PAID OFF! Celebration!

[Silver Bullitt]

Damn thing is almost as fast as the GT in sportmode with the A10

Tune it and it might just be faster.

Sponsored

 

[MustangGuy]

Tune it and it might just be faster.

Well the new Raptor has the same EB with 450HP / 510TQ so I know more power is on tap. Crazy to have 5000 lb trucks running in the 14's stock. BUT FUN!

 

[nastang87xx]

If you paid off your 0-2% loan early, its cause for financial education not celebration. If you skipped those rates for the maximum time period, same education.

 

[qtrracer]

Congrats. Always nice to be debt free.

Now use that payment money to build a 6 month emergency fund - unless you already have one. Then go into the stock market with it. Stock market historical return is pushing 10% annually.

For my '16, I took the zero interest Ford offered and put the otherwise cash purchase price into the market. At the end of the 5 year loan, the market with compound return will have paid me back about $24K. But no debt is good.

 

[gbgreen]

Congrats. Always nice to be debt free.

Now use that payment money to build a 6 month emergency fund - unless you already have one. Then go into the stock market with it. Stock market historical return is pushing 10% annually.

For my '16, I took the zero interest Ford offered and put the otherwise cash purchase price into the market. At the end of the 5 year loan, the market with compound return will have paid me back about $24K. But no debt is good.

Yes, but you just as easily could have hit a period like 2007-2009, where the equity markets were down 50%.
The safest thing to do is to first build up your 6 month emergency fund in cash (or ladder 6 month CDs or treasuries to get a better return than the pitiful amounts that money markets return), and then build up a *well diversified portfolio* of equities, fixed income securities, and other investments that don't all behave in the same way when certain events occur. And build it up by dollar cost averaging (don't purchase everything at one time). If you feel reasonably secure (IOW, accept only slightly more risk), build your emergency fund and portfolio at the same time. This way everything gets laddered and dollar cost averaged at the same time.

Better yet, go to cfp.net, find a fee-only based Certified Financial Planner near you, and work with them to build a financial plan that is tailored to you and your specific situation, goals, etc. The money you pay for a CFP is well worth it in the long run. And the less sophisticated your financial knowledge is, the more valuable a CFP will be.

I am neither a CFP nor a financial professional. I have no financial interest in making these recommendations.

 

[sdiver68]

Yes, but you just as easily could have hit a period like 2007-2009, where the equity markets were down 50%.

I am neither a CFP nor a financial professional. I have no financial interest in making these recommendations.

2007-2018 annualized SP500 return with dividend reinvestment is still almost 10% even with that dip.

The recommendations you are making are old school and proven ways for investment companies to take a nice portion of your money. Current long term set and forget recommendations are to just invest in a low cost SP500 index ETF. Truth be told I diversify a bit from that strategy with sector rotation but no more than 25% of my portfolio and I'm not a set and forget person. My returns are not much higher than above.

Sure, you can gamble on strategies with higher returns as long as you understand that's what you are doing. Gambling! But few do.

The key is to educate yourself on the whys of that strategy so you can withstand the psychological hit of watching the market go up and down.

Want some more, here's a good explanation of the strategy with a great example of a 20yr time period that went through 3 major market crashes-

https://www.investopedia.com/articl...16/put-10000-sp-500-etf-and-wait-20-years.asp

 

[seth21w]

This was my greatest achievement so far first car I've ever paid off and I've had over 100 cars and trucks. Mostly used and flipped first one bought new and paid in full the title is crisp and alot bigger than used car titles for some reason. I paid it off 2 years early to save on interest and to start paying my house off owe 80k then I am done with debt for now on.

 

[qtrracer]

Yes, but you just as easily could have hit a period like 2007-2009, where the equity markets were down 50%.

I've been in the equity markets since before '87. I've seen and weathered many ups and downs, and still the 10% average return holds. I am a huge Warren Buffet fan and before I retired had 95% invested. Always bought when the market went down; never went to the sidelines. Now I pay people to manage the investments; too much at stake. Pay-off real estate? Not a chance. Will always be leveraged in real estate since RE is so fickle.

 

[Ecoboosted]

I finished paying off my 18’ GT in February. Working on paying off my Road Glide next. I hate debt in any form. I pay off the 1 credit card I use every month so I can take advantage of the cash back.

 

[Bull Run]

This was my greatest achievement so far first car I've ever paid off and I've had over 100 cars and trucks. Mostly used and flipped first one bought new and paid in full the title is crisp and alot bigger than used car titles for some reason. I paid it off 2 years early to save on interest and to start paying my house off owe 80k then I am done with debt for now on.

