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Aunt Bea said:
IMO leveraging your assets is a very bad idea for the average retiree.

Not all investments and speculative ventures work out and when you are retired you don't get any do-overs so it's best to stay on rock solid ground with your finances.

Taking advantage of points on a rewards credit card is much different than taking on a long term debt for an investment.

If a person has substantial assets that is a very different situation and the use of leverage can be a viable tool or option.

We each need to do what we feel is best for ourselves and our situation.

I prefer to sit on a rock and watch the world go by at this point in my life, LOL!!!
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buying cd's eventually that pay more interest than your mortgage interest is not leveraging . having a diversified portfolio and a return that over time surpass's your mortgage interest is not leveraging .

TAKING ADVANTAGE OF CREDIT CARD REWARD POINTS IS TAKING ON LONG TERM DEBT ????? NO ,,,IT IS GETTING A REBATE ON THINGS YOU BUY .

choosing whether to pay credit card interest is a separate situation from reward points .

in fact we use the chase sapphire rewards card which offers tons of perks and value even though they charge a yearly fee . we got over 2k in perks this year from the card . chase said they lost 300 million because of the perks and the fact the majority of card users pay no interest and pay it off .

demonstrating poor financial behavior is very different than whether to carry "good debt " or not .
 

I retired at age 50 and I would not have dared do that if I had any debt, like car loans, mortgage, personal loans, etc. I have seen too many times where the market, or whatever, burst and people that were trying to make a killing by being heavily in debt to get in on something, got killed financially.
 
dpwspringer said:
I retired at age 50 and I would not have dared do that if I had any debt, like car loans, mortgage, personal loans, etc. I have seen too many times where the market, or whatever, burst and people that were trying to make a killing by being heavily in debt to get in on something, got killed financially.
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buying on margin is always risky . but that is not what i am referring to for retirees .

there is just easy long term money generally out there and even the fact cd's will likely surpass mortgage rates .

safety is actually greater when you hold liquid assets than tied up in a home where it can't be accessed .

an interest free auto loan beats paying cash when you have a choice any day as well as at any age .

after all , we are talking where you have choices , not where you are trying to buy things under funded .

you can actually play around in firecalc and do a what if scenario such as taking a mortgage vs using cash for all 117 30 year retirement time frames to date . the mortgage ALWAYS left you with more money at the end vs paying cash .

.
 

mathjak107 said:
buying cd's eventually that pay more interest than your mortgage interest is not leveraging . having a diversified portfolio and a return that over time surpass's your mortgage interest is not leveraging .

TAKING ADVANTAGE OF CREDIT CARD REWARD POINTS IS TAKING ON LONG TERM DEBT ????? NO ,,,IT IS GETTING A REBATE ON THINGS YOU BUY .

choosing whether to pay credit card interest is a separate situation from reward points .

in fact we use the chase sapphire rewards card which offers tons of perks and value even though they charge a yearly fee . we got over 2k in perks this year from the card . chase said they lost 300 million because of the perks and the fact the majority of card users pay no interest and pay it off .

demonstrating poor financial behavior is very different than whether to carry "good debt " or not .
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I guess we need to disagree on this point.

At this late stage in my life the additional income is simply not worth the potential risks involved.

I have seen too many situations over the years where the cash and investments have slipped away while the debt sticks with people and sucks them dry.

Like I said we each need to do what we feel is best for ourselves and our situation.
 
on the other hand 2008 demonstrated what can happen when you have to much allocated to your home and not enough liquid assets . so far to date , going back to the 1800's in this country , nooooooo one ever lost any money over any typical long term accumulation period or 30 year retirement period in diversified funds .

only their own poor investor behavior would have them losing money .
even at 65 there is long term money that will not be used to eat for 20 to 30 years . that is still long term money .

but again , i agree investing is not for everyone , but the reasons are different than the i don't want to see my money drift away , because quite frankly long term that never happened .

but what has happened far to often is avoiding markets and going fixed income only , has resulted in a poorly funded or failed retirement .

more than half of the 117 30 year cycles failed using just fixed income at 4% and required pay cuts to avoid running out of money .

a 50/50 mix failed 4% of the cycles and even 100% stock only failed 8% .so the real risk is avoiding investing in diversified funds . keeping the mortgage and doing your diversified investing with the money has always been the better choice financially . mentally is something else .

the problems some have is not markets but come from poor investor behavior when they either panic , try to time things , speculate or use long term investments for short term needs .

my only gripe here is the statement about retiree's avoid debt as well as avoiding market volatility . that is just not a blanket statement that can be made across the board . you have to distinguish between good debt and bad debt as all debt is not the same effect . debt can be a good thing when it allows you to have more than you pay out and long term investing in diversified funds is not as risky as fixed income . it is just more volatile in the short term but that means nothing on that portion of your money that is used to eat in 20-30 years . .
investing may not be something one has interest in doing , and you much prefer no mortgage or auto loan , but that does not mean it should serve as a rule for others .
 
