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Realty Check: Yes, You Too Will Get Old Someday...
June 09, 2008 5:06 PM
And when you do, you'll want your house paid off.
To me, that's the greatest lesson to take away from unseemly story of Ed McMahon. But it was a lesson that smacked me upside the head back when I was a local reporter in Baltimore in the late '80s and early '90s. I did a story about a feisty old lady named Emily Holloway who, with her super cute mutt Buddy, took her cameras down some of Baltimore's scummiest alleys and up some of Charm City's most elegant boulevards, to document the city. After airing her story, I got to know Emily pretty well. Maybe too well, because I learned she was having financial problems and started helping pay her bills.
See, Emily waited until she was in her 60s to buy a house – incredibly she was a renter 'til then. So there she was in her 70s, still paying a mortgage. She was in constant fear of having her heat and utilities and phone disconnected... Her friends were pitching in to make sure that didn't happen, and I joined them. Got a few of my friends to donate their time and money as well. (She was even getting film and developing supplies from one of the great a photojournalists at the Baltimore Sun. What can I say? She was compelling!) Through some quirk in the Social Security system Emily was only getting a little over $400 a month -- barely enough to cover her mortgage, certainly not enough for utilities. She made a little extra hanging her extraordinary photographs on the fence at Johns Hopkins University and selling them.
In 1992, I moved to Dallas for a new job, the city where my father was raised and where my grandmother still lived. She was in her 80s, still living alone in her own house, and, compared with Emily, she was rich. She wasn't really – Grandmama Brown had spent her life catering small luncheons for the grandees of The Big D, including Stanley Marcus of Neiman Marcus fame. But she sure didn’t get rich from that. No, she was sitting pretty because her house was paid off (and Texas abates taxes for the elderly), so Grandmama Brown's $720 a month Social Security check covered all her expenses, with enough left over to tithe ten percent to her beloved church. (Actually, "left over" is the wrong term – she paid that first!)
Emily's situation scared me – who wants to be well past their working years, still struggling to pay for the roof over their head? Who wants to depend on virtual strangers to keep the lights and heat on?
The average American moves every seven years... Okay, so your job or other life events keep you on the move – but can't you have that one Forever House? The one you can always return to. Maybe you rent it for a few years while real life carries on. But there's peace of mind knowing that, someday, you can go home again.
And when you do, what a relief to know that you'll have a FREE (well, almost free) place to call your own.
P.S. Neither Grandmama Brown nor Emily is with us anymore, but their life lessons live on...
-Vicki Mabrey
June 9, 2008 | Permalink | User Comments (7)
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When my wife and I married at the age of 26 we purchased our first house. We opted for a 15 year mortage, even though everyone advised us not to.
We paid off that house in less than 15 years and have had no mortgage for the past 10 years.
It can be done, but most people don't have the discipline.
Posted by: jack | Jun 9, 2008 5:35:53 PM
Today many are living beyond their means.
re mortgaging from past mistakes, like credit cards, still was life beyond their means.
I have seen people buy a new home, all new furniture, a new car, with a pay check that could barely make one payment. Let alone a list of payments.
The new Bankruptcy laws left many with out an escape clause.
it goes on in every level of society, someone yelling they are getting their utlities turned off, and they have a cell phone and cable and the internet.(all entertainment and not needed to live)
Seems many have never had someone to teach them the value of money. That you pay your bills before buying anything, and the route to all evils CREDIT CARDS.
Of course this is the me generation, I want it now, I want it all, and do not care how I have to get it. Me, Me, Me.
Maybe this is a wake up call for America to get back to basics.
A days work for an honest wage. The value of money. Don't spend what you don't have. Don't buy new until you need to. Read what you sign.
If it sounds to good to be true, then it is to good to be true.
Posted by: seah | Jun 9, 2008 5:36:56 PM
Jack,
Great advice from both Jack and Seah... Thanks for your posts.
Question for you, Jack: Why do you say "It can be done, but most people don't have the discipline"?
Why does it require discipline? Where do people go wrong?
And do most people reach retirement with a mortgage-free house??
Posted by: Vicki Mabrey | Jun 9, 2008 6:38:52 PM
I guess I have a different prospective. My wife and I never had kids, both our families are dead except for a half brother of mine that I see every twenty years or so. As we move into our sixies I don't see a great advantage to not having a mortgage. Who are we going to leave the paid off house to? I'd rather have the equity now when I can use it rather than as a gift to the state after my death. So, I'll probably refinance my existing mortgage at some point and use the money to buy gas or something.
Posted by: JR | Jun 9, 2008 7:19:38 PM
P.S. We both retired at 50 by the way, something we would NOT have been able to do if we had funneled our savings into the house payment rather than the stock market. The market returns thru the 90's paid well above the 6% interest the house payment runs.
Posted by: JR | Jun 9, 2008 7:23:18 PM
In Mr. McMann problem, he was a sidekick to one of the wealthest men in America, he can not try to keep buying trophy wives and exspect to have money, he is a good example of "there is no fool like and old fool".
Posted by: evonne waldrum | Jun 9, 2008 7:23:19 PM
JR is right on a few counts here. Although paying off the home is nice, the best investment is generally limiting your tax exposure. If you are not hit by the AMT, a mortgage is not necessarily a bad thing and you can use the extra money to invest in other things.
Posted by: MIguy | Jun 9, 2008 10:53:30 PM
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