull/bear market.

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Re: What age did you become debt free and what opportunities did it create?

Post by IlliniDave » Wed Jul 08, 2015 7:20 am

randomguy wrote:
IlliniDave wrote:
It's risk aversion. I've yet to meet a person who got into financial difficulty because they had too little debt. I don't think it is illogical to make decisions that limit your downside risk at the expense of some amount of upside potential.
There have been several posts on this board about people having liquidity issues who had 15 year mortgages and were paying extra towards principle. That is one way you end up in financial difficulty.

In then end on average, the invest versus pay off the mortgage tends not to matter much unless you either hit or miss a 10 year bull/bear market.
Was the issue that they didn't have enough debt? Or was it that they had more debt than they could pay off in the timeframe they attempted to pay it off in given their resources and whatever bumps they presumably hit in the road?

Your point is still an excellent one. I agree that once you have debt and then decide to get rid of it, especially large items like a mortgage, you need to deal with it it in a way that doesn't cause other problems. But the issue you highlight isn't really the size of the outstanding balance, it's one of day-to-day money management. Even a extreme debt-phobic figure like Dave Ramsey holds off on paying extra towards a mortgage until the end (step 6 of 7, with step 7 being the debt-free person piling up even more wealth and enjoying life). Prior to that you've cleared all other debt, funded a healthy emergency fund that reflects your exposure to income disruption, got all the appropriate insurance in place, started a robust retirement savings rate, and started college savings if desired.

Getting so myopic about eliminating existing debt that prudence is abandoned is not a good thing.
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Re: What age did you become debt free and what opportunities did it create?

Post by Dandy » Wed Jul 08, 2015 7:41 am

Probably in my early 40's didn't mark the date. Being a retiree the I bought when my mortgage for a 3 bedroom house was 31k. Today a mortgage might be more like 350k. I know salaries are much higher but still feel today it would be much harder/take longer to pay off a mortgage.

Being debt free was great- made me able to save/invest more, put two children through college and graduate without debt for me or them. Lost job twice and not having a monthly mortgage or other debt was really appreciated as I husbanded resources. Paid taxes quarterly so was able to earn interest on money until payment was due - a small bonus when interest money market rates were much higher. Other major expenses were easier to manage e.g. new car, new roof because I wasn't adding debt obligations to a mortgage.

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Re: What age did you become debt free and what opportunities did it create?

Post by 2Birds1Stone » Wed Jul 08, 2015 7:49 am

I have been debt free since I started full time work at age 23.

Always paid for vehicles with cash, socked away 30-40% of my pay (401k, Roth IRA), and I live in a HCOL area where renting an apartment costs the same as just the taxes on a median priced home.

That being said, this has given me the opportunity to cherry pick employement opportunities, go to work stress free, and sleep extremely well at night.

I changed careers at age 27 and have since then been able to effortlessly sock away 50% of my pay, which will provide me many opportunities to work on projects that I find interesting and rewarding.

I am not "rich" by any means, but having 2 years salary/5 years living expenses in investable assets at age 28 with $0 in debt feels wonderful.

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Re: What age did you become debt free and what opportunities did it create?

Post by cheese_breath » Wed Jul 08, 2015 7:57 am

When I retired I still had nearly 5 years left to pay on my mortgage. Rather than raiding my investments to pay it off early I just considered it a normal expense as I had before retirement and kept making monthly payments until it was finally paid off.
The surest way to know the future is when it becomes the past.

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Re: What age did you become debt free and what opportunities did it create?

Post by hudson » Wed Jul 08, 2015 10:13 am

nyinca wrote:Happy fourth everyone.

Given that holding "good" debt is so ingrained in the mainstream culture I was wondering for those who have become debt free (or striving to be), what age did you accomplish this? And what opportunities/satisfaction has it created for you?

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Someone else, maybe Nisiprius posts this at times. You've seen it before.
Last edited by hudson on Wed Jul 08, 2015 10:44 am, edited 2 times in total.

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Re: What age did you become debt free and what opportunities did it create?

Post by Rwentworth » Wed Jul 08, 2015 10:36 am

I'm not out of debt yet. I have about 14k in student loans that I need to pay off, but I'm hoping to have those taking care of in the next year or two. I don't anticipate paying my house off anytime soon, but if that's my only debt, I will be doing ok.

Having low debt definitely makes my life less stressful and opens up new possibilities.

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Re: What age did you become debt free and what opportunities did it create?

Post by easye418 » Wed Jul 08, 2015 10:51 am

Rwentworth wrote:I'm not out of debt yet. I have about 14k in student loans that I need to pay off, but I'm hoping to have those taking care of in the next year or two. I don't anticipate paying my house off anytime soon, but if that's my only debt, I will be doing ok.

