As long as interest rates stay high, pay the minimum and invest the difference.

That's the idea, except that it is being done with an eye on the element of risk, which is so often forgotten by folks that want to play on-the-margin schemes. Paying extra on the mortgage is an extremely safe, guaranteed return on that investment (if that turns out not to be the case, then we have much bigger issues to deal with). Taking the same extra amount and investing it in an unsecured investment that will probably return substantially more but might lose value has to have a substantially higher likely return to offset that risk. Given that we are talking about something that has a major impact on our lives in retirement (which is pretty imminent for me), my tolerance for risk on this one is pretty much non-existent. Hence, I'm willing to let the funds set in an insured money-market account that returns more (right now it is paying 5.12% APR) and, if rates start going down, I might put it into as long a term CD as makes sense given the rate structure at that time.

Another factor in this is that I hit the 59.5 year age point in less than a month, at which point I can withdraw funds from my retirement accounts. So one option would be to pull enough funds out (taking tax issues into consideration) and augmenting the money market so that, as long as we pay the escrow amount into it each month, it will be adequate to pay off the mortgage in time (and that will have to be revisited as interest rates change). I can probably do something similar within the retirement accounts by finding a suitably secure investment. The money market that is attached to the account has basically zero return and is only useful as a holding account for cash between investment actions.

 

That's the idea, except that it is being done with an eye on the element of risk, which is so often forgotten by folks that want to play on-the-margin schemes. Paying extra on the mortgage is an extremely safe, guaranteed return on that investment (if that turns out not to be the case, then we have much bigger issues to deal with). Taking the same extra amount and investing it in an unsecured investment that will probably return substantially more but might lose value has to have a substantially higher likely return to offset that risk. Given that we are talking about something that has a major impact on our lives in retirement (which is pretty imminent for me), my tolerance for risk on this one is pretty much non-existent. Hence, I'm willing to let the funds set in an insured money-market account that returns more (right now it is paying 5.12% APR) and, if rates start going down, I might put it into as long a term CD as makes sense given the rate structure at that time.

Another factor in this is that I hit the 59.5 year age point in less than a month, at which point I can withdraw funds from my retirement accounts. So one option would be to pull enough funds out (taking tax issues into consideration) and augmenting the money market so that, as long as we pay the escrow amount into it each month, it will be adequate to pay off the mortgage in time (and that will have to be revisited as interest rates change). I can probably do something similar within the retirement accounts by finding a suitably secure investment. The money market that is attached to the account has basically zero return and is only useful as a holding account for cash between investment actions.

My comment was made with full knowledge that your current mortgage is at 2.5%, and there are plenty of places to sock your money that will at least beat that 2.5% and still be at least as safe as your risk tolerance will allow, whatever that may be.

The real danger is that many will say they will invest the difference, but never do, and end up spending the difference on luxuries instead. Then they wind up behind on all counts.

I paid off my low-interest-rate mortgage long ago. I almost envy your position, except that I can channel all my surplus cash into investments of my choice without worrying to make payments on the house (excepting taxes and insurance, of course, which together amount to a mortgage payment of not too long ago).

 

In the US we have always socialized the armed forces so the model clearly yields benefits. The school bus service and police too are socialized, we don't see people crying out to privatize the police, or finance the police through first responder insurance policies. They do want to privatize USPS and that is sadly the death knell for the service. Those who admire the idea of privatization of USPS should explain why they don't also want to privatize the navy for example.

These kinds of publicly financed services are real examples of "socialism" the armed services would degrade rapidly if it were being run for profit, with shareholders and a share price, the efficiency would drop, standards adherence would drop. In the UK Thatcher's admiration for Reaganomics led to privatization of many services and the result has been reduced quality, increased costs to the consumer, increased bureaucracy and so on.

There are countless studies showing how privatization benefits the investor not the users of the service, it benefits private wealth not the public. The armed forces are paid for by the public, we finance it, we own it, if it was sold off to private ownership it would pretty much cease to function, no longer would the national interest be the goal but maximum profit, they'd likely outsource the navy to China and the CEO would get a bonus for being an innovative corporate leader.

