RE: I Paid Off My House Today
Sure, the leverage could go the wrong way
Advanced financial calculations should factor in risk (and systemic, devastating risk as well). There's more to my story you can read here: Living on a Boat for Two Years Shaped My Life. My parents didn't respect debt and it bit them hard.
Be careful. Playing with debt is playing with fire. You're banking on the idea that you're smarter than the banks who get bailed out by governments. IMO, you'd be better off with no debt and using your income to work for you all the way, without risk. Right now, you're taking on the risk, not the banks, because if we hit another 2008 crisis they will do bank bail-ins instead of bail outs. People will become part owners in worthless banks. They will have "shares" that are worthless. It's some scary stuff. We should plan accordingly and for me and my family, being out of debt is the best move.
You are indeed absolutely right. Playing with debt is a dangerous game. When the next crisis hits - maybe bank bail-in, nuclear war, plague, south american default, new digital US dollar, (defaulting on the old one), or housing decline, those with too much debt will get slaughtered. In the back of my mind, I've always thought I had a plan, A,B,C,D and E if an asset class collapses, but I will re-evaluate how it would work out in a range of scenarios - and how I would feel. On the latter point I have some experience. I got divorced in 2008 and had to sell every asset I owned at the bottom of the market. House, car, pension fund, shares, gold - basically everything. Financially it hurt like hell, but I was happy as a lark as I had my work and could use the leverage of future salary, (in part that explains the 100% mortgage I now have), to re-leverage and get back to where I was before I gave it all away.
Well now I am back to where I was, l agree, it's a good time to pay off some of that debt. I will work out a plan. Hate to sell my BTC though.
I will read your other articles - e.g about the boat. There's a lot of your blogs I plan to read. I can see it is very high quality. You write well.
I think Bloomberg has a stress test function. You put in your asset allocation, and it tells you what would have happenned in virtually every crisis since the South Sea Bubble. It's going to be interesting to play with, but the obvious flaw is that the next crisis is a black swan and they have no data on that. Also, it can't tell you what happens to crypto, or these new things that everyone calls alternative investments.
Thanks for the compliments, I do appreciate it. Sounds like you've got a good plan and you're thinking things through. Good luck!