Having low debt definitely makes my life less stressful and opens up new possibilities.
Having recently been introduced to BH, we have drastically focussed on paying off debts as quickly as possible.

From having 10 outstanding debts, I hope to be down to 2 by year end: Student Loan and Mortgage. That in itself will make me a very happy camper.

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Re: What age did you become debt free and what opportunities did it create?

Post by randomguy » Wed Jul 08, 2015 11:12 am

IlliniDave wrote:
Was the issue that they didn't have enough debt? Or was it that they had more debt than they could pay off in the timeframe they attempted to pay it off in given their resources and whatever bumps they presumably hit in the road?

.

To some extent the amount of debt doesn't matter. Have 400k of cash and a 400k mortgage is a lot better than having 0 debt and 0 in cash when your income drops to zero. Sure your monthly nut is higher put you can pay it.

Obviously you go they should have had a 2 year cushion. Yepp. And how do they get/keep that cushion? By having more debt. You pay more in interest for that financial flexibility. It can be a very good tradeoff

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Re: What age did you become debt free and what opportunities did it create?

Post by fourwedge » Wed Jul 08, 2015 11:21 am

CAP_theorem wrote:I am still making student loan payments, but I could pay them off if I wanted to I just choose not to. I would call that close enough to debt free. That happened around thirty. If I had made better career moves I could have done it a few years earlier.

It didn't create opportunities. Quite the opposite By forgoing leverage (and risk) I missed out on the low in the housing market and it will cost more in the long run. It's ok. My plan is to forgo risk and get rich slow and not take shortcuts and focus on the worst case outcome. Speaking of worst case I need to buy long term disability insurance.
If you still have student loans, Why are you responding to "debt free" thread? just curious
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fourwedge
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Re: What age did you become debt free and what opportunities did it create?

Post by fourwedge » Wed Jul 08, 2015 11:26 am

My family is 100% debt free, I was 43 and my wife was 31..... No CC, no student loans, no mortgage.


Just bought a business for cash, and own all our cars purchased with cash...

We now buy 5K worth of VTSAX / VTIAX every month.

I love to see the market falling like a rock!


That's how it benefits me on a daily and monthly basis.
Max out your tax sheltered retirement accounts with inexpensive, well diversified, index funds and you will beat 90% of all investors.

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Re: What age did you become debt free and what opportunities did it create?

Post by lthenderson » Wed Jul 08, 2015 11:48 am

Other than a mortgage that I could pay off at anytime, I've never had any other debts. Always paid cash for things I needed after saving up for them ahead of time and always had an emergency fund larger than my peers which allowed me to withstand any surprises thrown at me thus far in life.

Saying all that, I wouldn't hesitate to take on debt if an opportunity came along that I felt was worth the risk. Debt is not a bad thing when taken on wisely.

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Re: What age did you become debt free and what opportunities did it create?

Post by bloom2708 » Wed Jul 08, 2015 11:59 am

We paid off the mortgage at age 37 (2007). Our saving and investing vaulted forward.

Two years ago we went down to one income. Stress plummeted and flexibility increased.

Other than a credit card we use for Costco rewards we intend to stay debt free.

No regrets here. Debt freeeeeedom!!
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

DVMResident
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Re: What age did you become debt free and what opportunities did it create?

Post by DVMResident » Wed Jul 08, 2015 12:32 pm

bloom2708 wrote:We paid off the mortgage at age 37 (2007). Our saving and investing vaulted forward.

Two years ago we went down to one income. Stress plummeted and flexibility increased.

Other than a credit card we use for Costco rewards we intend to stay debt free.

No regrets here. Debt freeeeeedom!!
Lucky timing :beer
Pay off debt in market high, redirect cash-flow to investment during market low, followed by huge bull run.

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Re: What age did you become debt free and what opportunities did it create?

Post by bloom2708 » Wed Jul 08, 2015 12:40 pm

DVMResident wrote:
bloom2708 wrote:We paid off the mortgage at age 37 (2007). Our saving and investing vaulted forward.

Two years ago we went down to one income. Stress plummeted and flexibility increased.

Other than a credit card we use for Costco rewards we intend to stay debt free.

No regrets here. Debt freeeeeedom!!
Lucky timing :beer
Pay off debt in market high, redirect cash-flow to investment during market low, followed by huge bull run.
It was August of 2007. We had no thoughts other than wanting to be debt free. In hindsight it was very good market timing. Sheer luck.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

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Re: What age did you become debt free and what opportunities did it create?

Post by easye418 » Wed Jul 08, 2015 1:15 pm

CAP_theorem wrote:I am still making student loan payments, but I could pay them off if I wanted to I just choose not to. I would call that close enough to debt free. That happened around thirty. If I had made better career moves I could have done it a few years earlier.

