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Old 01-12-2015, 08:08 PM
 
Location: New York
1,096 posts, read 958,565 times
Reputation: 1067

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If your plan is to live off Social Security...you need a new plan...lol.

OP...
Emergency fund
Max out Roth IRA then 401k ~15% of your gross income.
Everything Extra goes towards the house.

Pay that mortgage off as fast as possible! Good luck and congrats for paying attention!

After no mortgage save some more...retire with a smile when YOU WANT! Social Security will be peanuts compared to your nest egg.

What people fail to factor with debt is the RISK factor. If something happens debt can ruin your life.
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Old 01-12-2015, 08:24 PM
 
Location: Boise, ID
8,043 posts, read 23,612,120 times
Reputation: 9329
Quote:
Originally Posted by ncole1 View Post
That's irrelevant to a decision on whether to own with or without a mortgage - the value of rent only matters if you are considering renting.
.
I was just giving an example of the value of today's dollar versus the value of past and future dollars. Why spend money today on a low interest rate debt if inflation is almost keeping up with that interest rate and I have the option to spend that money later?
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Old 01-12-2015, 08:28 PM
 
Location: Texas
43,434 posts, read 52,425,333 times
Reputation: 70406
Don't hurry to pay off a cheap loan.
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Old 01-12-2015, 08:32 PM
 
12,673 posts, read 9,911,944 times
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Quote:
Originally Posted by stan4 View Post
Don't hurry to pay off a cheap loan.
Not so simple. Sometimes it makes sense to do that in lieu of investing in bonds.
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Old 01-12-2015, 08:34 PM
 
Location: New York
1,096 posts, read 958,565 times
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Quote:
Originally Posted by ncole1 View Post
Not so simple. Sometimes it makes sense to do that in lieu of investing in bonds.
correct...you wouldn't borrow to invest.
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Old 01-12-2015, 08:35 PM
 
12,673 posts, read 9,911,944 times
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Quote:
Originally Posted by Lacerta View Post
I was just giving an example of the value of today's dollar versus the value of past and future dollars. Why spend money today on a low interest rate debt if inflation is almost keeping up with that interest rate and I have the option to spend that money later?
Inflation is only relevant if the alternative to paying down the mortgage is to spend the money. If the alternative is investing, then you only care about the relation between the two rates (return vs. mortgage rate). Adjust them both for inflation, or adjust neither, the difference between the two rates is the same either way. Inflation cancels out (do the math).
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Old 01-12-2015, 08:37 PM
 
Location: Texas
43,434 posts, read 52,425,333 times
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Quote:
Originally Posted by ncole1 View Post
Not so simple. Sometimes it makes sense to do that in lieu of investing in bonds.
Who said anything about bonds?

Why would you hurry to pay off a cheap loan?
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Old 01-12-2015, 08:38 PM
 
5,121 posts, read 5,533,775 times
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Quote:
Originally Posted by dedratermi View Post
I think it depends on how much you already have saved for retirement. If you are already on track, and the money you are talking about is truly "extra", then in my opinion it makes sense to pay down the mortgage. The stock market is at an all-time high so you have to ask yourself whether you want to invest "extra" in this current environment, or if it makes more sense to get the guaranteed 3-4% return which comes with mortgage prepayment. I'm actually in this exact same situation and for me personally, it makes more sense to prepay the mortgage, for now. If the stock market takes a 20% dump this year, then I might re-evaluate things :-)
I think I am on track... at least, when I use online calculators they say I am. I've been saving for retirement since my first job out of college and I currently save 16% towards retirement.
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Old 01-12-2015, 08:39 PM
 
Location: New York
1,096 posts, read 958,565 times
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Quote:
Originally Posted by jillabean View Post
I think I am on track... at least, when I use online calculators they say I am. I've been saving for retirement since my first job out of college and I currently save 16% towards retirement.
Great job! Keep it up!
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Old 01-12-2015, 08:42 PM
 
12,673 posts, read 9,911,944 times
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Quote:
Originally Posted by stan4 View Post
Who said anything about bonds?

Why would you hurry to pay off a cheap loan?
The simple answer is "to save money on interest".

The more complex answer is that when you do that, you are forgoing other uses of the money, but if you otherwise would put the money in a mix of assets (e.g. stocks and bonds), then each asset individually must be a better choice than mortgage prepayment in order for it to make sense to buy it rather than using that portion of your funds to pay down the mortgage.
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