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January 10, 2014

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Not feeling the mortgage payoff. I could probably pay mine off right now, but would leave me w/ very little cash. Why wouldn't I want to be liquid in case I need it and also try to invest and grow the money? My mortgage is at 4% and is my only tax break.

Step 19 is not an option, it's a necessity for a very happy life.

Step 20 is great of course however I didn't become debt free until I retired at the age of 52.

Step 21 is not something that I believe in.

The most important factor in my financial success was educating myself in how to take best advantage of the stockmarket after I retired. In my early retirement years I played the market aggressively. I practiced "Fund Selection" by using some proprietary software that I subscribed to in order to pick the best performing funds at the time. I also used "Market Timing" in order to sell funds that peaked out and to buy replacement funds that were in nice uptrends. This is very stressful work and definitely not for everyone.

Here are my results for the last 21 years in comparison with the Nasdaq index. I would also add that at the end of 2008 I became a conservative investor and only held bond funds and individual corporate and municipal bonds. It's pretty wearing to be an active trader and I knew when it was time to move over to the slow lane and avoid the stress of volatile market behavior.

1/1/1993 to 1/9/2014 - 21 years
My portfolio gained 2,345%, annual rate of return 16.21%.
The Nasdaq gained 623%, annual rate of return 9.10%.

I bought a new car recently. I could pay cash for entire purchase. Didn't do it. Dealer gave $500 for taking the financing which is 1.9% for 5 years. Now my cash is invested in index funds thru vanguard, betterment plus company stock option and personal capital earning well over 10%(actually 17% by end of 2013). Even if I make average of 10% year after year I come out way ahead. Why wouldn't i do it? Same with mortgage which is 3.875% for 30 yrs. I put 5% down, rolled in upfront much reduced PMI. Again I could knock off the mortgage in 10, maybe 15 yrs. But why should I? I put the extra principal in investment account religiously every month. I expect in 10-12 yrs my investments will grow to equal the mortgage balance. With fixed mort payment I got inflation hedge.

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