Book Review: Ordinary People, Extraordinary Wealth

Book Review: Ordinary People, Extraordinary Wealth February 24, 2008

Posted by BDO in Multimedia, Reviews.
Tags: book, extraordinary, finance, ordinary, people, review, success, wealth
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Ordinary People, Extraordinary Wealth by Ric Edelman has a lot of advance ideas about securing your future with investing. It was a great read and very user friendly, but not really the place for this forum.

The biggest news I learned coming out this book was the idea of holding onto a mortgage (debt) instead of paying it off. The author recommends putting more money into investments, vice paying off the mortgage. Mr. Edelman points out that given how the current tax code is arranged, your mortgage interest is deductible which makes it negligible compared to the amount of money you can make in many other investment products, i.e. stocks or bonds. Also, given the fact that once you pay down more principle on your home, you will not be able to see that money unless you take out a home equity loan, (debt) or sell the house; either is a very difficult decision. This difficult decision in turn tempts many people of going to other forms of quick cash, like credit cards which gets us back into our slavery of debt.

The author shows that most investment products are much more liquid for those times you need the money and earn a higher interest rate than your deductible mortgage. Therefore, by the numbers, it makes sense to not pay off your mortgage.

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In the end, it is your decision. You can have the piece of mind that the house is paid off, or the extra cash from earned interest for emergencies or retirement.

What have you decided as far as paying off your mortgage?

Have you seen success in paying it off? Have you seen success in earning interest in your investments?