tag:blogger.com,1999:blog-2980246226076317453.post3878319916521558347..comments2024-03-27T09:17:51.095-07:00Comments on Done by Forty: Another Mortgage PivotDone By Fortyhttp://www.blogger.com/profile/06246597867355460723noreply@blogger.comBlogger28125tag:blogger.com,1999:blog-2980246226076317453.post-42880697968727533012019-05-28T14:53:39.382-07:002019-05-28T14:53:39.382-07:00Ha! I think the toilets would be worse...but only ...Ha! I think the toilets would be worse...but only by a bit. ;)Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-67529880621569869832019-05-27T18:38:20.344-07:002019-05-27T18:38:20.344-07:00Alright apparently it's bed time for me since ...Alright apparently it's bed time for me since I just read "that dumb tablet on the table" as "that dumb toilet on the table" and was very confused and also disgusted, and I would totally not go to an Olive Garden again if they had toilets on their tables!<br /><br />(I hate those dumb tablets too btw, I know it's for convenience but maybe sometimes less convenient things are better?!)Anahttps://personaltradelines.comnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-76255537319283167712018-08-22T12:21:52.413-07:002018-08-22T12:21:52.413-07:00Maybe after my experience...maybe it ain't for...Maybe after my experience...maybe it ain't for me either! LOL Nah, it's alright, I'm still pretty gung ho about real estate. Good luck with the flip! Andrew@LivingRichCheaplyhttp://www.livingrichcheaply.comnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-70823647034372055762018-08-09T17:40:34.542-07:002018-08-09T17:40:34.542-07:00Any time! It's pretty awesome. Just cost me a ...Any time! It's pretty awesome. Just cost me a bit of time and the payment to principal to free up hundreds in monthly cash flow. Revanchehttps://www.blogger.com/profile/07293868300535734672noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-21923977992413300792018-08-08T06:19:22.353-07:002018-08-08T06:19:22.353-07:00Truly not bringing in politics here. That said, m...Truly not bringing in politics here. That said, my assessment of the new tax plan is there will be a consequence (intended / not intended, not sure) of many people to pay down their mortgages because mortgage rates will no longer be tax discounted for me (and for many people, not all). For the first time in 15+ years I will be taking the standard deduction so mortgage interest doesn't help my taxes burden. So I will in fairly short order plan to pay it off entirely, for the combination of guaranteed return and piece of mind. I have to think I am not in the minority, it's going to be enough people to see the stats overall in a few years IMO. In reality I don't think you can go wrong reducing your yearly expenses by the amount of the mortgage, it's certainly a safe move as we should all tend to make once you have a nest egg worthy of protecting.Chrisnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-61228232535849284852018-08-07T11:52:43.267-07:002018-08-07T11:52:43.267-07:00Mr. PoP just FIRE'd and we're going throug...Mr. PoP just FIRE'd and we're going through a very similar thought process with our mortgage-we could sell a piece of land, pay off the remaining 68k and put the rest back into the market. Every night Mr. PoP closes his eyes, grit my teeth and repeats the mantra, "I'm not a market timer, I'm not a market timer, I'm not a market timer."Mrs PoP @ Planting Our Pennieshttps://www.blogger.com/profile/03092406694266872975noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-76965575018798873812018-08-05T07:36:54.910-07:002018-08-05T07:36:54.910-07:00Hey I think we have the same interest rate on the ...Hey I think we have the same interest rate on the mortgage! 5 years goes by really quickly, especially with a baby. 3 years even quicker. You would want to slow some of these years down because babies grow up in a blink so I think your plan is a good thing!Lilyhttp://thefrugalgene.comnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-31070289176765614352018-08-05T07:21:06.328-07:002018-08-05T07:21:06.328-07:00You pivot sounds good. Paying down the mortgage is...You pivot sounds good. Paying down the mortgage is a good thing. We're planning to consolidate our properties too. Once we're down to one property, we'll figure out what to do with the mortgage. I wouldn't worry about the timeline either. Just go at your own speed. You still have quite a few years left. Keep at it!retirebyfortyhttps://www.blogger.com/profile/02180702594001358403noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-46546760149404140732018-08-04T12:26:28.415-07:002018-08-04T12:26:28.415-07:00You and I are going to have to chat sometime about...You and I are going to have to chat sometime about recasting. I kind of love that idea.