walkitout (walkitout) wrote,
walkitout
walkitout

comparing incomparables

I was discussing the Fit v. the Prius in J.'s journal, in the larger context of a discussion of other difficult-to-compare things. In browsing from Seattle Housing Bubble, I ran into this:

http://www.searchlightcrusade.net/2007/03/should-you-pay-off-your-mortga.html

Searchlight Crusade is kinda interesting, altho I will concede they have their whackjob moments. But this article is an a-number-one example of why I don't like to do these comparisons.

Here's the deal: incremental reduction of debt incrementally reduces risk. Total elimination of debt makes a qualitative difference in one's financial options. The author I've linked to calls this "psychological". Yeah. Whatever. But it is _not_ in your head. Your run rate is way lower and the set of Badnesses that can happen to you as a result of financial reversals is substantially reduced.

Of course, eliminating debt leaves you, along with the rest of us, still prey to death, taxes and the needs of one's offspring.

At moments like these, I have to laugh at R. and I being together. We frequently disagree on all manner of things, but boy, when it comes to this kind of financial thing, it's really a no brainer for us. That said, we are planning on picking up a mortgage if/when we find something to buy. It'll be a 30 year fixed and we'll pay it off. Way early, one way or the other.

9 years median in a property is kinda fascinating, too.

ETA: one step back was this article, about how people just don't seem to be sensitive to rolling closing costs into a loan balance, something which always weirded me out and made me not want to refinance because I could never figure out how it all was going to play out.

http://www.searchlightcrusade.net/2007/06/dont_roll_mortgage_refinance_c.html

I think it might be kind of a "magic money store" thing, where the numbers are so incomprehensible that you just quit paying any attention to an extra $1-20K. Which I am sympathetic to, but try very hard to resist.
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