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Why don’t you have enough cash to do your own thing?

July 22, 2012

I came to the US dirt poor and now I am wealthy. Why aren’t you? You had a head start on me in language and culture. Why don’t you have enough cash to do your own thing? The answer is simple. You went to an American school and your economics teachers didn’t teach you the right stuff. What is the right stuff? The right stuff is learning how to take advantage of financial opportunities in your society, whether it is buying a home on the cheap or investing in Apple and Pixar when Toy Story came out, like I did. OK, let’s stop pontificating and get down to business.

Soon I will be refinancing my home. My mortgage rate has been 1.5% to 2.6% for years, amortization 30 years. Do I continue my variable mortgage or move to fixed? Every time that I refinance my mortgage during recession times (low-interest rates) I add a huge “piggy back” to the shrinking principal – so I always have enough cash to do my own thing. What it means practically is that my home “borrows” thousands of dollars from a financial institution at 2.6% interest per year and “gives” the cash to me. I love my home. You should see my Brazilian granite “Island” and counter top in the kitchen, all built with borrowed money! I have a friend who paid off his mortgage and doesn’t have enough cash to live on big time. He doesn’t agree with my “system.” He said,  “All my financial advisers over the years told me to pay off my mortgage faster, if I can do it, so I will be able to sleep at night.  How can you and your wife sleep so well at night with a mortgage that is “ballooning every year?” I looked at poor George and said, “I could pay off my huge mortgage tomorrow and live with less and less cash every day because my 2.6% loan will cease to exist while more expensive loans will drain my finances. I don’t want to do that.” George looked at me, “I guess that is what I do,” he uttered.  “well, George, don’t feel so bad. You are in good company of millions of Americans who do what you do.” Why do they? “Well, George, read my posting. At the beginning I wrote: “The answer is simple. You went to school and your economics teachers didn’t teach you the right stuff.”

“Can you give me a loan?”

“No, George, my rates are much higher than what you can get from your fully paid off house!

“Did George change his ways? What do you think?

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One Comment leave one →
  1. August 18, 2012 1:10 am

    helpful blog, bookmarked the website with hopes to read more, this is the way a blog should be! thanks! lista de emails lista de emails lista de emails lista de emails lista de emails

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