Do you hate the thought of working past 55 or 60? Do you hate not being able to live the life you deserve today? Do you hate not knowing what your financial future looks like? It's time to stop doing what you hate, here's your host, Mr. Harold Green.
(00:20): Oh, hi everybody. This is Harold Brene of Brightree financial group, and it is time to stop doing what you hate. I hope you are having a fantastic day today. It's a Monday for me. And I just kind of worked through the weekend with the exception of having Sunday off. And it was a very relaxing day and you know, nice weather got to take my life out to have lunch at you know, one of our favorite restaurants. And it was funny because, you know, we get to the shopping center. The Royal Hawaiian shopping center is where this place is located and we walk inside and it's like just tons of people in there and it's lunchtime.
(00:57): And we're like, okay, let's go over here. There's line over here. And then it's like, let's go over there to this line over there. And then, you know, finally we get, you know, to this one area. And then we, you know, it's where our, our our favorite places and we get there and there's a line. And so we get in line in, everybody's walking in and everybody had reservations and I got to the door and the lady was checking temperature, whatnot. And she's like, Oh, you have a reservation. I said, Nope, it's just two of us. And you know, we want to see if we can have lunch. And she said, sure, I'm right in. We have this area, that area, my wife was like, we're going to go to that area. And it wasn't crowded inside. It was just we were just very fortunate, so had a nice lunch and was just able to relax and just enjoy the day.
(01:37): So I'm super excited to be sharing today's show with you. And it is titled mortgage versus no mortgage that's right. Mortgage versus no mortgage. And I get this question all the time, Harold, should we pay off our house before we retire? And my answer to that depends on, depends on this. And I'm going to tell you who the show is for this show today. As for people who say, Harold, I want to be able to go wherever. I want, whatever I want, regardless of how much it costs Harold, I want to be able to drive whatever car I want to drive. Whenever I want Harold, I want to be able to help my kids or my grandkids whenever they need it, or just whenever I want to Harold, I want to be able to have the kind of life that I want to, regardless of what's going on and the economy, if you are that person, this show is for you mortgage versus no mortgage.
(02:45): Now there are studies that show that or senior citizens, people, I would say 60 and above 60, roughly 66% of their net worth is sitting, sitting in their house. Why there's a lot of these people, their parents, they saw them come through the great depression and they saw how important it was to be in a life or to have a life where you didn't have a mortgage or, or debt. Now, of course, these people, they had pensions, they had, they had guaranteed income coming in and they were going to be on a fixed income. Once they retired, they were going to have their pensions, you know, the government annuities or whatever. It was, social security, whatnot. That stuff is very fixed. And so in their minds, they said, look, if we can just pay off our house, we would be on easy street. Right? And that's what many of them did now?
(03:48): Was that a good idea? Maybe for some, but it was a very, very, very, very bad idea for others. Why? And I'm going to get into this. And it's the number one thing that I see that is hurting people when it comes to living the kind of life that they want financially, and it's having all of their money's tied up and things. And in places that don't serve them. Well, I find that when people have their money's tied up in places that don't serve them well, it can lead to a couple of different things. And according to a study released by the national council on aging, roughly 13.2 million Americans are candidates for reverse mortgages to pay for long-term care expenses at home, which allowing many to remain independent and live, live in their homes longer. Why do people end up needing reverse mortgages? That's because all of their money tied up in the house and they had buried a little money and savings accounts and different things like that.
(04:53): Their pensions aren't enough. And so it's, he is definitely not enough. And I would say shortchange themselves by having the kind of mindset that says, you know, what, if we don't have any debt, then we're okay. But what they fail to realize is it's not about not having debt, but it's about having enough income that will last you your entire life. That's why only, okay, 4% of the people in America have enough to last them their entire lives, because people are putting their money in places where it's guaranteed. Now I'm not having guaranteed money. I have quite a bit of guaranteed money, but I don't have more indeed money. The non-guaranteed money because guaranteed money is only going to earn you so much and interest anything at all. What do I mean by that money? The bank, yes. Is guaranteed for the most part, but what are you gonna do?
(05:47): Half a percent, if that sitting inside of your home, what do you get on it? Now, this is different. If you're buying and selling to flip and to make money, this I'm not to you. I'm talking to the people that want to take a large percentage of their disposable income every single month and plunk it down on their homes versus investing now, because we're talking about an investing, all investments, carry risk of loss. I encourage you to go check with your own investment advisor before making decisions and investing in the market past performance is no guarantee of future results, but people have the mindset where they realize it or not. There are chasing guarantees versus chasing income. Now here's a very interesting stat that I found. You can check this out mortgage retirees today, and it's the squared away blog, financial behavior. Worksaver retire 30 years ago, just one of every four homeowners in their late sixties to late seventies still had a mortgage today, nearly half do.
(06:56): Once people hit 80 mortgages used to be extremely rare. And as because of what I've been talking about and only 3% had them today or had them. So today it's one in four and that's Harvard joint center for housing studies. And that's where they came from. Now, a lot of times people's retirement condition. It depends on how much they spend on their highs housing. And one of the interesting things they talk about here is in today's world. People have less aversion to debt, which means, you know, they, they, they're not really concerned about it all that much. And a lot of times people have been using debt to finance their life. And so they they've just become numb to the fact of, of having debt. And another interesting thing that it talks about as people now are buying homes that cost away more than what they really can afford.
