Uncertainty

I'm still on an internal debate, whether I accept funding a trip to Mexico with my girlfriend and her three kids. Educational, cultural experience, living with a host family, all great stuff, but but but...

My financial position is comfortable, able to make sizable extra principle payments to my mortgage, enough to pay off a 30 year mortgage in 9 years with luck, and I've made it to year 4 so far. Biggest uncertainty is how much my ATM-5/30 will go up next fall, but I basically know the worst case, can increase by up to 2% every six months and capped at 10.75%. Even worst case (assuming I can continue paying it down as planned) I'll be paying less interest/month than when I started, spefically $937 the first month, and $578 now, could jum to $691 next summer, then to $823 after another year at a potential 10.75% peak.

It is amazing, whether I pay a low rate or high, my final payment barely changes by 2 months. Of course those two months are all extra interest, but "fast-tracking" mortgage payments may save money, but not time.

It is interesting also to consider interest costs. Basically for every $1 now that I spend, I add $0.31 to the end of my mortage. So a $5000 trip to Mexico now adds $1550 in interest payments, so the actual trip will cost $6550. Perhaps even that comparison is flawed, give money is worth less in 5 years. If inflation is 4%, then something like 17% inflation is "lost", and my $0.31 cost is really only $0.14. AND since I expect inflation and fuel prices to keep going up, perhaps this'll be a "dirt cheap" trip compared to future costs.

Silly extravagent thoughts by someone well off by any good measure. I mean it burns me up to imagine all the money wasted by so many people because they are not in a position (or inclination) to save first, spend second.

I have the LUXURY to worry about the economy simply because I have hope that I can strengthen my position against future hardship - NOT that I feel strong, but I figure there's no downside to SAVE-NOW (paying down debt=savings) and whatever shall be, shall be. Ultimately we all have to have some "blind faith" that our work now will be rewarded later, that the system is set up to reward savings.

I suppose I DO THINK that high inflation must be in our future, so perhaps dollars under the mattress (or a 0.5% savings account) isn't going to hold value to my work, but a house that I own debt free means my future cost of living will be lower.

And yet now I'm struggling to ask what money is worth. My girlfriend's kids will be largely grown by 2012. For myself, I hold little value in travel. There's too many in unmet needs around me to seriously entertain the idea that I can just throw money away for the privledge of owing another month's mortgage in 2012.

YET - 80% of the U.S. households make such decisions times TEN - spending now for promises later. Why do I hold debt in such contempt? It is curious since when I've loaned money to family or friends, I find myself feeling in LESS control than I do now BEING in debt. I mean a person in debt to me, if they know me at all, will know that I have no will power to enforce repayment, or very little while I feel strong financially. Mostly I feel like any money I might loan, if it takes more than a year to repay, that it might as well be a gift.

On a different side I do think about investments that may take longer to get payback on. AND investing in children is certainly a longer term investment, and one that is more of a gift, never expecting a direct payback, only an indirect one, hoping for an adult who will be capable in doing their own good for the world. Now THAT is real uncertainty, not that most kids don't succeed, but just to ask WHAT SORT of investments make sense. Is airtravel extravant or consciousness-expanding? Probably both, but are there cheaper ways to get the same result?

I suppose my biggest moral dilemma says this: Whatever benefits I WANT in life, I ought to believe others also have equal opportunities.

I might say I don't own a car myself BECAUSE I don't believe in the indefinite future that an average human being in the world can afford an automobile. But my reasoning isn't quite that nice. More I just don't feel overly empowered by a car, while a bike does empower, and buses too - It's nice to NOT OWN a vehicle myself, to not have to depend on strangers to tell me how many thousands of dollars the next repair bill will cost me and have no idea if I'm being exploited or not. Of course I COULD LEARN, but it pisses me off to think I should waste my time learning about things I don't want to depend on in the first place. I don't take cabs either - think they're sort of a ripoff, but at least they're small, and I'm glad for them as a last resort.

Mostly I will give in to spending money for someone else, letting my girlfriend take the responsibility on deciding value, and figure my only job is to adjust my budgeting for it. I mean there's nothing special ultimately about 2012. I mean perhaps I will lose my job that year and be glad for my debt-free house, but if my budget said I could pay by 2015, well, that'd be just as good a goal for all I know.

Truthfully, I don't expect I'll make it by 2012 as planned, or to the month at least. There'll always be more expenses than I like to admit. It's just good I have the flexibility. Paying down debt is savings, and unexpected expenses mean saving slower for a while. It's a good racket while it works. Well I'd better keep my job.

Of course others in weaker positions than me will make millions on their investments, while I'm just content to pay down an honest debt with honest work. My life is unfairly simple, but its as close to a guarantee as I could hope for.