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Old 07-11-2010, 12:08 PM
 
Location: Grove City, Ohio
10,133 posts, read 12,385,819 times
Reputation: 13971

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Quote:
Originally Posted by TuborgP View Post
You reach a point where that security becomes important.
No sure things in life and while you may be high income now what about two years from now much less 30 years?

The only thing you can be sure of is you will get older and the day will come when you can no longer work.
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Old 07-11-2010, 12:27 PM
 
48,516 posts, read 83,932,349 times
Reputation: 18050
Without crunching allthe numners and not knowing your sitaution ;no one can make this decision for you. Many are paying off because they can and they are not earning the money they were on investments especailly being more conservative in thosee investment close to retirement.Apparently your not confident your in a postio to do so .
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Old 07-12-2010, 12:06 AM
 
5,702 posts, read 16,190,575 times
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My mother and uncle are the same age. My mother has a mortgage and my uncle does not. He paid his home off. Every tax year my mom uses her home as a deduction and gets a little back. My uncle owes every year. Their tax attorney said it was better to have something to deduct.
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Old 07-12-2010, 01:54 AM
 
71,563 posts, read 71,730,589 times
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thats rediculious logic ,no its not better to have something to deduct...it means your paying out 4 bucks and maybe getting back 1 of them..... its better to pay out nothing ....

people come up with this deduction stuff is good without stopping to think its no different then paying any other expense like utilities, taxes, repairs etc.

only difference is you get a rebate of a bit, its not saving you taxes on your other income.

no matter how you slice it to get the deduction you had to spend money over and above the price of the house and its a bill.

just ask yourself after the deduction if your piggy bank is richer or poorer after you pay the bill and get the deduction... its poorer!

Last edited by mathjak107; 07-12-2010 at 02:56 AM..
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Old 07-12-2010, 08:29 AM
 
8,197 posts, read 11,913,206 times
Reputation: 17979
Quote:
Originally Posted by Felix1177 View Post
I believe in paying off the mortgage ASAP. The tax deduction that you get from the mortgage interest is one of the dumbest excuses I have ever heard. You give the bank $10,000 a year in interest so that you don't give the government $2,500 in taxes. 5.85% may sound low, but multiply it by 30 years and you get to pay the bank... here it comes... wait for it... 175.5% plus the original loan (100%) = 275.5% Go ahead, pay nearly 3X the house and see if you really get ahead. "I will gladly pay your $2,500 in taxes once your check for $10,000 clears in my account." - Dave Ramsey
Quote:
Originally Posted by mathjak107 View Post
just ask yourself after the deduction if your piggy bank is richer or poorer after you pay the bill and get the deduction... its poorer!
Not necessarily. It depends what you did with the principal on which the loan is based. That's the part that everyone is leaving out. (Especially that idiotic comment from Dave Ramsey. It's not a simple question of giving him $10,000 and getting back $2,500.)

At a current mortgage rate of about 4%, we're talking about a loan of $250,000 to generate $10,000 in interest. Or conversely, you turning over a quarter of a million dollars to the bank in order to save $10,000 in interest charges (minus the $2500 - $4000 you'll save in taxes depending on your bracket and whether you pay state income taxes).

If you want to give me a quarter of a million dollars for 30 years, I'm pretty confident that I can do better than a 4% ROI over that period of time.
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Old 07-12-2010, 09:25 AM
 
71,563 posts, read 71,730,589 times
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they are not talking about a specific return on the money they didnt pay in .they are merely refering to the deduction itself.

it goes without saying if you can invest at a higher rate its a no brainer but thats not what they are refering to..they are talking about the fact one of them gets a tax refund and one dosnt so the one that does is better off with the deduction because they get money back..... his mom may be investing nothing ,just paying the interest on the loan for all we know.

makes no sense ,the statement about the deduction being a benefit by itself.... its not.... its an expense.....
whether you make more then the expense with the borrowed money is a seperate issue in this case.

Last edited by mathjak107; 07-12-2010 at 09:50 AM..
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Old 07-12-2010, 10:10 AM
 
8,197 posts, read 11,913,206 times
Reputation: 17979
Quote:
Originally Posted by mathjak107 View Post
they are not talking about a specific return on the money they didnt pay in .they are merely refering to the deduction itself.

it goes without saying if you can invest at a higher rate its a no brainer but thats not what they are refering to..they are talking about the fact one of them gets a tax refund and one dosnt so the one that does is better off with the deduction because they get money back..... his mom may be investing nothing ,just paying the interest on the loan for all we know.

makes no sense ,the statement about the deduction being a benefit by itself.... its not.... its an expense.....
whether you make more then the expense with the borrowed money is a seperate issue in this case.
I wasn't referring to that one post about the guy's mother & uncle (which I agree with you is ridiculous). I was responding to the general discussion on this thread by those advocating for having no mortgage (including the Dave Ramsey comment in the other post I quoted) that it is a given that it is stupid to pay $4 in interest to get $1 back. That line of thinking completely ignores what one does with the principal money still in hand.
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Old 07-12-2010, 10:12 AM
 
71,563 posts, read 71,730,589 times
Reputation: 49156
we are in agreement there....
i myself didnt want a mortgage...i could have done better but at this point i didnt want to owe anything so we paid cash for the house 3 years ago .. i didnt want to increase the risk level of my portfolio by having more money on the table and when i seperated with my old company there was a certain level of comfort that if i didnt find another job we would have moved to pa to the house and everything was paid for.

i got to tell you that feeling alone was worth alot... but non the less most folks at this point can get returns that exceed the interest they will pay.

its all just a matter of whether you have to, want to or need to....
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Old 07-12-2010, 10:45 AM
 
29,779 posts, read 34,867,277 times
Reputation: 11705
Quote:
Originally Posted by nicet4 View Post
No sure things in life and while you may be high income now what about two years from now much less 30 years?

The only thing you can be sure of is you will get older and the day will come when you can no longer work.
Already retired and locked into place
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