<br /><br />I suspect that simply going full bore at the mortgage as we plan to do might not be the most effective plan, even if it is the simplest.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-7911043096414745542018-08-02T14:29:50.007-07:002018-08-02T14:29:50.007-07:00DbF: I'm totally in agreement about reducing c...DbF: I'm totally in agreement about reducing costs before starting retirement - that's why I'd really like to do it even if it's not possible to hold everything else steady over the next ten years so I can make it happen. If possible, maybe it will be something along the lines of a couple of big payments to principal in the next couple of years so I can get the most impact out of them, plus a recast. I've already done two and we haven't had the mortgage two years yet :D Revanchehttps://www.blogger.com/profile/07293868300535734672noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-22793628545767637702018-08-02T10:01:50.955-07:002018-08-02T10:01:50.955-07:00Hey, we are not fancy folks here at the Done by Fo...Hey, we are not fancy folks here at the Done by Forty household. I'm not ashamed to admit I really love the salad and breadsticks.<br /><br />But maybe you culinary elites can show me what real food tastes like up in MN. :)Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-11864142211281297242018-08-02T08:53:13.464-07:002018-08-02T08:53:13.464-07:00Thanks for sharing Big Ern's fancy analysis on...Thanks for sharing Big Ern's fancy analysis on the wisdom of mortgage pay-down. We're in the middle of slaying ours. No big fancy analysis, just trying to carve out as much cash flow as possible before checking out of cube land. I figure even at 3%, mortgage pay off is like a hedge in your portfolio. <br />Olive Garden? Dude...Cuberthttps://www.blogger.com/profile/05284434513106168111noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-58087725910562936042018-08-01T08:31:53.650-07:002018-08-01T08:31:53.650-07:00That's a good point about the differences in h...That's a good point about the differences in having a very big mortgage in HCOL areas, Revanche. I think the main takeaway from Big ERN's post is that sequence of return risk is greatest at the early end of an early retirement, so you just want to minimize expenses on that front end (say, the 10 years or so). <br /><br />Maybe recasting the mortgage right before early retirement is a middle ground?<br /><br />And I like the idea of an exit plan! That's never a bad idea. <br /><br />I hope I don't sound like I'm against rentals altogether. I actually think getting some income in early retirement is a fantastic hedge. These rentals just aren't for us, unfortunately.Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-34282723694130103742018-07-31T15:42:56.437-07:002018-07-31T15:42:56.437-07:00More food for thought! I viscerally prefer the ide...More food for thought! I viscerally prefer the idea of paying down the mortgage before retirement but we have a really big number right now and I don't think we can swing it in the next 7-10 years. So either I change our retirement aims or I change our plans for retirement. But I should not be (though sometimes I am!) in a rush to make it all happen right this second, I want to be sure we do the right thing for our brood over the long term. <br /><br />I go back and forth on whether continuing down the path of rentals is for us. We have a stable tenant who takes good care of the property now, and the place has appreciated, but I also had a crap property manager that I'm still cleaning up after and that's costing us a bundle this year. I want to set a clear point at which it's not worth hanging on to before we lose a ton, much like setting an exit plan for a business. Revanchehttps://www.blogger.com/profile/07293868300535734672noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-66722014992005712652018-07-31T12:22:41.213-07:002018-07-31T12:22:41.213-07:00My sister is a big Keto fan, but that is not somet...My sister is a big Keto fan, but that is not something I think we'll be doing.<br /><br />But more plants is do-able!Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-88879567250860075662018-07-31T12:10:20.361-07:002018-07-31T12:10:20.361-07:00Hey there, Andrew!