(07:47): In other words, their income is not keeping up with the cost and the price of housing. And so one of the things I always talk to my clients about when they ask me the question, whether or not they should pay off their houses, we talk about the kind of lifestyle that they want to have. We talk about how much income we are generating for them. And we talk about this one particular thing. Now, I think that you can pay off your home early if you are a young person, okay. And the cost of your home is not all that great. And you have another 30, 40 years to save and invest. Okay. That is one of the only win-win situations that I've found. When I see other people that are older in their forties, in their fifties, looking at paying off their home and having to save for retirement.
(08:39): I see paying off the home as being a detriment to them. And for these people, the people that I talked about earlier, who say, I want to go where I want do what I want when I want, although, having to worry about money, here's the deal I say, and it is my professional. And it is also my personal opinion because this is what I do for myself. I pay my regular mortgage. I don't pay a penny more or a penny less. I pay my regular mortgage, all of the extra money that I have leftover. I invested, okay. Or I save it or invest and save for retirement. I put it in my life insurance policies. I put it in the stock market. I'm about to start another type of pension fund for the company here. But I, I do that. And I'm, I'm 47. I'll tell you that right now, I'm 47 years old.
(09:30): And I don't plan to retire until I'm probably or sell the company or whatever it might be. Turn it over probably around 67 or so, maybe 70. Because I realize a couple of different things. I don't want to be doing this forever, although I love it. But at the same time, I'm not concerned about being able to pay off my debt right away, because I'm looking at entry points and exit points in the market. And I know that if I put my money away in the right place, it's going to grow to the point where I have enough income on that money to pay off the debt over a period of time, or I could cash in whatever I want, pay the taxes on it and pay off the debt, which I probably don't think is a wise thing to do due to the fact that I have enough life insurance to cover all of my debt.
(10:17): And that will help with some of the costs, estate planning cost, and some of the taxes if I owe any taxes on my state. So I think it will do you a disservice in today's low environment, low mortgage rate environment to have a house fully paid off because your house is only going to grow at maybe half a percent or 1%. It is a appreciating asset. But when you look at all of the expenses that come along with having a home, when you retire, that's a whole different ball game. So although your home could be fully paid off, there's still taxes to pay. There are still home repairs and maintenance to do on that house. And so therefore you definitely want to have way more income coming in than you actually need. So fully paying off the house can be a detriment to you. Now, who is this for?
(11:08): Like the person who really wants their house paid off is for the person in their mind that they can't sleep at night. If they have debt, or if they have a mortgage, some people are so stressed out about things like that. They can't function in life. So that's who should be paying their homes off. And you know what, if you are willing to give up other things in life and not be able to do the things you want to do, and you just say, I just want the house paid off and I don't want any debt. And it helps me sleep at night. And that's just the way I think. And that's the way I want to do it, then fine. You can do that, right. But for the person who says, Hey, I don't care about having a house fully paid off. I want the income.
(11:46): I want the money. I want the freedom. I want to be able to do what I want when I want and why I want to do it without having to worry about it. Then definitely not paying the house off is for you. I say, carry that debt. I say, get the lowest mortgage you can possibly get. And then when the clients come in and they're about to retire and you know, they may owe 70, 80, $90,000 on it. And it doesn't make sense to take 70, 80, 90,000 out of your IRA and pay a buttload of taxes on it. I simply tell them, get a home equity line of credit for the largest amount you can get and then transfer that home or that mortgage onto the home equity line of credit. Because a lot of these home equity lines of credit, you can get about 1%, 2% for three years, and then slowly pay those things down over time.
(12:30): And if you don't mind redoing your line every three, four years, you can always go find a cheaper line of credit rate and then just keep doing that until the house is fully paid off. Now, if you receive an inheritance or something like that or cash, then fine by all means you have a couple of choices. You can either invest that money, or you can take that money and pay off the house. It just depends on your long term financial plan. So if that's you out there and you're like, wondering, Hey, should I be paying this extra $500 a month on the house or not? Look me up (808) 521-4401, go to my website, retire now, retire wild.com or go to bright fg.com and look at the rapid retire program. Give me a call. And what we can do is sit down and we can run some different scenarios for you to see if paying off the house is right for you or investing the money and then generating enough revenue to do so in the future, we can run those scenarios.
(13:22): And might I add one more thing? The reason why a lot of people dump the money in the house and they don't want the debt is because honestly they don't know what else to do with the money. They don't know how to invest properly or their investment advisor. Maybe he's asleep on the job. I don't know, but what I've seen in the past is I've seen people take those positions and they can be doing way better than what they are doing. Just because of something that they don't know. Let me take that excuse away from you. Let me take that away from you. Get in touch with me (808) 521-4401. And let's talk. All right. So thanks for letting me share this short and sweet and simple show with you today. And until next time everybody, one, two, three, let's get it
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