I hear what you are saying but not everyone has sufficient income and assets to power themselves over the rough spots in the market. The 2008 collapse is a good case in point. Some folks could have mortgaged their home to have enough liquid assets to survive the decline but if they did not have sufficient investments to reimburse them for the cash spent they would have come out of the decline with a mortgage and little or no cash to help pay it back. I came through the 2008 decline in fine shape because I was fortunate enough to have sufficient cash to wait for the market to come back and sufficient investments to eventually replenish my cash reserves. I get concerned over the people that read these threads and may not understand all of the factors that go into these decisions. I would hate to see someone run out and mortgage their home because they heard it was the smart way to improve their cash flow and then end up with no cash and no home.

The fact is that when you are broke it doesn't really matter whether it's due to the performance of the market or poor investor behavior, you are still broke.

My avoidance of debt has to do with my own peace of mind more than anything else.
 
Aunt Bea said:
I hear what you are saying but not everyone has sufficient income and assets to power themselves over the rough spots in the market. The 2008 collapse is a good case in point. Some folks could have mortgaged their home to have enough liquid assets to survive the decline but if they did not have sufficient investments to reimburse them for the cash spent they would have come out of the decline with a mortgage and little or no cash to help pay it back. I came through the 2008 decline in fine shape because I was fortunate enough to have sufficient cash to wait for the market to come back and sufficient investments to eventually replenish my cash reserves. I get concerned over the people that read these threads and may not understand all of the factors that go into these decisions. I would hate to see someone run out and mortgage their home because they heard it was the smart way to improve their cash flow and then end up with no cash and no home.

The fact is that when you are broke it doesn't really matter whether it's due to the performance of the market or poor investor behavior, you are still broke.

My avoidance of debt has to do with my own peace of mind more than anything else.
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A LOT OF MYTH ONCE AGAIN HERE .

it should only be the long term money that is invested not what you need to live on now . like i said you have money you will need to eat with in 20 to 30 years . but even so , a typical 50/50 mix that hits a down turn would merely be rebalanced and stocks would never get sold AT A LOSS , the bonds would be sold and rebalanced , perhaps buying stock as well as creating cash in a downturn . so this needing cash to get over rough spots has no logic to it .

in fact many retirees hold little cash . i hold 1 year for spending and a small emergency fund .

a balanced portfolio is rebalanced yearly to provide more cash . in a down blast bonds generally go up and are what ends up being sold , not stocks .

this myth you see about having to sell stocks when markets are down is a lot of hooey and has no logic since it is the stocks that fell the most and bonds the least . most retirees are somewhere between 40-60% equity
 
mathjak107 said:
the problem is that freezing your credit with the 3 consumer agencies still leaves you vulnerable to anyone taking commercial loans and credit cards . commercial credit does not go through those agencies so you won't see it , nor will the freeze mean a thing ..
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I'm not sure what you mean by commercial loans so I cannot address that.

I can tell you that it is impossible to obtain even a gas credit card, let alone an auto loan, without my unlocking my credit report - because I have done both in the last year.

I don't look for complete elimination of all risk in my life (probably my banking and insurance background, LOL). I look to MINIMIZE my risk profile in line with my financial needs. And in that, I feel I'm fairly successful at.

But this is only my situation, not necessarily other's.
 
business who seek commercial lines of credit or loans are put through the likes of dunn and bradstreet . i worked for an electrical wholesale . we would check business's who wanted open accounts through D&B . the 3 reporting agencies are used for consumer credit .

we know someone who had a 100k loan taken out in her name through a business loan with forged documents . it was all done through dunn & bradstreet reports .
 
How secure is anything online anymore? I trusted one, Credit Karma because I had heard and read good things about it. But I only used it once then didn't need it anymore because my credit card companies started offering free credit scores. If you're uncomfortable with giving too much information be aware that the credit bureaus Trans Union, Equifax and Experian are supposed to give one free credit report per year to individuals. If you stagger them (say one every four months), you can get three free reports per year. They will already have access to your SS number anyway. Equifax was hacked a couple of months ago. Like I said...is anything secure anymore?
 
every fraud i ever experienced came from sources other than doing things over the internet .

i had a debit card number and pin stolen from within the banking system . i had our fidelity account info found on the dark web , and my wife never logged in with that info .
 
