Merv's Politically Incorrect Audio Blog

I call bullshit on winders saying he allocated funds for 15% returns in the stock market and doing mortgage refi's to maximize the gains on the route. An aggressive market investment minded person would have flat out mentioned this at the get go. He didn't. Instead, winders said he made x2 what he paid for the house which he did not after 22 years of interest payments and 20 years remaining. He did not mention stock market.

Even the most risky investor has positions in cash and hedges against when the shit hits the fan. No one puts all their marbles in one basket. I've seen what happens to people who do.

Anything winders said after his initial post as far as I am concerned is bullshit designed to save face.

Finally, without the additional context, which winders did not provide initially, what winders said he did with the mortgage was otherwise f'ing stupid with an incorrect assessment of the net and shining example of why Americans can't get out of debt. Of course I cannot make a proper judgement call from a post in the future.

P.S.

Besides, my point of the 30 year mortgage was how unnatural it was as the cause of suffering (for most); as at one time, there was no such thing or at most five years like a car payment. Winders is an exception that he already had a $400k slush fund to play with. Most mortgagees are wiped after that down payment and tend to remain so. Life is hard for most of us, but Winders is blessed.

 

Remember Yoda's rule: It's OK to take loans to make money. There are many ways of making money. Investing in the market is a form of making money. It's also a great way of losing money if you don't know what you are doing or are not connected.

It's just balancing your portfolio based on many factors. Retiring soon or kids going to college, lower risk may be a different avenue. My risk tolerance now is lower than it used to be. Does the market look like it will stagnate? May be a good idea reallocate that portfolio and pay off that 3.6% mortgage. This is what I did. With the huge debt we've racked up, I don't see much more upside with stocks in the next 4-6 years.

Also, my observation is what the prior POTUS' does is what sets up the market conditions for the next POTUS' term. (Note that this goes both ways, so it's not a judgement on Trump or Republicans vs Democrats, etc.) We've had a great run for over ten years now and all good things come to an end. Besides, something is totally off when the barely a mention of stimulus or no stimulus affects the market so much.

As far as refinancing, that is to normal people, I see a lot of things that make me cringe, some of which you have mentioned:

1. Late refinancing, which is pointless, since most of the payments are already toward the principal. Given the hidden fees, extra fees such as appraisal, processing fees, doc fees, it probably comes down to a wash. Remember, someone is getting commission for setting this up, and you are going to be paying for it somehow.
2. Made payments for 8 years already? Tacking on another 30 year refi on top of that is dumb. Refi for 20 years.
3. Taking money out during refis to buy a car or something else. 3% interest for 20 or 30 years is dumb compared to 5% on four or five years. The only thing that may make sense is improvements to the home that will add value. It's break even in the end, but at least you can enjoy those improvements.
4. Since mortgage is paid in arrears, depending upon the timing of the refi, you may skip a payment. This is the same as taking money out.

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As far as tax write off, new tax laws since 2019 put a cap on this now. It screws over folks in CA and NY, who will typically have larger mortgages. The tax write off is minimal once one gets later into the mortgage. Also the write-off is a deduction, not a credit. It's slightly overrated after the math is done.

 

You are speaking as if bankruptcy is an easy process or consequence free. First the consequences: you are branded with a letter L (for loser) on your forehead, or at least on your credit report. As a result, expect much higher down payments and higher interest rates, that is if you can even get approved for a loan.

Bankruptcy isn't an easy process. All your assets down to your DAC, IEMs, and audiophile cables need to be documented. A judge has to approve it and they can pretty much say "this is bullshit, or this is weaksauce, I'm not signing off on it". Even then, there are two kinds: one with a payment plan and one without. At the end of the day, your liquid assets are taken from you where your creditors get to fight each other for it. You only get to keep stuff that is exempt: your home, basic appliances, clothes, and car. The basic stuff that you need to live and start over.

No declaring bankruptcy doesn't do anything from a pragmatic point of view (other than being purely a punitive measure). The creditors still won't get any money, and the debtor is stuck. It's better to be able to press the reset button and start over with only home, appliances, clothes, and car. The judge will not let you keep that Eddie Current or Donald North amp, the Harley, or the Vette. And again, pressing the reset button also gets one a big L seared on their forehead.

Also, sometimes bankruptcy happens because of the death of the primary earner, divorce, illness, etc. in many instances, there are young kids involved (psychologically, those kids will be scarred for life).

Believe it or not, student loans can be discharged after bankruptcy. However one needs to show that they earnestly tried to pay it off. Judges won't buy it if you never tried. The reason for the common perception that student loans can't be discharged is because most of the idiot kids treated them as if they were gifts, not loans.

 

Exactly. This is why I mentioned previously that current POTUS screwed me over with my taxes. Which coming from the GOP was fairly unexpected.

Someone mentioned that it was because I live in California. Yes and no. This indeed affect states with larger mortgages the most. But no, because where I felt it the most was in my Federal Tax. It was not an immediate consequence due to a state policy change.

 

Probably less GOP than a vindictive POTUS. Anyway, there is no such thing as GOP and Demmies today. GOP is running so scared that they would vote for evil and has been just as much hand-out party. Demmies served entrenched big and tech interests and sold us out to China.

 

Replace Washington with Argentinian or Mexican pesos. And prepare to say: Oh Mie Gwad!

 

Yup.

And lets not forget the Fannie Mae and Freddie Mac snafu.

 

ROFL. I'd take the Monopoly money. At least I could play a fun board game which gives me happiness. Holding on the peso with the wild swings between hope and fear seems like to much suffering.

 

Something doesn't makes sense here. Obviously you have means and are well off enough that you could pay off your mortgage at any time.

However, why did you choose to the tack on yet another 30 years to your mortgage for a 42 year term for your refi(s)? Why didn't you refinance and choose a term to keep the original amortization schedule from 22 years ago? If you got $1.5M in the market, does that $237 per month (or whatever amount) lower payment (because you pushed the final payment date back) really matter that much?

My argument was about the ridiculousness of the 30-year term, mentioning how in the 20s before the New Deal with associated gov't structures, mortgage terms were three to five years. Are you saying that you would prefer a society where the 30 year mortgage is standard along with the side effects of such as inflated asset prices?