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« Saving Money on Housing, Part 1 | Main | Discipline Leads to Wealth »

February 20, 2007


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Thanks for the tips. You start investing at the age of 42 and retired at the age of 55. I am only 21 now and maybe i can retire at the age of 40 :)

Although I do understand the logic behind having no debt, I think the question is better phrased as, "What do I do with my debt?" If you have debt because of spending on things you don't need, or to finance a vacation or antyhing else that doesn't create value, I agree, you shouldn't have any debt. And more importantly, NO CREDIT CARD DEBT.

But, if you have a long term liability, like a mortgage for example, you have to look at the opportunity cost you lose by paying off that mortgage too early. First, you will no longer be able to take the deduction on your taxes, but second, and more importantly, you could invest that money in higher yielding investments. If you're paying 8% interest per year, and instead of paying off your mortgage, you can invest in an asset that gives you a return of 10% a year, then you'll be creating wealth at a faster rate.

The question then becomes, "Where can I put my money and get a better return with as least risk as possible?"


If you're planning to pay off your mortgage in 2 - 3 years, doesn't make sense to refinance, even if the interest rate is lower. The cost of the refinance is better applied to your mortgage principal, given the short time the loan would be in effect.

Going out to eat once a week? Extravagance! Heheh.

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