Friday, January 17, 2014

Why We Choose To Live Debt-Free

Last  weekend on one of the network programs here on WOSH I heard one of the hosts cite a new report claiming that paying off your mortgage early is a huge mistake.  The study recycled the financial myths of debt--"You can write off the interest to lower your taxes! (forgetting that you only get to deduct 28% of that when you are middle class) and  "You can use that money for so many other things!"  I smiled in my Jeep knowing that the host was absolutely dead wrong about everything that she was reading.

And the proof of that came this week as I participated in a conference call hosted by the liberal group Americans United For Change demanding an extension of long-term unemployment benefits.  Besides Wisconsin Congressman Ron Kind, an unemployed former career counselor from Three Lakes--Candice Hemmerling--was on the call............

click here for audio

Candice would go on to say that she is in her 50's--and is at risk of losing her home because she can no longer make the mortgage payments.  She also says that she has a Masters degree--so employers think that she is "overqualified" for any of the menial jobs available in her area.

Because it was not the setting for such a discussion, I held off on using the question and answer session to ask Candice why she committed so many financial mistakes in the period since losing her job--namely: failing to admit that there is a financial problem, continuing to pay for an expense that doesn't cover a basic need, and why her son can't help pay for his own schooling.  I also wanted to ask why she didn't have six months of expenses saved up before the layoff, why she was in her 50's and didn't have enough money in her retirement accounts to cover six months of expenses, and why--at her age--she still had an unpaid mortgage.  I can only assume that Candice was told by those in the education system that she needed to keep going to classes and get a better degree to "make herself more valuable" in the job market--all at the expense of establishing her own "safety net" to deal with hard times.

It's too bad that Candice wasn't available to call in to our weekend program immediately after the host read her report about how "foolish" it is to be completely debt-free.  While it may seem "smart" to pay a bank $6000 a year in interest so you can write off $1700 on your adjusted income--and while the stocks you could have bought gain an average of 8% a year compared to the 4% interest you pay on a mortgage--it's far more reassuring to know that you will never have to participate in a liberal conference call to beg the government for more help.

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