Yeah, we had bad experiences w...Hey there, Andrew!<br /><br />Yeah, we had bad experiences with both rentals, alternating between good renters and very bad ones. More to come in a future post.<br /><br />But I think the thing that tipped the scales for us was the opportunity to make some money when selling. We bought the first rental at $80k and sold at $126k a few years later (though we did put a good chunk to flip it a bit). Once we saw we could get out and make a profit, we decided to do the same here. (Bought around $90k, will list at $140k, putting $14k or so into the flip.) Here's to hoping.<br /><br />And yeah, if you know you're moving I totally agree: no reason to pay it off. We feel like this is going to be our forever home. It was flipped and totally done when we bought it, big lot to expand on if we really want it, and it has a pool which we didn't think we'd want but now can't imagine living without during the summers in AZ.<br /><br />But if we were going to move, we'd certainly follow your plan and hold off on any prepayments.<br /><br />I honestly think rentals are a GREAT investment for the right person who has better luck than we did. I certainly see a lot of FIRE folks using it as the foundation for their plans, and doing so successfully.<br /><br />But it ain't for us!Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-63343804662553551292018-07-31T10:05:58.641-07:002018-07-31T10:05:58.641-07:00A hybrid of popular things.
Essentially: Intermit...A hybrid of popular things.<br /><br />Essentially: Intermittent Fasting combined with Keto and then mandatory daily exercise. As I'm finishing up that book, I'm also converting myself to a much larger percentage of plants vs. animals in my diet (so start with keto, but transition even away from animal fats as much as you can).Tinhttps://www.blogger.com/profile/17710280020482764792noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-87107518235919563752018-07-31T08:34:41.672-07:002018-07-31T08:34:41.672-07:00Did something also happen with the other rental or...Did something also happen with the other rental or you didn't see the point in just keeping one? I've heard the Indy market is pretty hot so hopefully the flip will be successful. My wife and I should do those yearly meetings as well. <br />As for the mortgage, I'm probably on a different boat. Well being that I think we'll outgrow our current place, there's no real point in paying off the mortgage. And if we stay in NYC, paying off a mortgage seems unlikely. For better or worse, I'm taking the opposite approach and taking on my debt and buying more rentals. To be honest, the cash flow from my first rental wasn't great either but it did have some decent appreciation. I bought another property which I'm renting short term. Hopefully that goes well.LivingRichCheaplyhttps://www.blogger.com/profile/11836385188598507626noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-61161946033126398382018-07-31T07:52:00.841-07:002018-07-31T07:52:00.841-07:00Hi Tin!
Yeah, the rentals have barely been making...Hi Tin!<br /><br />Yeah, the rentals have barely been making a profit. Or I should say, they make profit for a while, but then we get a bad renter, or a major repair, and nearly all the prior year's profits are wiped out.<br /><br />In the end, the thing that made us pull the trigger was the stress. I get upset when someone purposely trashes the property, because I have so many emotions tied up in the place. It's our house, so I unreasonably expect people to treat it a certain way...<br /><br />What's your health/diet plan look like? I could use some help in that area!<br /><br />Will check out that book, too. It's on the list!Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-21157245423881389092018-07-31T05:06:33.398-07:002018-07-31T05:06:33.398-07:00Sounds good to me. I'm guessing the fact that...Sounds good to me. I'm guessing the fact that you are considering this though is that your rental isn't pumping out a lot of extra cash flow?<br /><br />On a totally unrelated note, I thought your dining choice introduction quite funny. That being said, I found myself thinking, "No, don't eat/drink that!" (e.g., bottomless soda). I finally put myself on the health (diet/exercise) path I should have started years ago, and now my brain is already hard-wired onto this new path, like I'm a different person (I have always had sort of a super-power ability to be able to re-wire my brain very quickly, if I'm motivated enough. It's a trait I found very useful in my dating years when I had to rewire to quickly move on from girl friends ;-).<br /><br />Anyway, FWIW the current state of dumb politics has made me so angry that I was getting unhealthy/stressed. I decided to redirect that wasted energy into something I can actually control. My motivating health vision statement is: "This guy is stressing me out and making me die early. I'm going to eat much better and get really fit, because I don't want to die before that joker does."<br /><br />Bringing it back to you, with kids this becomes even more important. Ever read the book "How Not To Die"? I think you would like it as the tone quite frankly is DBFish (but medically related).Tinhttps://www.blogger.com/profile/17710280020482764792noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-76315224115061535432018-07-30T14:11:32.750-07:002018-07-30T14:11:32.750-07:00Hi there, Savvy Financial Latina!