The knee-jerk "capitalists" decry the idea of publicly funded health care yet merrily support publicly funded armed service - yet each service is and should exist for the greater good of the American people. These are the kinds of ideas that most people should think of when they hear the term "socialism" instead they rant irrationally about "dictatorships" and "communism" and all the other scaremongering.

Ah yes, the classic mistake of believing anything done with public money has to be socialism.

No, socialism is not everything done with public money, it is an economic/political system based on fairness and equality.

Municipal systems such as the police are based on the principal of economies of scale not socialism.

Socialism is also supposed to be a classless system, so anyone that believes the military is a socialist system need a reality check because the military is neither based in equality or fairness.

The military is the most tiered system in existence, and what is so fair and equal about the lowest ranks being sent to the front while the upper ranks stay behind?

Again...the classic mistake of believing anything done with public money has to be socialism.

There are some "actual" examples of socialism in the US such as the public school system and rural electrification but the idea that everything done with public money is socialism is just absurd.

 

The real danger is that many will say they will invest the difference, but never do, and end up spending the difference on luxuries instead. Then they wind up behind on all counts.

Agreed (and I pointed out both of those things previously). While I've established a good track record of fiscal responsibility over the last three decades, it's not perfect. That's one of the reasons that I'm thinking about pulling out enough of the retirement funds to make a single deposit into the money market to ensure that the loan will be taken care of as long as I just pay the monthly expenses into it (which I can't claim that I've been good about). But, going forward, I can settle for making an annual distribution and deposit to always keep the account on track. I suspect that, at some point, I will decide that the peace of mind from being completely debt free will become worth more than the marginal income of playing this game. What it really comes down to is whether that peace of mind is worth giving up about $500/mo in extra income. For me, right now, that amount puts it on the bubble. If it were $100/mo, the mortgage would be paid off tomorrow. If it were $1000/mo, it would be a no-brainer the other way.

Since the decision to pay off the house (or pay down on it) is irreversible, I'm content to default to the status quo until such time that the peace-of-mind value rises enough to make the decision clear. The nice thing is being in a position in which I know that either route is more than "good enough".

I paid off my low-interest-rate mortgage long ago. I almost envy your position, except that I can channel all my surplus cash into investments of my choice without worrying to make payments on the house (excepting taxes and insurance, of course, which together amount to a mortgage payment of not too long ago).

While I've kept myself in a position so that I don't feel the stress that many mortgage holders do, even as I close in on retirement, I also know the extreme peace of mind that came from being completely and absolutely debt free (twice in my life, each for about five years before upgrading in home). The first time I paid off my house, back in about 2003, my household expenses (taxes, insurance, and utilities) amounted to just $250/mo and I was so used to living on rice and beans that I could have kept my current lifestyle working a minimum wage job if I had to. In fact, even with raising my lifestyle by what seemed like a very significant amount once the house was paid off, I accumulated $70k in my bank account without even trying to and that I used for the down payment and closing costs on the house on the mountain.

If I were to pay off this house today, I don't know that that would still be the case. My monthly escrow payment is now nearly $900 (taxes and insurance have both taken outrageous hikes in each of the last two years and I doubt the end is in sight). Also, I've got a family to support now. But we have enough equity already in this place that we could come close to selling it and clearing enough to downsize to a suitable retirement home for cash (possibly a townhome -- I do miss not having to deal with exterior maintenance) using little, if any, of our other funds. Downsizing would also have the huge benefit of forcing me to finally get rid of most of the useless crap that I've collected over the years -- I'm making headway, but it will probably take that kind of extreme motivation to force me to push through on it.

 

I tend to agree with that sentiment but there are too many people who don't understand what capitalism is and how it actually functions within the US economy and therefore gets the blame for things it is not responsible for and no credit for the things it is responsible for.

"Capitalism", just like many other "ism's", can easily run-away and degenerate into just plain greed! A serious example of that happening in my part of the world came about when the local non-profit hospital chain merged with a larger Publicly Traded hospital chain. The whole service changed from what I see. Of course that was to be expected, because according to the law, the responsibility of the management, including the board of directors, of every publicly traded business, is to the shareholders, not the customers.
Given that the law is clear on that point, why are folks surprised when suddenly every decision is based on a cost/profit evaluation?? And why did anybody not believe that it would happen????