It didn't create opportunities. Quite the opposite By forgoing leverage (and risk) I missed out on the low in the housing market and it will cost more in the long run. It's ok. My plan is to forgo risk and get rich slow and not take shortcuts and focus on the worst case outcome. Speaking of worst case I need to buy long term disability insurance.
fourwedge wrote:
If you still have student loans, Why are you responding to "debt free" thread? just curious


Yeah, CAP_theorem, what the hell are you doing, this is Communist China where you can't post your thoughts on becoming debt free! :annoyed

....oh wait, this is America and if someone wants to talk about how there journey to debt free went, then its fine by me.

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Re: What age did you become debt free and what opportunities did it create?

Post by randomguy » Wed Jul 08, 2015 2:43 pm

bloom2708 wrote:
DVMResident wrote:
bloom2708 wrote:We paid off the mortgage at age 37 (2007). Our saving and investing vaulted forward.

Two years ago we went down to one income. Stress plummeted and flexibility increased.

Other than a credit card we use for Costco rewards we intend to stay debt free.

No regrets here. Debt freeeeeedom!!
Lucky timing :beer
Pay off debt in market high, redirect cash-flow to investment during market low, followed by huge bull run.
It was August of 2007. We had no thoughts other than wanting to be debt free. In hindsight it was very good market timing. Sheer luck.
Took out a mortgage in early 2012 instead of paying cash. I like to think of it as skill rather than luck that I have earned enough to pay off 75% of that mortgage in 3 years:)

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Re: What age did you become debt free and what opportunities did it create?

Post by DVMResident » Wed Jul 08, 2015 4:59 pm

randomguy wrote:
bloom2708 wrote:
DVMResident wrote:
bloom2708 wrote:We paid off the mortgage at age 37 (2007). Our saving and investing vaulted forward.

Two years ago we went down to one income. Stress plummeted and flexibility increased.

Other than a credit card we use for Costco rewards we intend to stay debt free.

No regrets here. Debt freeeeeedom!!
Lucky timing :beer
Pay off debt in market high, redirect cash-flow to investment during market low, followed by huge bull run.
It was August of 2007. We had no thoughts other than wanting to be debt free. In hindsight it was very good market timing. Sheer luck.
Took out a mortgage in early 2012 instead of paying cash. I like to think of it as skill rather than luck that I have earned enough to pay off 75% of that mortgage in 3 years:)
We did the same: purchased a rental with heavy leverage in 2012. It was a timing move and has paid off well, but there sure was a lot of prior hard work and savings that allowed us to act during that time.

Results occur where preparation and opportunity intersect.

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Re: What age did you become debt free and what opportunities did it create?

Post by dbadalam » Wed Jul 08, 2015 6:35 pm

I became debt free at 42 when I paid off my mortgage. However, my significant other has a mortgage and car payments. We will spend the rest of our lives together so when we sell his house (not going well so far) we will pay off his car and be debt free again.

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Re: What age did you become debt free and what opportunities did it create?

Post by IlliniDave » Thu Jul 09, 2015 4:00 am

randomguy wrote:
IlliniDave wrote:
Was the issue that they didn't have enough debt? Or was it that they had more debt than they could pay off in the timeframe they attempted to pay it off in given their resources and whatever bumps they presumably hit in the road?

.

To some extent the amount of debt doesn't matter. Have 400k of cash and a 400k mortgage is a lot better than having 0 debt and 0 in cash when your income drops to zero. Sure your monthly nut is higher put you can pay it.

Obviously you go they should have had a 2 year cushion. Yepp. And how do they get/keep that cushion? By having more debt. You pay more in interest for that financial flexibility. It can be a very good tradeoff
Again, given you already have a large debt, you have to be smart about paying it off, no question. Maintaining emergency liquidity should be higher priority than retiring a mortgage early.

But the problem in your scenario is $0 cash, not $0 debt. The same person from your scenario could have $200K cash, $0 debt, and $200K equity instead of $0 cash, $0 debt and $400K equity. Then there is no problem with $0 debt, the difference being simply having taken on less debt to start with.

Anyway, this is veering a little off topic. I don't think we disagree that given an already-assumed large debt, there are constraints to how quickly a typical person can prudently retire it. So I appreciate the point you made. But I have to stick by my initial observation that I've yet to see someone get in trouble for having too little debt. Even in the early payoff scenario, less initial debt and/or a modicum of prudence in basic personal finance could head off most issues.
Don't do something. Just stand there!

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Re: What age did you become debt free and what opportunities did it create?

