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Comment by rsynnott | Hacker News Reader

I always find these ‘optimise your net worth’ posts quite strange, especially in the context of working for FAANGs/ Unicorns where generally pay for software engineers is very, very high anyway. “I have more money that I need now, but if I’d done different thing ten years ago I’d have even more money than I need” is a weird thing to worry about.

I say this as someone who now works for a ‘unicorn’ and previously worked in a number of places that the author might consider dead end. I have some regrets about one previous job in particular, but mostly around stress it caused me at the time, not impact on my net worth. And, certainly, job hopping every couple of years seems like no life.

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Eventually the party will end and software will face the same comp as other engineering disciplines.

Make money while you can, for it may already be 5am.

The question is when will that be, I need to time my exit from the field.

I felt like the article was more about optimizing your net self than optimizing your net worth. Subjects like complacency, (over) loyalty, learning are focused around making sure one is taking the opportunity to actualize, grow.

The question of why & for what is a good one, & we see various forms of these doubts throughout comments here. I think everyone ultimately had to do some personal development, define their own arch of progress that they are shooting for, build their own personal mythology that pushes them forward, or not (exist & be merry). The named dimensions, accomplishment, growth, impact, challenge, community seem like good things to keep an eye on to assess whether we are chasing better versions of ourselves, no matter what end goal orientation you want, be it mastery or merely money.

It would be nice if I didn’t have to worry about a mortgage any more. It’ll be a loooong time before I have more money than I need.

If I may offer advice - the math is against you, a $150k home loan over 30 years (+tax, insurance) is usually well over $300k at the end of the road. If you can (a) ensure your loan has a "all extra payments to principal, not interest" loan and (b) overpay every single month as much as you can, even shaving 10 years off that time frame will net you a lot back in your pocket to invest and make money on it. Even an extra $100/mo if that's all you can manage - pay down that principal as fast as you can to reduce the interest owed on that principal.

I strongly disagree with the way you paint this - especially the irrational “the math is against you”.

if given someone who unjudiciously spends money, then I agree that paying off a house is a fantastic way to save (versus fancy car, excessive holidays). But this is a psychological battle, and has relatively little to do with finance.

Critically, many people have very little diversification and instead they only have two financial instruments: their job and their home. Investing money in a third instrument (equivalant to retirement savings?) instead of paying off principal should make sense if expected returns are similar to mortgage rates.

For those that have the skill and strength to invest carefully, the equation simplifies down to comparing your mortgage rate versus your expected investment returns. If investment returns exceed interest costs, then not paying principal and instead investing, is the prudent thing to do. There are other life circumstances that affect expected returns e.g. age and capacity to deal with market volatility.

The cliché that you should pay off mortgage principal before anything else is mindless, and may come from the past when interest rates were higher?

> ...especially the irrational “the math is against you”

nod I did not say what was in my brain which I followed up in another comment; it's all about time scale - if your plan is meager (+$100/mo) you only shave 5y off your final loan cost, which could probably be beat with a mutual fund instead. If your plan is aggressive (pay off in 5y) the return on investment for the following 25y using the full "mortgage payment" works out (money makes money) - but you must be disciplined and determined.

Edit: also just to share, I completely underestimated the reduction in cost of living which happened when I moved from a location where houses were very expensive to somewhere much more modest ($$$) but same type of community (nice street, nice neighbors, low crime, etc.). I ended up saving a lot of extra money by accident in just regular life things which I was able to roll over into the extra payoffs. I feel this accident in my math helped work in my favour very significantly to my overall plan, it took me a bit of "where is this extra money coming from?" reflection to realize my initial mistake in the plan. This could of course cut both ways, should you move into a more expensive community with a higher cost of living in your new house.

this doesn't really track with the rock bottom interest rates we have right now

> even shaving 10 years off that time frame will net you a lot back in your pocket to invest and make money on it

what about just investing it in the first place instead of paying down extra on the mortgage?

why pay extra on 3% (or less!) debt to free up cash flow to use for some ~6-10% investment when you can just take the extra from step 1 and skip right to step 2

Just paid off a large chunk of mortgage recently. Monthly payments are now under $500 a month.

It possibly would have been better long term to invest it but the peace of mind a low monthly payment brings is really nice.

If I can gather another largish chunk of money I’ll definitely be looking to get rid of the mortgage completely.

While it might not have been the best long term move you never know what the future will bring and also I think having that feeling of freedom right now counts for a lot too.

> ...but the peace of mind a low monthly payment brings is really nice.

+1, and if you've ever been evicted from a rental/lease for capricious reasons dreamed up by a landlord who just wants you out so they can raise the rent, the peace of mind of "I can't be kicked out of this house, and nobody can take it away from me for failure to make a mortgage payment" is part of my life experience and feelings. "No HOA" was a hard requirement when I was house shopping.

You're not comparing like risks. The risk-free/very low risk rate of return is probably more in 2-3% range right now.

On the other hand, interest rates a low right now, so you could also invest that extra $100/month, and come out ahead.

Maybe just before the election isn't the best time to invest though.

This is bad advice. The $300k doesn’t look so bad when compared to the compounded gains those extra payments would get if they were invested instead.

It depends on how aggressive you want to be - I did a 30y loan and paid off at 5y by just sacrificing a lot to the math. The math was it would take +7 more years investing the "mortgage" to reach even (so 12y, 3y less than a 15y loan with far far less interest due) and I compounded that much more month over month during those +7 years, leaving me at the end of 12 years with a "free house" and a lot more month over month to keep investing with a nice reserve. I realize that's extremely aggressive and perhaps not possible by many people, I started with enough in reserves to be able to make it work.

IF you paid off a house in 5 years, you bought way less house than you could afford. Almost no one in America lives with that level of income to expense (as income usually scales with cost of living). Beyond that - unless you got some crazy predatory loan, you should be able to get a loan that will always be less than market returns (averaged over the years) even after taxes (you also get mortgage interest deduction when you have a loan). Rates today are now below 3% and with the economy booming - they were still frequently below 4%.

Home ownership (especially for $500k+) is heavily subsidized in the USA.

> IF you paid off a house in 5 years, you bought way less house than you could afford.

Of course I did, that's the whole point to me. Moving to a location with a nice quality/standard of living with housing available far below my income so that it's not a financial burden. Everyone has a different goal - a small, modest house in a nice place to live is all many of us ask. And not being in debt.

> Home ownership (especially for $500k+) is heavily subsidized in the USA

A really nice house (nicer than mine for sure, even a brand new build) here is 250k. 500k buys a lot of house here (miniature mansions in some places), there are plenty of nice places to live in the USA for 150-250k. I just checked Zillow, where I grew up half way across the country (where parents still live) is the same prices as here. Not everyone lives in an overly expensive housing market or wants a massively large house/land.

if they're invested. investing takes time, and if your job/career is on a natural rising curve, sinking time in the job to advance faster will gain greater returns, especially if you and the job market can stay in the "switch every two years for 15% pay increase" zone, very hard to beat that unless one is consistently very lucky all the time with investment, at which point it's better to fire yourself and start investing other people money as a job anyway.

Not this year.

or put an extra $100/mo in an investment with the growth rate great than mortgage rate

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