Anyone who reads my columns knows that I absolutely despise debt.
Some people argue that there is “good debt” (a mortgage or student loans) and “bad debt” (credit-card debt and payday loans). I disagree.
Debt is debt. It’s sometimes a necessary financial tool, but only when it’s used sparingly and paid off as soon as possible.
But is there ever a time when indebtedness is a fair trade-off for something you value?
That’s the question I was asked during a recent online discussion. My answer might surprise you.
“My wife and I have always been great savers,” a reader wrote. “We are debt-free even after finishing putting our two children through doctorate degrees two years ago. We hate debt, but we love our children. The two girls and their families have moved seven hours away, and we would like to be closer to them.”
The couple are also concerned that, as they get older and possibly need some caregiving help, living so far away will burden their children.
So they wanted to know whether they should move and take on a mortgage or stay where they are and be debt-free.
To move, the couple said, they estimate they will buy a home for about $300,000. They are in their mid-60s and retired, with a combined monthly retirement income of about $7,000 before taxes. They are able to make a $200,000 down payment.
“We always bought the smallest house on the block that met our needs, not our desires,” the reader added.
Before going any further, Donna Butts, executive director of Generations United, recommends that the couple talk to their daughters about their expectations.
“They don’t want to move closer thinking they will see the grandchildren or help with them more frequently if that isn’t also what the parents are thinking,” she said.
If everyone were thrilled about the possible relocation, the next issue would be: Can they afford the mortgage?
Using a Realtor.com mortgage calculator, I found that the principal and interest payment on a $100,000 loan at 2.99 percent would be about $961 if they opted for a 10-year fixed loan. Current interest rate trends for various mortgage types are automatically plugged into the calculator, which lets you input your home location and also which estimates your property tax and insurance payments. Using a Washington-area Zip code, the couple’s total cost would be $1,294, including principal, interest, taxes and insurance.
The couple didn’t provide any additional financial information, so I don’t know what assets or other major expenses they may have. I don’t know whether the $200,000 would come from the sale of a current home or whether they planned to pull the money out of their retirement savings. But based on what I do know, it appears they could handle a mortgage.
Then the issue turns on how much they value being debt-free. This is when personal finance becomes very personal.
“We are torn [between] our love for no debt and love for our children,” the reader said.
I would move.
As I told them, I would do whatever I could to avoid getting a mortgage, including searching again for a house or condo I could buy outright. But if they don’t want to rent, can’t or don’t want to move in with family, or they can’t find a cheaper home to meet even their modest needs, take on the mortgage.
As much as I hate debt and dream of one day being mortgage-free, I don’t want to hold on to money at the risk of losing the time living closer to my adult children and grandchildren.
“Generally it’s a great arrangement because all generations can help with caregiving across the life span, but even more, it means sharing family stories, history and experiences that help children and youth connect with their roots,” Butts said. “It supports what has been called the ‘grandparent advantage’ because younger generations benefit from the recycled knowledge and experience of elders, and elders are fulfilled helping launch the next generation.”
To further make her point, Butts referred to a Maya Angelou quote: “Today people are so disconnected that they feel they are blades of grass, but when they know who their grandparents and great-grandparents were, they become trees, they have roots, they can no longer be mowed down.”
By moving, the couple can leave a legacy that distance can prevent. If they stay put, they may have more money to pass on to their children and their children’s children. But if they move, they also have something else they can pass on — their presence. And as we know, money can’t buy time.
Write to Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or firstname.lastname@example.org. To read more, go to wapo.st/michelle-singletary.