Refinance, reinvest, and retire
I am coming to the point in my life when I am working toward more aggressive financial goals in order to secure my retirement. It is no longer enough for me to work and save and hope for the best. I need to have my money make money.
I typically read a few financial books each year and the most recent one gave me a kick in the pants to get moving. After reading “The Richest Man in Babylon” written by George Samuel Clason, I decided to take action. Two of the most impactful lessons in his stories that stood out to me were to fatten thy purse and make thy gold multiply. I was already investing and saving a large part of my income so how could I do even more?
I decided to take advantage of historically low interest rates to refinance my primary house, which will reduce my payment by about $800 per month and help secure my future. The refinance process went very smoothly and we closed using a notary/title agency at my kitchen table.
This monthly windfall will help give me the ability to build a portfolio of rental income properties. I know that some of you may be yelling at your screen incredulously because some schools of thought teach us to pay down debt as fast as possible, especially our primary residence. I look at it differently. I see the primary home as a highly illiquid asset and I have no interest in aggressively paying it off. I choose to trade interest payments for improved cash flow and opportunity. When I combine the monthly savings plus the time horizon of 20 years to retirement, I can grow my wealth far more than paying off my primary mortgage. The upside far outweighs the additional interest I will be paying over the term of the loan.
A wise man once said “If you think you own your home, stop paying property taxes and see what happens.”