Here on maxoffshore.com, we are big with buying things with cash and cash only. If you can’t afford to pay latest new toy with cash, you shouldn’t buy it in the first place. Buying things on credit is a fast way to debt. You have to pay interests, unlike when you buy things with cash. With cash you can also negotiate better prices.
Buying things with cash gives you peace of mind, since you don’t own anything to anybody. On the contrary, when you buy things with credit, you are slave to somebody and it will not go away until you pay it off or bankrupt.
When you have enough cash, you will become more disciplined and will not buy stuff on the impulse. When you see money changing hands, you will know whether buying this specific thing was a good idea or not and will spend money more wisely.
You can use cash to invest and to grow you money nest. With no debt, you are free to do with your cash whatever you want. You are not tied down to pay off debt and interests, so you can use your existing money to make even more money.
You will be happier knowing that you don’t own anything to anybody. If you are not disciplined enough to use credit card wisely, simple solution is to cut up your credit cards. Save money aggressively, pay off debt asap and live cheap if you can’t afford high standard of living. In the long run all of this will pay off. When you have no debt, life is much better.
When it comes to paying off mortgage, we think it is a bad idea to get one in the first place. You tie yourself down for the next 20-30 years of slavery. We believe it is much better idea to save the money and just rent the place, until you have enough to buy yourself a home, or even better to invest money in alternative investments instead.
Now, if you really want to buy a house or apartment and you have an offer you simply can’t refuse, we suggest that you take mortgage of no longer than 5 years. Anything beyond 5 years is risky. Prices change, market change, it is a long period and a lot of uncertainty. With buying house or apartment with cash, you can also negotiate much better terms. Above all, you’ll never lose a night’s sleep over mortgage payments.
Be liquid all the time, don’t fall into a trap of getting mortgage in the first place, rent instead and invest your savings into investments which will bring you more value than house or apartment. Rather invest either in stock market or business.
One may argue, that mortgage is a great deal because you can deduct interest payments from your income and pay taxes on a reduced amount. Sure, there are some advantages, but nothing can compare with safe and better alternative investments, like stock market or business. Once you purchase a home with money, that money is gone for ever, unless you sell your real estate.
Don’t get into debt, pay off with cash as much as you can. It will give you a peace of mind, you will sleep better knowing you are not slave to anybody. If you really have to buy real estate, don’t take mortgage over 5 years. Instead of buying real estate rather consider investing money in stock market or business and rent.