We used to keep...Hi there, Savvy Financial Latina!<br /><br />We used to keep more cash around (and ironically, we have a lot now because we sold two houses in the past year). But once again, Big ERN has convinced us that keeping a big cash cushion might not be so hot of an idea.<br /><br />https://earlyretirementnow.com/2017/03/29/the-ultimate-guide-to-safe-withdrawal-rates-part-12-cash-cushion/<br /><br />In any case, for us, $15k would still be about half a year of true bare bones expenses. If unemployment was the reason we'd be tapping it, then we could stretch it out quite a bit further.<br /><br />But yes, I can DEFINITELY see the appeal of keeping more cash around. The bucket strategy can work!<br /><br />Best of luck with the mortgage and the payoff!Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-49943064537686725142018-07-30T14:07:47.639-07:002018-07-30T14:07:47.639-07:00Hi there, DGI.
Yep, we still rock the Simpleton&#...Hi there, DGI.<br /><br />Yep, we still rock the Simpleton's Portfolio, which has 25% of our portfolio in bonds (and really, really safe bonds at that: all short term, which REALLY won't keep up with the mortgage). And yeah, we're 25% international, too (rounding out with 25% S&P 500, and 25% Small Cap US).<br /><br /><br />"What is your reason to hold a large amount of fixed assets in your portfolio that yields around 2% or so, but have a long-term liability yielding 3.75%? "<br /><br />That's a fantastic question! I think the reason we have bonds + a mortgage, and this is off the cuff, is that we're not willing to drastically change our asset allocation just in order to pay down debt. That is to say, if I had credit card debt equal to our bond position, I wouldn't necessarily sell all our bonds at once to pay it off because that would put us in 100% stocks overnight, drastically changing our risk profile.<br /><br />Simply put, we might sell our investments overall to pay down debt...but our AA is our AA. Whatever we did, we'd want to rebalance back into our desired asset allocation.<br /><br />Great point about opportunity costs just kind of being part of the equation if you're mitigating risk. Like you said, the goal isn't to maximize gains, but to avoid running out of money!Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-57428816846977414432018-07-30T13:59:29.606-07:002018-07-30T13:59:29.606-07:00That's a really sweet set up, ECL. I love the ...That's a really sweet set up, ECL. I love the idea of passive income but our attempts at it (via rentals) are anything but passive, to the point that we just want them gone. <br /><br />At least the investment dividends are somewhat regular and passive. Though Big ERN has a great post on how we need to be careful not to just rely on the dividends in down times...Done By Fortyhttps://www.blogger.com/profile/06246597867355460723noreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-55703141003224812152018-07-30T13:22:43.339-07:002018-07-30T13:22:43.339-07:00First thing, I noticed you don't keep a lot of...First thing, I noticed you don't keep a lot of cash in your emergency fund.<br />We're probably very conservative and keep a year worth of expenses.<br /><br />I like your take on looking at the sequence of return risk. As I'm about to enter a 30 year mortgage, I'm already thinking of how to pay it off. SavvyFinancialLatinahttp://www.savvyfinanciallatina.comnoreply@blogger.comtag:blogger.com,1999:blog-2980246226076317453.post-85099382077571914592018-07-30T11:45:16.721-07:002018-07-30T11:45:16.721-07:00DB40,
Do you still have 25% of your networth in ...DB40, <br /><br />Do you still have 25% of your networth in bonds/fixed income?<br /><br />What is your reason to hold a large amount of fixed assets in your portfolio that yields around 2% or so, but have a long-term liability yielding 3.75%? ( I ask myself this question as I also have a mortgage, anytime my level of cash/fixed income increases to say a certain %-age of NW)<br /><br />One thing most retirement projections miss is that they are very US centric. There have been long periods in developed markets where housing did better than equities. ( like in France for example)<br /><br />As a retiree your goal is to make sure you do not run out of assets. So while there may be an opportunity cost in missing out on future equity returns that are above 4%/year, you also increase your "staying power" in case equity returns are lower than 4%/year ;-0<br />Dividend Growth Investorhttps://www.dividendgrowthinvestor.com/noreply@blogger.com