I read a Globe and Mail Article today about how tough it will be to refinance one’s debt this year (Visa bills and lines of credit folded into a new mortgage) because the real estate values in places like Toronto and Vancouver are declining. That (and the new stress test one has to pass at 2% higher than the going mortgage rate) have put a crimp in a lot of people’s style.

It just further verifies the belief that Maria and I lived in a different galaxy long ago when we first bought a home. That was back in the bronze age when we still had pennies and paper one dollar bills.

Granted we were still a long way from retirement and we were working in places that had a pension plan. Pensions were seen as desirable benefits back then – not something the board of directors could use to screw the employees later in life. That said we didn’t pay as much attention to retirement planning as we did in paying the mortgage off. 15% interest rates will do that for you.

Even though we had climbed the real estate ladder a bit in the interim, we worked at it and after 10 years we were free and clear. We still had plenty of time to save after that – we even retired early although Freedom 55 wasn’t quite in our playbook. At least it wasn’t for me.

But I can never get my head around this refinance thing – even given the high prices for real estate and the low interest rates we’ve had for a decade now. The article said that a lot of refinancers take an additional 30 year period to pay the dam’ money back. If we had done something like that back in the 80s we’d have had at least 5 years of retirement in mortgage debt. Isn’t the whole point of the exercise to retire mortgage free?

I’ve always believed that borrowing is really just taking money from your future self. On a day when the spiritual side of me teaches that my future self is a lot closer to dust and ashes than anything else, it still doesn’t make sense to be borrowing money from it. Even if “it” is something that you are likely to find under the sofa.