Comments on: If you came into $1M… http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/ Trying to live large ...one step at a time Mon, 15 Mar 2010 23:14:39 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Future Millionaire http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/comment-page-1/#comment-1507 Future Millionaire Sun, 20 Apr 2008 23:33:57 +0000 http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/#comment-1507 Since I'm currently a renter because I like to keep my monthly cash flow at its current levels - if I came into a $1M I'd probably buy a home and then do some type of automatic withdraw each month so that I would still be paying "rent" it would just be going into savings. This automatic withdraws seems to work well for me - its how I do my Roth IRA savings and my car savings and I completely forget that I have this in my take home pay. But everyone has different methods. Since I’m currently a renter because I like to keep my monthly cash flow at its current levels – if I came into a $1M I’d probably buy a home and then do some type of automatic withdraw each month so that I would still be paying “rent” it would just be going into savings. This automatic withdraws seems to work well for me – its how I do my Roth IRA savings and my car savings and I completely forget that I have this in my take home pay. But everyone has different methods.

]]> By: Barb1954 http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/comment-page-1/#comment-1506 Barb1954 Sat, 19 Apr 2008 15:08:29 +0000 http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/#comment-1506 Obsolete, you said what I wanted to post. People who put off enjoying what life has to offer until retirement may find themselves sorely disappointed. There are no guarantees how long we or our partners may live. Some people never get to enjoy retirement. In the last couple years, people I know have died at ages 62, 69, 59, and 46. If you have a million dollars in the bank and a paid for home, you can certainly afford to take annual vacations to someplace nice. One must always balance planning for tomorrow and living for today. Otherwise you end up like Ebeneezer Scrooge, sitting alone counting up your stacks of money and never enjoying the pleasures of a life well lived. Obsolete, you said what I wanted to post.

People who put off enjoying what life has to offer until retirement may find themselves sorely disappointed. There are no guarantees how long we or our partners may live. Some people never get to enjoy retirement. In the last couple years, people I know have died at ages 62, 69, 59, and 46. If you have a million dollars in the bank and a paid for home, you can certainly afford to take annual vacations to someplace nice. One must always balance planning for tomorrow and living for today. Otherwise you end up like Ebeneezer Scrooge, sitting alone counting up your stacks of money and never enjoying the pleasures of a life well lived.

]]> By: Week in review | Pinching Copper http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/comment-page-1/#comment-1505 Week in review | Pinching Copper Sat, 19 Apr 2008 12:45:46 +0000 http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/#comment-1505 [...] Living Almost Large pondered what would happen if you came into $1,000,000. [...] [...] Living Almost Large pondered what would happen if you came into $1,000,000. [...]

]]> By: LivingAlmostLarge http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/comment-page-1/#comment-1500 LivingAlmostLarge Sat, 19 Apr 2008 04:12:54 +0000 http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/#comment-1500 Good point Meg about having the financial release of knowing you could pay off the mortgage. That would help a lot. But I couldn't pay off the mortgage and be under the gun in saving. And yes it would be losing me money even 6%. But it's a mindset. And obsolete, I think the problem is that I might get too foolish with spending and jeopardize my financial future. By having a set savings and spending limit with a very fixed budget it's easy. When you have more disposable income then it's easier to spend. And just because I have a paid off home, doesn't mean I'm set for life. If anything I still have to make sure I can afford property taxes, insurance, etc when I retire. And that will be generated by my savings. If I save nothing and only have a home I'm screwed. Good point Meg about having the financial release of knowing you could pay off the mortgage. That would help a lot.

But I couldn’t pay off the mortgage and be under the gun in saving. And yes it would be losing me money even 6%.

But it’s a mindset. And obsolete, I think the problem is that I might get too foolish with spending and jeopardize my financial future. By having a set savings and spending limit with a very fixed budget it’s easy. When you have more disposable income then it’s easier to spend.

And just because I have a paid off home, doesn’t mean I’m set for life. If anything I still have to make sure I can afford property taxes, insurance, etc when I retire. And that will be generated by my savings. If I save nothing and only have a home I’m screwed.