Post by obgyn65 » Thu Jul 09, 2015 4:53 am

Same for me. I have never had any debt, and paid my condo cash. I have the opportunity to retire this year, age 50.
BW1985 wrote:I've never borrowed which has allowed me to focus a high percentage of my income towards savings.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell

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Re: What age did you become debt free and what opportunities did it create?

Post by BW1985 » Thu Jul 09, 2015 8:52 am

obgyn65 wrote:Same for me. I have never had any debt, and paid my condo cash. I have the opportunity to retire this year, age 50.
BW1985 wrote:I've never borrowed which has allowed me to focus a high percentage of my income towards savings.
Rock on! :sharebeer
"Squirrels figured out how to save eons ago. They buried acorns. Some, they dug up, for food. Others, they let to sprout, in new oak trees. We could learn from squirrels." -john94549

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Re: What age did you become debt free and what opportunities did it create?

Post by EvanRude » Thu Jul 09, 2015 8:13 pm

We became debt free in our early 40s (now 55). We never carried any credit card balance. Paying off the mortgage and auto loans saves money, provides peace of mind, reduces stress and pressure if there is a job loss, and provides monthly cash flow that can be used for investment or whatever.

The amount of home equity not mortgaged can be viewed as a fixed income component. Some say you should carry a mortgage so you can invest that amount in the market. It may work out for the better, may not. One thing is for sure - the mortgage company wants their money each and every month.

As we get closer to retirement, it is a good feeling not to owe anybody anything.

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Re: What age did you become debt free and what opportunities did it create?

Post by CAP_theorem » Fri Sep 29, 2017 4:46 pm

fourwedge wrote:
Wed Jul 08, 2015 11:21 am
CAP_theorem wrote:I am still making student loan payments, but I could pay them off if I wanted to I just choose not to. I would call that close enough to debt free. That happened around thirty. If I had made better career moves I could have done it a few years earlier.

It didn't create opportunities. Quite the opposite By forgoing leverage (and risk) I missed out on the low in the housing market and it will cost more in the long run. It's ok. My plan is to forgo risk and get rich slow and not take shortcuts and focus on the worst case outcome. Speaking of worst case I need to buy long term disability insurance.
If you still have student loans, Why are you responding to "debt free" thread? just curious
I consider positive net worth with sufficient liquidity to eliminate all debts immediately as debt free. If you disagree it's cool.

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Re: What age did you become debt free and what opportunities did it create?

Post by HomerJ » Fri Sep 29, 2017 5:52 pm

CAP_theorem wrote:
Fri Sep 29, 2017 4:46 pm
fourwedge wrote:
Wed Jul 08, 2015 11:21 am
CAP_theorem wrote:I am still making student loan payments, but I could pay them off if I wanted to I just choose not to. I would call that close enough to debt free. That happened around thirty. If I had made better career moves I could have done it a few years earlier.

It didn't create opportunities. Quite the opposite By forgoing leverage (and risk) I missed out on the low in the housing market and it will cost more in the long run. It's ok. My plan is to forgo risk and get rich slow and not take shortcuts and focus on the worst case outcome. Speaking of worst case I need to buy long term disability insurance.
If you still have student loans, Why are you responding to "debt free" thread? just curious
I consider positive net worth with sufficient liquidity to eliminate all debts immediately as debt free. If you disagree it's cool.
Your way is fine, but (of course there's a but), will you still be "debt-free" if the market drops 50%? What if it drops 89%? Those of us who have actually paid off the loans will remain "debt-free" in those situations, while you may find yourself no longer with sufficient liquidity to eliminate all debts.

That said, your way is probably the smarter strategy. Your extra invested money is growing faster than the money I have tied up in my paid-off house. But I'm pretty conservative, and happy with my choice.

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Re: What age did you become debt free and what opportunities did it create?

Post by A440 » Sat Sep 30, 2017 6:13 am

Age 38. We sold our rental duplex before child #2 was born. After paying the taxes and tithe we split the profit of the sale in half: paying off our mortgage and putting the rest towards 1st child's 529 plan. The decision to pay off the mortgage vs. investing was made mainly because this was shortly after the 9/11 attacks. We were not sure what was going to happen with the markets, should another attack occur again. Paying off the mortgage allowed us to sleep better at night. I also wanted to make sure my family had a home free and clear, should something happen with my job.
We used the former monthly mortgage amount to add to our monthly Roth accounts and 529 plans, all of which have compounded very nicely indeed.

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Re: What age did you become debt free and what opportunities did it create?

Post by MikeWillRetire » Sat Sep 30, 2017 8:29 am

I just paid off my house last week, age 55. Now I can pay my two son's college bills without having to dig too deep into savings. I am on track to retire in 3 years.

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