 

As far as "socialism" goes, Margaret Thatcher so aptly described the main failing: "Sooner or later you run out of other people's money."
What this warning reminds us about is that clear thinking must always be applied. But it seldom is applied.

 

"Capitalism", just like many other "ism's", can easily run-away and degenerate into just plain greed! A serious example of that happening in my part of the world came about when the local non-profit hospital chain merged with a larger Publicly Traded hospital chain. The whole service changed from what I see. Of course that was to be expected, because according to the law, the responsibility of the management, including the board of directors, of every publicly traded business, is to the shareholders, not the customers.
Given that the law is clear on that point, why are folks surprised when suddenly every decision is based on a cost/profit evaluation?? And why did anybody not believe that it would happen????

Are you old enough to remember that doctors once had their own offices, and made house calls?

Ask yourself why that is no longer the case.

 

"Capitalism", just like many other "ism's", can easily run-away and degenerate into just plain greed! A serious example of that happening in my part of the world came about when the local non-profit hospital chain merged with a larger Publicly Traded hospital chain. The whole service changed from what I see. Of course that was to be expected, because according to the law, the responsibility of the management, including the board of directors, of every publicly traded business, is to the shareholders, not the customers.
Given that the law is clear on that point, why are folks surprised when suddenly every decision is based on a cost/profit evaluation?? And why did anybody not believe that it would happen????

Greed is a human condition, therefore any human system can be corrupted by greed.

 

There is nothing preventing privatization of all social services, security, law enforcement, military, prison, correctional services, fire departments, ambulance, garbage collection, rail transit, utilities, parkland, recreation, air and water, and even governments. That is the way the capitalist would rather have it.

 

Are you old enough to remember that doctors once had their own offices, and made house calls?

Ask yourself why that is no longer the case.

As a matter of facts, yes, we had at least one doctor house call for a younger member while I was rather young. AND, as late as high school, our family doctor had their own office.

 

Are you old enough to remember that doctors once had their own offices, and made house calls?

Ask yourself why that is no longer the case.

I definitely remember those days -- only a few house calls that I can remember, but most doctors were in private practice, usually as a partnership with a very small number of other doctors. Usually you had two to four doctors and one nurse, who often doubled as the admin staff.

But between liability exposure and exploding administrative costs associated with regulatory compliance and insurance billing procedures, it became nearly impossible for a small office to have the administrative staff that was adequately trained to know what needed to be done, get it done, and keep up with the constantly changing landscape. Many places turned to contracting out the admin and billing, but as those expenses continued to mount they had to have more clients than a small office could handle, so they started merging and that made them attractive to corporate entities that could bring those admin and billing functions back in house and keep the per-doctor costs down by having lots of doctors under the roof. By the same token, doctors could reduce their admin/billing overhead by a significant amount at the expense of giving up their autonomy.

 

I definitely remember those days -- only a few house calls that I can remember, but most doctors were in private practice, usually as a partnership with a very small number of other doctors. Usually you had two to four doctors and one nurse, who often doubled as the admin staff.

But between liability exposure and exploding administrative costs associated with regulatory compliance and insurance billing procedures, it became nearly impossible for a small office to have the administrative staff that was adequately trained to know what needed to be done, get it done, and keep up with the constantly changing landscape. Many places turned to contracting out the admin and billing, but as those expenses continued to mount they had to have more clients than a small office could handle, so they started merging and that made them attractive to corporate entities that could bring those admin and billing functions back in house and keep the per-doctor costs down by having lots of doctors under the roof. By the same token, doctors could reduce their admin/billing overhead by a significant amount at the expense of giving up their autonomy.

Thus, capitalism did not kill medicine.

If anything, it saved it from the administrative state -- a "feature" of our mixed economy -- the best it could.

 

Thus, capitalism did not kill medicine.

If anything, it saved it from the administrative state -- a "feature" of our mixed economy -- the best it could.

