I reckon I'm pretty smart about technical matters, and know as much as anyone about interest rates and basic finances, but I also know what I don't know. My dad is an engineer also and way smarter than me and I've seen him make some poor financial decisions. Because of that my wife and I have had a fee only financial advisor working with me for coming on 15 years, and he's really helped us with retirement planning, taxes and the like. I've taken his advice on nearly everything except real estate.

When we first started working with him he was adamant that we buy a bigger house. "It's a hedge against inflation." The reason is that he has a formula, basic percentages of the optimum balance of your portfolio, depending on income, aversion to risk, and other factors. We only took his advice partially- instead of a larger home we built a second, vacation home about two hours away. My 'cabin in the mountains" has been much more enjoyable than living in some McMansion somewhere, so much so that we're looking to retire there as soon as possible. (The technical advisor to his association is Burt Whitehead, and he's written some easy-reading books for us lay folk.)

The other thing that we haven't been ready to accept is the value of keeping a mortgage after you retire. Shouldn't the goal be to own your home outright so you're not paying the bank monthly?

I understood the "hedge" part of the equation quite well. During times of inflation, real estate values increase, much more so that the interest rate on savings. What I didn't understand was the value of a mortgage as the real hedge against inflation.

Two weeks ago it finally hit me. If the value of the dollar goes into the toilet, my cash savings is worthless, but so is the value of my mortgage. I can simply use the cash to pay back the loan.

Therefore it is financially wise to have more debt than cash, CDs, savings, or other similar investments.