]]> By: obsolete29 http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/comment-page-1/#comment-1504 obsolete29 Sat, 19 Apr 2008 00:55:38 +0000 http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/#comment-1504 What's the purpose of fiscal security and the freedom that goes with that? If you're debt free with a big ole nest egg saved up for retirement, why not take the vacation to Greece? Hehe, to put it another way, if I'm eating pinto beans all the time for dinner and driving a 97 honda accord, what's the purpose of having a net worth of $2million? I would pay off all debt and invest the rest. I also wouldn't feel guilty about paying cash for nearly new cars every few years or a yearly vacation to Europe. ;) I dunno, maybe my line of thinking is the reason I don't have a networth of $200k. :D What’s the purpose of fiscal security and the freedom that goes with that? If you’re debt free with a big ole nest egg saved up for retirement, why not take the vacation to Greece?

Hehe, to put it another way, if I’m eating pinto beans all the time for dinner and driving a 97 honda accord, what’s the purpose of having a net worth of $2million?

I would pay off all debt and invest the rest. I also wouldn’t feel guilty about paying cash for nearly new cars every few years or a yearly vacation to Europe. ;)

I dunno, maybe my line of thinking is the reason I don’t have a networth of $200k. :D

]]> By: Meg http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/comment-page-1/#comment-1503 Meg Fri, 18 Apr 2008 21:15:33 +0000 http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/#comment-1503 Assuming I had a low fixed rate, I wouldn't pay off my mortgages. The main financial and psychological reason to eliminate debt (even good debt, even debt at low interest rates) is to minimize your debt-to-income ratio so that less of your income is needed for fixed costs each month. This increases your level and sense of security: if you lose your job or the market tanks your retirement fund, you will still probably be fine because your fixed costs are so low. But if you had millions sitting in the bank and you knew you could pay off all your debt at any time, then the psychological release of paying off your mortgage would be less - and the financial benefits (leverage) of keeping it would still remain. Assuming I had a low fixed rate, I wouldn’t pay off my mortgages.

The main financial and psychological reason to eliminate debt (even good debt, even debt at low interest rates) is to minimize your debt-to-income ratio so that less of your income is needed for fixed costs each month. This increases your level and sense of security: if you lose your job or the market tanks your retirement fund, you will still probably be fine because your fixed costs are so low.

But if you had millions sitting in the bank and you knew you could pay off all your debt at any time, then the psychological release of paying off your mortgage would be less – and the financial benefits (leverage) of keeping it would still remain.

]]> By: tom http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/comment-page-1/#comment-1502 tom Fri, 18 Apr 2008 20:44:15 +0000 http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/#comment-1502 that is a very tough question. I think I would probably pay it off. You make a very convincing arguement not to. We currently have a mortgage rate of 5.75%, which is very good. If we are in the 25% tax bracket, thats bascially a rate of 4.3%. If you invest the million, you will likely see a better return than 4.3% over the long run. However, the peace of mind that comes with having no mortgage, outweighs the "loss". I agree that if I did pay it off that I probably wouldn't invest all of that monthly "savings". I would invest most of it though... that is a very tough question. I think I would probably pay it off. You make a very convincing arguement not to. We currently have a mortgage rate of 5.75%, which is very good. If we are in the 25% tax bracket, thats bascially a rate of 4.3%. If you invest the million, you will likely see a better return than 4.3% over the long run. However, the peace of mind that comes with having no mortgage, outweighs the “loss”.

I agree that if I did pay it off that I probably wouldn’t invest all of that monthly “savings”. I would invest most of it though…

]]> By: Grace http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/comment-page-1/#comment-1501 Grace Fri, 18 Apr 2008 14:47:44 +0000 http://www.livingalmostlarge.com/2008/04/18/if-you-came-into-1m/#comment-1501 Knowing yourself is a big part of the financial battle. That's why Dave Ramsey suggests paying debts smallest to largest rather than go the more rational route of paying those with the highest interest rates first. That's why I get a large tax refund even though it means I'm lending the government money interest-free. The correct response is to do whatever works for you. Personally, I probably would pay off the mortgage just to have that out of the way. But that's Grace, not YOU. Knowing yourself is a big part of the financial battle. That’s why Dave Ramsey suggests paying debts smallest to largest rather than go the more rational route of paying those with the highest interest rates first. That’s why I get a large tax refund even though it means I’m lending the government money interest-free. The correct response is to do whatever works for you. Personally, I probably would pay off the mortgage just to have that out of the way. But that’s Grace, not YOU.

]]>