Aunt Bea said:
I hear what you are saying but not everyone has sufficient income and assets to power themselves over the rough spots in the market. The 2008 collapse is a good case in point. Some folks could have mortgaged their home to have enough liquid assets to survive the decline but if they did not have sufficient investments to reimburse them for the cash spent they would have come out of the decline with a mortgage and little or no cash to help pay it back. I came through the 2008 decline in fine shape because I was fortunate enough to have sufficient cash to wait for the market to come back and sufficient investments to eventually replenish my cash reserves. I get concerned over the people that read these threads and may not understand all of the factors that go into these decisions. I would hate to see someone run out and mortgage their home because they heard it was the smart way to improve their cash flow and then end up with no cash and no home.

The fact is that when you are broke it doesn't really matter whether it's due to the performance of the market or poor investor behavior, you are still broke.

My avoidance of debt has to do with my own peace of mind more than anything else.
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I like the peace of mind of not having to worry about having to come up with a significant amount of money every month to make this loan payment and that loan payment. The old cash flow deal. I can tighten up and get by on not much of any cash flow if I need to and not worry about taking money out of this to cover that, etc. Some people may like that challenge, but I'm not one of them. I like to feel a little more secure.

Now that said, if they are offering car loans at 0% interest that is too good to pass up. It does cost anything, you can still have that pile of money on hand that you might have used to just pay for it, and it helps your credit rating (I think).
 
but the flip side is if you held the cash and didn't tie it up in the house by retiring the mortgage you still have the money you didn't use . .

the above has been an argument those who say they are retiring their mortgage earlier try to present . but the reality is you just would be paying it with the money you did not drop in the house pocket and would have anyway .

it is only a matter of switching pockets .
 
>> if they are offering car loans at 0% interest that is too good to pass up. It does cost anything, you can still have that pile of money on hand that you might have used to just pay for it, and it helps your credit rating (I think).>>

No, actually incurring more debt affects your utilization rate, which will lower your credit rating. Ours has dropped since 0% financing our new car in May 2017. No biggie, about 20 pts.
 
the drop may happen with any loans but it depends on the score . there are 55 different fico scores that are industry specific . they all weight things differently . the consumer score you see may be pretty different from what your lender sees anyway .. if your score is high who cares . i will take loans that let me increase wealth any day of the week .
 
Lethe200 said:
>> if they are offering car loans at 0% interest that is too good to pass up. It does cost anything, you can still have that pile of money on hand that you might have used to just pay for it, and it helps your credit rating (I think).>>

No, actually incurring more debt affects your utilization rate, which will lower your credit rating. Ours has dropped since 0% financing our new car in May 2017. No biggie, about 20 pts.
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For various reasons I have 5 credit cards/store cards and my credit rating varies by about 30 points depending on how many have any balance on them when they run a check... it can be as little as $2 as far as I can tell. I thought having a non-mortgage loan in good standing generally improves your credit score, versus not having one? What I'm getting at is I'm not so sure financing your new car caused it to drop?
 
depends on which score you are looking at . is it a amex-citi or discover fico score ? they are not comprehensive credit scores they are bank card scores . the actual fico score used by a lender is not your consumer credit score either .there are 55 fico scores and all weight something different
 
mathjak107 said:
depends on which score you are looking at . is it a amex-citi or discover fico score ? they are not comprehensive credit scores they are bank card scores . the actual fico score used by a lender is not your consumer credit score either .there are 55 fico scores and all weight something different
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Yes, I know there are different FICO scores, as well as different specific lender scoring. The score I referred to is indeed a bank card FICO score, which I check maybe two or three times a year just to monitor credit usage.

We are not in the position to need to worry about our "actual" FICO scores (which change anyway, month to month). We are fortunate to be in excellent financial shape and are enjoying a good retirement where we can afford to do anything we want to.
 
>>I thought having a non-mortgage loan in good standing generally improves your credit score, versus not having one? What I'm getting at is I'm not so sure financing your new car caused it to drop?>>

As mathjak points out, different banks assign different weightings to the various factors that go into a given credit score.

Although I don't normally spend a lot of time checking into my ever-changing FICO score as calculated by Barclays PLC, it so happens that I did check my score both before and after buying the car. This was because although we did have the ability to pay cash for the car, I chose to only withdraw half the amount I was willing to spend from our portfolio, and would withdraw the remainder next year (2018), to avoid incurring excess income tax.

So we intended to finance 50% of the cost, and I checked my score 'just in case'. When the car came in, the dealer offered us 0% financing so we put the minimum down and financed the rest.

We had done no traveling (where we charge just about everything) so the credit card bills were minimal that entire summer. When I checked my score again about 6 weeks later, it had dropped the 20 pts.

Like I said, no biggie.
 
barclay uses fico 8 (tu08) . fico 8 is not a comprehensive fico score like you pay for . fico 8 is a bank card score . it weights credit cards very heavily and reduces or does not count other types of debt .some like citi use a high score of 900 not 850 too
 

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