Saturday, September 24, 2011

This Article Pissed Me Off

In Perry Is Right: There Is a Texas Model for Fixing Social Security the author, Merrill Matthews, writes:
As with Social Security, employees contribute 6.2% of their income, with the county matching the contribution (or, as in Galveston, providing a slightly larger share). Once the county makes its contribution, its financial obligation is done—that's why there are no long-term unfunded liabilities.
The contributions are pooled, like bank deposits, and top-rated financial institutions bid on the money. Those institutions guarantee an interest rate that won't go below a base level and goes higher when the market does well. Over the last decade, the accounts have earned between 3.75% and 5.75% every year, with the average around 5%. The 1990s often saw even higher interest rates, of 6.5%-7%. When the market goes up, employees make more—and when the market goes down, employees still make something.
Emphasis mine.  How much is a mortgage?  How much was a mortgage?  PAY YOUR FUCKING MORTGAGE!  You get guaranteed return by not incurring future expense!  That interest is charged against a levered outlay, so you're looking at some big time savings, all the while staying warm and dry.

#winning  #tigerblood  #sensibility

I'll charge you the extra low, one time fee of nothing for that suggestion to consider.  Normal people do not belong in the stock market.  Learn how to save, and learn how to spend.  Why would you undertake to lose sight and grasp of your money when we've experienced 2 recessions + 1 depression since the middle 80's, with exploding debt and unfunded liability at the sovereign level?!  Dude ... guaranteed returns through the elimination of future expense.  Guaranteed.  Normal people shouldn't care about outpacing inflation.  I wonder what the actual market returns, brokered or self-directed, has been for the middle class in the last 20 years.  There's the lasting claim to need to combat inflation, but how does that work out when bouncing between bubble and calamity with fees and emotional distress attached?

It is a great and ongoing crime perpetuated against the middle class that they cannot elect to reduce their mortgages with these matching funds, and in a tax efficient manner, but that does not mean they should abandon the calling to make the best financial decisions.

In closing:  Pay.  Your.  Mortgage.

For more on this topic please view:  Why I think people should own homes, not stocks.