My personal conclusion is that the biggest culprit in our runaway health-care costs are the natural consequences of divorcing the person receiving the benefit from the person paying the bill. Prior to WWII, few employers offered any kind of health insurance coverage and most people that had insurance bought it directly. As a result, they were very aware and sensitive to the costs. So they primarily purchased policies that did just what insurance was supposed to do -- provide coverage for the unlikely, but extraordinarily expensive situations. They did not cover any routine expenses such as annual physicals are vaccinations. Most common procedures, like broken bones or an appendectomy, also weren't covered or with a significant co-pay. So most people never made a claim on their health insurance or did so only once every many years. Since providers were dealing directly with the people that were both receiving and paying for the bulk of their services, they had pressure to keep those costs reasonable and affordable. Even for major expenses covered by insurance, the usual practice was for patient to be billed directly and be responsible for payment, usually with sufficient time before payment was due for the patient to submit the bill to their insurance company and be reimbursed. So it was common for a person to receive the bill, submit it to the insurance company, wait for reimbursement to arrive, and then pay the provider (including their co-insurance amount, typically 20%). So even though the patient was only paying a fraction of the cost on the high-cost events, they were intimately involved in the billing and payment process and were thus very aware of the costs.

But, in WWII, the government imposed large scale wage freezes to prevent inflation, but still expected companies to greatly expand their workforces and production to meet wartime needs. So companies looked for ways to offer higher compensation to keep and attract workers and the wage freezes had overlooked the value of benefits (since benefits were traditionally pretty minimal). One of the first things they did was start offering employer-paid health insurance. The shifted this cost from being a personal expense paid by individuals that were very sensitive to how much of their own money was being spent, to it being an aggregated business expense that could simply be passed on to the customers and, since other employers were doing the same thing, there was no substantial competitive burden to be suffered as a result. By the end of the war, employer-provided health insurance was pretty much the norm, and as the need to expand benefits grew to continue expanding production throughout the war, the benefits provided by the policies expanded far beyond what most individuals would have been willing to pay the premium for.

But, for the most part, the patient-in-the-middle billing practices remained in place for the next few decades, and this kept some level of damper on costs. But as costs grew, the patient being involved in the billing process became an issue for everyone involved, so it became more and more commonplace for providers to bill insurers directly, leaving patients out of the loop, until you quickly got to the system where we are today in which insurance covers virtually everything, including routine annual expenses, and the patient has absolutely no sense of how much any of it costs. In fact, the providers largely have no idea how much the patient is going to be charged. They may know what they will charge for their specific service, but have no comprehension of the myriad other costs that are tacked on that typically raise the bill by more than an order of magnitude. Both providers and insurance carriers are fully aware of the dynamics involved and neither has any real incentive to constrain costs. Neither do employers, since it is still a business line-item expense that has little effect as long as their competitors costs are comparable to their own. Providers have obvious motivations to see costs grow without constraint. But so do insurance carriers. The profit that an insurance carrier can make without running afoul of regulators is primarily as a fraction of premiums paid. If you are a carrier with $100 million in premiums but you pay out 85% of that in coverage, you have a gross profit of $15 million. But if you allow costs to grow so that you now have $1 billion in premiums but pay out $95% of that in coverage, you have a gross profit of $50 million -- and the regulators are going to look at you much more favorably. If that increase in premium results from the cost of procedures increasing by an order of magnitude, your actual costs to administer them has no changed much at all, but your making three times the profit on one-third the profit margin. So you are going to lighthanded on doing anything that discourages high inflation, as long as it happens in a relatively smooth and long-term way.

The solution isn't to impose more government controls or inject a bunch of government money -- those will only make things worse in the long run because the basic problem remains. The solution is to shift the landscape so that the patients are once again more directly involved in the financial transaction.