Congrats, looking forward to your paid-off house post in a few years.

I've been in the equity markets since before '87. I've seen and weathered many ups and downs, and still the 10% average return holds. I am a huge Warren Buffet fan and before I retired had 95% invested. Always bought when the market went down; never went to the sidelines. Now I pay people to manage the investments; too much at stake. Pay-off real estate? Not a chance. Will always be leveraged in real estate since RE is so fickle.

You may be at a place with enough cash/liquid investments to weather the downturn but folks who are over leveraged in real estate now are getting crushed as they did back in 2008. Primary home owners and renters are getting forbearance on mortgages and rents (this may end up just kicking the can down the road), but it's more difficult for landlords, especially if their mortgages aren't federally backed. And I believe that mortgage forbearance is the major thing that's preventing 2008 style RE crash right now and crash may still be coming if the recovery take too long.

https://www.wsj.com/articles/a-barg...due-for-overextended-airbnb-hosts-11588083336

I'm more about free cash flow (FCF) and debt reduces it. Unrealized gains look good on paper but they can easily evaporate when you need cash the most to pay bills and taxes. If you think about it, even safe havens like investment grade bonds and gold took a little hit during the big crash in March, whereas they usually go up in the past when the market crashed. This smells like a liquidity crunch to me when companies and individuals had their revenue cut or expecting a big cut and had to sell to build up cash.

Luckily, my net worth took only around $110K hit between beginning of March and April because I sold some of the winners in non-retirement last year after reading an article about Black Swans. I bought investment grade bond funds with it, which bunted some of the crash. And because I have a high FCF, I continuously plowed money into stocks during crash and made back $80K between beginning of April and May (I do monthly net worth calculations). I never had to touch my emergency savings in the past as high FCF covered minor emergencies; if I have higher expenses in a month, I simply invest a little less that month. On the flip side, you usually don't have an option to suspend mortgages or car payments without consequences when you're tight on cash.

 

[JohnD]

Paid off my house in 1992, haven't borrowed money since then. Get out of debt and stay out of debt, watch the money pile up.

 

[Mustang5ohMan]

I've been in the equity markets since before '87. I've seen and weathered many ups and downs, and still the 10% average return holds. I am a huge Warren Buffet fan and before I retired had 95% invested. Always bought when the market went down; never went to the sidelines. Now I pay people to manage the investments; too much at stake. Pay-off real estate? Not a chance. Will always be leveraged in real estate since RE is so fickle.

Real estate always recovers usually... and having a renter pay your mortgage with a little on top for many years and turn and and sell it and gain the equity you didn’t lose a penny and made money on top of money.

 

[Balr14]

I have a "car fund", a bank account that I put a percentage of my income in to fund a new car and/or pay for maintenance and repairs on my current cars. It causes you to make a lot of interesting trade-offs. I think twice about expensive mods that will delay the purchase of my next car. It is a system that works great.

 

[qtrracer]

Real estate always recovers usually... and having a renter pay your mortgage with a little on top for many years and turn and and sell it and gain the equity you didn’t lose a penny and made money on top of money.

After 2008, our residential RE took more than 10 years to recover to pre-2008 levels, and that was in a very hot market. Residential RE on average increases about 3% a year. Compare that to the 10% annual stock market average.

FCF analysis is important to determine one's financial health, but some folks don't look to this when planning on long-term purchases like RE. The focus is what is the monthly payment compared to rent and can we handle it. And any savings went to the down payment rather than an emergency fund. So looking forward, they are already in negative cash-flow territory once the closing occurs. It's only after do we see the house-poor situation when that raise/promotion didn't come in, etc., and other things must be changed in order to put food on the table.

Experience over the long term, with many mistakes, helped me to see that in general, residential RE is a poor investment. Yes, one needs a place to live and buying is better than renting. But for most, a primary residence is their largest single asset which only increases by 3% a year on average. Add in the cost of the loan, I won't tie-up much in such a slow/no gainer. Would rather be reasonably leveraged and look to other assets to increase wealth. .

By the way, in June, 2019 we'd been on the down-side of the business cycle for about six months. We'd been moving into less risky assets in anticipation of a mild recessionary period which China was already experiencing. During the March/April 2020 time frame, the portfolio lost about 24%. It's gained back half that as of last week.

 

[ivantwilliams]

Smart idea that!

I have a "car fund", a bank account that I put a percentage of my income in to fund a new car and/or pay for maintenance and repairs on my current cars. It causes you to make a lot of interesting trade-offs. I think twice about expensive mods that will delay the purchase of my next car. It is a system that works great.

Sponsored