Ironic.

I was just listening to all the gloom and doom on the radio today and shrugging it off.

I guess I sit extra pretty because the whole subprime/ARM thing was scaring the crap out of me last fall and some economic experts were starting to speak out about the tumble that the economy would take. Like I said before, being out in California maybe it is a lot easier to see the writing on the wall. I hardly know anyone who isn't over their head in debt - subprimes/ARMs/houses uses as ATMs, etc.

So I locked in some CDs in the last year at some really decent rates, and while I wondered if I got out of the market too soon, those fears are somewhat erased today (plus I am still squarely in the market where it counts - long-term retirement).

But anyway, so today with all the fear and doom and gloom I Was kind of just shrugging my shoulders and thinking to myself that we are in a good spot. We refused to play the debt game, didn't see the point, thought long-term, and today we have little worries. I was even thinking if this was 2001 when we first bought our home and had no market equity (or became upside down), I have to say we felt the same. For one we put 20% cash down. We found a way to lower our cost of living considerably and were just stoked by that. I ran around saying back then I didn't care if our hosue plummeted to a value of $0 - the move made our life SO MUCH easier. So I don't think we would have little care of this is 2001. & far less care with a good $300k+ equity still left today. I find it hard to believe our house will plummet below the $200k or so we owe on it. Very hard to believe. & even if it does, our mortgage is far cheaper than rent in the area (though I guess that could change if markets plummeted). But either way you slice it we took on a mortgage we were very comfortable with, and we are miles ahead of renting. I have no whoas today.

I am also lucky to have a rather recession proof job. I want to be realistic and know anything can happen. But the tech crash hit California hard and I was one of the few left standing. Since our business is mostly healthcare and 75% CPAs are in the process of retiring (I can work in any industry really) I have little worries. IT's a good place to be.

& most importantly we don't RELY on debt for anything. Our mortgage may be an exception, but it is a strange exception that makes life way more affordable for us than otherwise. & for now it has a long way to go before we could possibly be upside down, so I don't feel much "reliance" on it.

OF course I popped on free money finance today (always something interesting over there)

http://www.freemoneyfinance.com/

& the guy had a pretty similar post. I think he feels the same as me pretty much except he had to take a "Dave ramsey" stab and say: "6. Why are the "keep your debt and invest instead" advocates silent lately? And those who thought zero-interest loans and all the other wicked forms of debt are pretty quiet too. What happened to their boldness? :-)"

Hehe. Whatever.

I replied that I Was not an idiot and did not put my 0% financing proceeds in the market and though I choose to invest rather than prepay my mortgage, I am in for the long haul, so this matters little.

Frankly I have been thinking with markets down we may have more opportunity to buy at a discount. Being in for the long haul it always feels better to invest when markets are down as opposed to up.

I am not at the point where I have enough invested to pay off my mortgage if need be, but I am just starting. I should be there in a few years. Over the long run I expect the market to fare much better.

We'll see.

I am happier to have cash and investments to fall back on in tough times than a paid off house. For sure. Our monthly mortgage is pretty small beans (we could both work minimum wage and stay afloat) but the entire $200k balance is a little overwhleming for us. Hell maybe dh could go to work and we could neglect our retirement and get that sucker paid in our 30s, but what's the point? So we could lose everything in a flood? So we could never see our kids? I guess like I have said with so much equity and such insane housing prices out here, diversifying outside of our house feels pretty key to financial security. I just can't put all my eggs in one basket, and investing will buy us much greater financial security over the long haul. I want to live life now and my mortgage seems a small price to pay to enjoy the time I am here (which may be short, you never know).

I also saw an interesting point in one of my debates in a blog the other day that you save the most money when you buy a house, not when you sell. I guess that is pretty much how I feel. We bought low and inflation makes our payment easier with time.

A few of our neighbors on the other hand paid upwards of $600k on their homes. Who knows if they even had any cash to put down. Don't compare them to me - there is no comparison. You can't just lump everyone who has a mortgage into the debt happy category. They've been upside down about since they bought. Ouch. We have a LONG way to go before we would feel a pinch. When dh and I were married we pretty much drew the line at a $200k mortgage, even when we made six figures. Because we never wanted to rely on that big income. Few around here drew that line and most are in trouble.

No comparison...

I guess the point of this long blab is yes, it is good to be debt free overall and to prepare financially. I was just thinking about it today... But I have a LONG ways to go to eat crow over my "using debt for good like 0% returns and investing for the long term instead of prepaying my mortgage" stance. Still don't see why I can't use debt for good... It's all in how you play the game.