I Ain't Rich Folk

I got into a good exchange with a co-worker at lunch yesterday, who effectively told me how utterly ridiculous it is to be paying down on my mortgage.

He indicated that with falling housal unit values, with interest rates in the dirt, and with interest tax deductible, it makes no sense to pay it down -- leverage it with your down payment, write off the taxes, and invest what extra principal you would be paying into stocks or other equities that earn more than the cost of mortgage interest. He indicated how wasteful my money is locked up into housal unit equity that can't be invested in anything else.

That sounds good on your computer screen, doesn't it? It almost makes sense -- use someone else's money (the bank's) to buy 85% of a house and gain 100% of the housal unit equity increase on your 15%. Borrow cheaply (say, at 4.75%) and write off the interest, while investing all your other monies into Vietnamese and Chinese startups and other emerging companies and earn 25%.

I suppose this is why I ain't rich folk....just someone who in 10 months will have his home paid for...