Old Nov 21, 12, 9:10 pm
  #3000  
gpapadop
 
Join Date: Feb 2001
Location: Ann Arbor, Michigan
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Posts: 2,876
Originally Posted by fti View Post
I guess for someone like me, I prefer to pay my mortgage and put what I might otherwise pay additional into an investment acct. That will yield me a higher return and in case of a huge emergency (loss of job for a long time for example) I can tap that money. No way I could get a home equity loan to tap my home equity in that case. Certainly one needs to see that money as "spent" or "untouchable" or it is to no avail.
But diff'rent strokes for diff'rent folks!
Yes it is different strokes for different folks. It is interesting how you won't see many colleagues of mine saying what I am saying, they want to get a hold of YOUR money because that is how THEY can make some money

Here is my approach, in GENERAL:

-Skills/career/good stable job - Build on skills/Networking/etc.
-6 months emergency fund (Bank Direct, even with the darn $12 monthly fee) Maybe 3 or 4 months if both spouses are working & at least one has a stable job
-Long term retirement/college funding plan w/ plenty of conservative assumptions. Of course, maximizing 401k Plans is non negotiable!
-No debt other than mortgage. Avoid car loans too...have short term funding goals for such short term expenses!
-Keep plugging away. Diversify, keep investment costs low, rebalance in regular intervals (I prefer twice a year but annually is fine) and don't do anything stupid tax wise.
-Windfall or some extra cash and the above are set. Do what make you feel better. If you want to pay towards principal it is FINE. You know what you are getting in return and getting that HUGE moment of being debt free much closer. Yes, interest rates are low. Yes, you COULD probably make more. But it is NOT guaranteed return. Stuff happens. I can tell you stories of what happened to people (not clients) with the dot bombs & then in late 2008 you will weep to eternity.

And this is my story and am sticking to it.

Now, let's not fog the issue of having no debt at all AND how it affects your credit score and cc churning, cough
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