Debt-Free Is the Way to Be—Eventually

Although debt has its place, I'm not among those who believe that it's always better to use “other people's money.” These folks advocate having a mortgage as long as you live because you can almost always invest the money at a higher rate of return than you're paying.

That may be true, but there's a strong psychological advantage to being beholden to no lender in retirement, when your income will likely be fixed and your ability to survive financial setbacks may be lessened. Knowing that their house is paid for helps a lot of older folks sleep soundly at night.