“There’s no place like home.” The Wizard of Oz, 1939
Gino and Bernice managed their money carefully, saved a down payment and bought their home after a few years of marriage and the birth of their son. Gino’s income as a unionized cement worker depended on the weather and the good will of his employers but, because he was skilled and reliable, he was able to work regularly.
Within fifteen years Gino and Bernice paid off the mortgage – early. The money that they spent on mortgage payments was then redirected into their “banks”. When, many years later at age 63 , Bernice was diagnosed with pancreatic cancer, the family was able to cover her out of pocket medical costs and provide Gino with support services as Bernice languished for 18 months and died peacfully in her home on her 65th birthday.
A few years after Bernice died, Gino’s 65+ years of heavy smoking and drinking wore out his heart and lungs. While he was on oxygen for emphyzema he had a heart attack and survived open heart surgery. He lived for several more years as a semi-invalid and his son and daughter-in-law provided him with support around the house and in the yard.
When Gino finally died, his son inherited the house free and clear, plus thousands of dollars from Gino’s “banks” and savings accounts. The son, Pat, still rents the house. Within a few years Pat was able to use the inheritance and rental money to help pay off his own mortgage well before its final payment due date. The rent from the family home and the monthly mortgage payment, which he no longer has to pay, go into “banks” for himself, his wife, and his three children.
When Pat is 67 and ready to retire, he will have two properties, both paid for; one producing income and the other costing only taxes, insurance and maintenance. His three children will have college educations with no college loans. He will have a stable retirement income from his and his wife’s retirement plans from work, social security, income from the rental, and substantial income from his savings plans, with much of it tax free from his “banks”. Their retirement income, by the way, will exceed their working career income.
There is no such thing as “good debt” for an individual or family. There are occasions and situations where debt is useful or necessary. That doesn’t make the debt good. A mortgage is a debt; sometimes useful and often necessary, but still a debt.
Those who would have you believe that mortgaging your home to the hilt so you can “invest” the equity with them are selling a dream that that will put money in their pockets and could easily become a nightmare for you and your family. They want to convince you that this strategy is followed by the “wealthy” and if you just do the tricks they teach, you too will be wealthy.
BUNK!
Measure such “plans” against this template before you buy into them:
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Does their plan have guarantees?
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Are the guarantees strong enough to support the end result that is being illustrated?
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Could you get results that were substantially better than the guarantees without buying into the plan being sold?
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Are the non-guaranteed elements of the plan based on both back-testing and actual performance of the companies and products you are being asked to purchase?
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If non-guaranteed results are based only on back-testing because the products and/or companies have only been around for a few years, does the back-testing cover at least 100 years to include the depressions of 1907 and 1929 and the doldrums of the late 1940’s and early 1950’s or does it go back only far enough to incorporate the longest and strongest bull market in the history of markets?
Your financial life can be like that of Gino, Bernice and Pat. They did not have to take great risks or buy into esoteric schemes to succeed with the money that passed through their lives. They employed simple, treid, tested and proven strategies that allowed them to live comfortabley without relying on debt. You can too. –> www.TheMoneyForLifeBook.com
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