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Being in debt isn't synonymous with being broke.
I could pay off my house tomorrow if I wanted, but financially it doesn’t make sense - so I keep the debt. That doesn’t mean my net worth is negative or that I don’t have disposable income.
Sorry, I'm dense. For me being in debt and paying off something like a loan on a house has the purpose of paying something you do not have the funds for to pay off in one go. Seeing as the longer you take paying it off, the more you actually pay since rates increase or whatever, depends on contract specififcs.
How is it not a smart thing for you? Is this about US credit rating system or something else.
Edit: thanks to all replies, not gonna spam thank yous to you all. Didn't consider those options.
My savings are invested in the stock market, and the returns I get from that are higher than the interest on my mortgage. If I liquidated my investments to pay off the house, the savings from not paying mortgage interest would still be less than what I’d make from the market over the same period. I’d rather use the profits from my investments to cover the mortgage interest - that way I still have money left over. If I did the opposite, I’d lose that extra money.
What would happen if stock market dives?
The value of my portfolio dips too, but I don’t actually lose anything unless I sell. I just hold and wait for prices to recover - as they always have so far. In fact, when the market drops I buy even more, because the same money gets me more shares. People don’t lose their savings because of a crash; they lose them because they panic and sell for less than they paid.
We're talking about an average over 30 years. The market will dip multiple times through that period, but it will likely average ~10% per year gains as it has for more than a century.
I meant more like something akin to the great depression, but I get the point, if you have a buffer to wait out bad times you can enjoy some extra money for less price