Brother (DR55) has just explained more of his financial woes. I understand the problem he is in, but it is really hard to advise him. I've never been in his situation, although I've heard the debate. Do you pay off your house, or put the money where it will earn more, even at risk?

MD and I approach our mortgage by PAYING IT OFF. We have a good, not great, rate, renegotiated the ARM at a lower rate after the PMI limit was reached, and then PAID IT DOWN. Top priority.

Brother, 55, has no savings and 4 kids with an expensive divorce settlement. So, he bought a fixer upper house, after 5 years the appraisal was twice what he paid, so he took out a second mortage against the new value and put the cash into commodoties. But he has two full time jobs, and doesn't have time to do the day/minute trading required, and has LOST the money. Worse, he still sees the value of the house as equity he can retire on, and is having difficulty seeing that he has no equity if he has already taken out and spent the money. If he sells the house now, he will BREAK EVEN, not double his investment. No retirement, no savings, he was hoping for a magic bullet, and he took one instead.

I DO understand the thought process of using equity to invest the money in a higher yield plan, but higher yields are usually higher risk. I'm a strong believer in truly evaluating the risk you CAN ABSORB, not just that you need to be able to absorb.

So, now, he wants to keep trading, $20K down again, to regain his money. To me, he's gambling straight up, as he CANNOT afford the risk, no matter how great his need.

MD is flat out horrified. He doesn't want to bail DR55 out just to watch him sink again. DR55 is POSITIVE he can and should reinvest, and to pick himself out of the dumps he bought a new Bowflex and some power tools on credit. ACK!

I'm staying out for now, but he needs some supportive words, and I'm all out. He's jealous of my retirement, yet I'm the one looking for the $10 rebate on my new mixer! Do people actually win the equity game?