More than enough Income yet paying off a Mortage ?

Did our Parents have the Right Idea after all ?

There was a news item the other day about Ben Bernanke re-financing his Mortgage rate. Surely that cannot be true ? Should a man in his fifties, highly successful and earning a lot, still even have a Mortgage ?

This has been bothering me for a while. Why has this economist not paid off his mortgage. Isn't it the first order of the day, to pay off your debt ? Thinking about this problem brought my attention to more " high-earning " individuals, who do the same. Look, not all that shines is gold and more than a few millionaires like to spend like billionaires or live vicariously through multiple marriages and alimony.

My parents grew up just after the second World War, when things were difficult and a lot of people had nothing. To this day, my Mum never throws out left-overs. That would almost amount to a sin. If possible, they pay off all debt, before they spend on luxuries. If you think of your parents or grandparents, I am sure that they had paid off their homes by the time they were middle aged ! Having any kind of debt, was and is more like a red flag to this generation.

Maybe they've had the answer to our modern dilemma all along. Yes, everyone needs to spend to keep the economy going, but if we all spend on credit ( debt ), we mostly keep the banks happy and lose a lot of sleep trying to keep our jobs, which is such a vital link in this chain. Ideally we should all spend with money that we actually have right now. Hectic idea !

Imagine how your monthly budget would be, if you had no debt to pay back. There would be so much more to spend on the things you want or you could just invest it and make it grow.

Should the world of Business and Economics not teach us to pay off our debt as soon as possible. Paying interest on homes or cars, i.e the big ticket items, takes a lot out of our pay-cheques and if you calculate the interest rate charged, you will get to realize how much more you pay for them.

Scouring the Internet, you can find lots of tips to pay off your home loan faster: paying the same amount bi-weekly instead of monthly can save a lot already.

Biggi