The necessary pieces are already in place and work well -- they just are not sufficiently widespread to have any overall impact. Health Savings Accounts coupled with true High-Deductible Health Insurance plans put the patient right back in the driver's seat for the majority of their healthcare needs. And providers very much do respond to patients that walk in and tell them that they are effectively cash-pay. Back when we were on an HSA, I never got less than a 50% discount right off the top and it was usually between 75% and 90% (a few times even more). Look closely at your EOBs (Explanation of Benefits) and see what the original billed amount is and what the actual amount paid is -- you'll likely see that it tracks those percentages pretty closely, almost never less than a 50% discount and very often more than a 80% discount. That right there tells us how much providers are willing to accept for their services compared to what they routinely bill for them. But by bill 10x what they would be willing to accept, sometimes they hit the jackpot. This is particularly the case with automotive health coverage or out-of-network providers, which generally pays the bills in full until the coverage limits hits, since there is no pre-arranged schedule of discounts.

At the same time, read those financial billing agreement forms that you have to sign when you go someplace and that most people routinely don't glance at longer than it takes to find where to sign. They almost all state that if they bill your insurance and the claim is denied, that you agree to pay the full billed amount (not the 10% of that amount that they would have actually received if the claim had been paid), regardless of what their cash-pay price is.

 

https://www.sfgate.com/bayarea/article/laid-off-bay-area-tech-workers-struggle-jobs-19545761.php
Laid-off tech workers advised to sell plasma, personal belongings to survive

 

https://www.sfgate.com/bayarea/article/laid-off-bay-area-tech-workers-struggle-jobs-19545761.php
Laid-off tech workers advised to sell plasma, personal belongings to survive

I can relate to many of the points raised in the article. Although I can't claim to be "looking hard" ("hardly looking" is a FAR more accurate description), I noted quite some time ago that my age and experience has definitely been a hindrance in what job searching I've done. If I were looking for a management role, that might be different -- but I have very little management/supervisor experience and, frankly, I'm not interested in getting any. I also noted that having a PhD also immediately and dramatically reduced the number of responses I got to applications. Several others I have talked to have noticed the same thing, so that's something that people should consider before they choose to pursue one. Certainly in some fields (such as academia and research), a PhD is all-but a requirement, but in the broader industrial and commercial market, it is often seen as in indicator of someone that is overqualified, or too-narrowly qualified, or is likely to expect too high a salary.

People that choose to remain in an area like Silicon Valley long after they can no longer afford it because they don't want to leave or don't like the thought of working someplace else have a hard time getting much sympathy from me. I may be staunchly opposed to illegal immigration, but I do have sympathy and admiration for people that are willing to leave everything behind and undertake what are often physically arduous and dangerous travels to seek a better life, with no guarantees that it will happen.

 

Certainly there is a place for those immigrants willing and able to work. But a large number, it seems, may not have much marketable skill. And the really bad news here in the USA is that the cost of living is really quite high. Part of that is because prices do get bid up by demand, while a larger portion seems to be prices rising because of very intentional inflation. I have heard the explanations of why we need inflation, and they all smell like at least partial lies.
And my conclusion is that the problem is not actually CAPITALISM, but rather GREED! The bad news is that I see no cure for the greed of others. Controlling one's own greed is quite enough of a task.

 

....but rather GREED! The bad news is that I see no cure for the greed of others.

There is no one more greedy than a politician.

Government greed is insatiable.

 

Certainly there is a place for those immigrants willing and able to work. But a large number, it seems, may not have much marketable skill. And the really bad news here in the USA is that the cost of living is really quite high. Part of that is because prices do get bid up by demand, while a larger portion seems to be prices rising because of very intentional inflation. I have heard the explanations of why we need inflation, and they all smell like at least partial lies.
And my conclusion is that the problem is not actually CAPITALISM, but rather GREED! The bad news is that I see no cure for the greed of others. Controlling one's own greed is quite enough of a task.

I beg to differ. The real problem is not greed, but rather envy. It is the envious attitude of people that dislike or disapprove of other's success that, in their twisted and pathetic minds, justify stealing (for that's what it's called when you take something from someone in exchange for nothing) in the name of the "greater good" and "fair distribution".

Envy is the prime mover of people that try to vindicate their own failures by snuffing out other people's success.

 

There is no one more greedy than a politician.

Government greed is insatiable.

So how do we solve the greed problem?? It is challenging enough to run one's own life in a decent manner, and running other folks lives meets with quick resistance, plus that being a responsibility I do not want. So there are challenges.

 

So how do we solve the greed problem?

Freedom.