Felt inclined to share my 2c if anyone's interested. I was initially baffled that a site of traders has so many opponents of utilizing capital at 3% interest, with tax breaks included! But on second thought it's fairly telling. In order for taking money out at 3% interest rate to be a good move for you, you need to have the skills to be able to grow capital at better something better than 3% without being risky to do so.
If you're emotionally uncomfortable or against the idea on principle, that may very well be where the worry or aversion is coming from; if you know deep down that you aren't 100% confident in your ability to easily grow capital without substantial risk. And if you don't have the skills to make capital work for you at a rate better than a measly 3% IN AN ENTIRE YEAR without putting it at risk to do so; I'd really take a step back and get on developing that this year.
Granted, I can sympathize with a few reasons previously cited. If you're already far enough along the income curve that the marginal utility of your next dollar doesn't mean more than a psychological comfort of having less debt / less to take up your time and attention, I can totally understand that view. Or if you're already in some sort of entrepreneurial situation (rentals, whatever) and you don't want your DTA ratio to get too high that's prudent as well.
But to oppose debt on principle is just not rational, especially for someone frequenting trading boards. Even for the most technically unskilled traders or investors, there is a myriad of ways both within the stock market and without to deploy capital at near 0% RoR which can easily outperform a 3% carrying cost, even in the intermediate term.
One more important thought, if you're worried about a spouse having to manage things they have no interest in, you can just liquidate the capital and repay your mortgage in full in the event of death, illness, or whatever. In fact, for every financially-minded individual with a spouse who is not like-minded, we should write up a plan to restructure and simplify our estate in the event we're unable to manage it anymore. It is a thoughtful and kind thing to do. I've see a few friends go through a major family death recently where things weren't organized well at all beforehand and it can add a large additional strain on a family in a time that is already very difficult.
If you're emotionally uncomfortable or against the idea on principle, that may very well be where the worry or aversion is coming from; if you know deep down that you aren't 100% confident in your ability to easily grow capital without substantial risk. And if you don't have the skills to make capital work for you at a rate better than a measly 3% IN AN ENTIRE YEAR without putting it at risk to do so; I'd really take a step back and get on developing that this year.
Granted, I can sympathize with a few reasons previously cited. If you're already far enough along the income curve that the marginal utility of your next dollar doesn't mean more than a psychological comfort of having less debt / less to take up your time and attention, I can totally understand that view. Or if you're already in some sort of entrepreneurial situation (rentals, whatever) and you don't want your DTA ratio to get too high that's prudent as well.
But to oppose debt on principle is just not rational, especially for someone frequenting trading boards. Even for the most technically unskilled traders or investors, there is a myriad of ways both within the stock market and without to deploy capital at near 0% RoR which can easily outperform a 3% carrying cost, even in the intermediate term.
One more important thought, if you're worried about a spouse having to manage things they have no interest in, you can just liquidate the capital and repay your mortgage in full in the event of death, illness, or whatever. In fact, for every financially-minded individual with a spouse who is not like-minded, we should write up a plan to restructure and simplify our estate in the event we're unable to manage it anymore. It is a thoughtful and kind thing to do. I've see a few friends go through a major family death recently where things weren't organized well at all beforehand and it can add a large additional strain on a family in a time that is already very difficult.
