Comments on Wisdom Steps 101 ... Be Weird...Be Debt Free: Why You Should Pay Your Mortgage Off Early

For me, I can't wait to stop paying my $1800.00 pe...

2009-05-08T14:57:00.000-05:00

For me, I can't wait to stop paying my $1800.00 per month, principle and interest. The other portion that is taxes and insurance not included in the $1800 per month, will continue, at about $400 per month, probably forever.

What could I do with $1800 per month? Ahhh, I'll give 1/4 of it, or $5,400 to the government in taxes.

That leaves $16,200 per year, in my pocket! You'll never convince me not to pay off my mortgage early.

Oh, banks, yeah, they'll lend it all right, to WHOM? A bunch of folks who shouldn't have gotten a mortgage to begin with, and now, me the single who rakes in $111K per year GROSS, are having to bail OUT??? No, thanks!

Let's see, $16,200 per year is about $1,350 per month....save up that for a few months, and me and The Prince of Thrift are going on a cruise!!!...now that I am single again.

LOL

HS, I would rather keep the money myself, like Bec...

2009-05-07T18:58:00.000-05:00

HS, I would rather keep the money myself, like Becky said. In so doing, the Government might get a another 28 cents or whatever my tax bracket is, but I keep 72 cents. In the end I am ahead, then giving the bank that 28 cents.

Then again, by keeping it, I can then donate it to charity and still get the same deduction that I would have, from the mortgage. What a better use of my money. At least in my mind.

Thanks for the encouragement Becky. Lev - Truum...

2009-05-07T18:54:00.000-05:00

Thanks for the encouragement Becky.

Lev - Truump addressed your argument in his article to. Very interesting reading.

Joe Taxpayer - I agree. I even mentioned that in my post, in passing, that I was surprised he took that position, seeing the massive amount of debt he takes on.

I also am concerned, by one of his businesses, the only publicly traded one, having filed bankruptcy several times. What is it now? 3 times?

Still he has some pearls of wisdom, and I would love to meet him one day. Maybe even land an interview with him, for this blog. Try to get to know the man behind the persona.

There's a sequence that makes sense: Deposit to 40...

2009-05-07T16:41:00.000-05:00

There's a sequence that makes sense:
Deposit to 401(k) at least to get all company match.
Pay off all Credit Card debt.
Have emergency account properly funded.
Decide whether prepaying is right for you.

Most people are better off doing just that, because while, in theory, the market should return more than the mortgage rate, the reality is that most people can't stomach the market swings and buy high/sell low. So, the guaranteed 5% return is better than the chance to achieve a higher return. I do find it crazy when a client brags that's he's prepaying, but I see he has $10K in CC debt at 18%. The interest deduction is the most discussed aspect of this that just confuses the issue. I agree with Lev's remark. By the way, the only reason Trump is rich is due to his huge debt decades ago, he owed so much the banks negotiated with him. He's not an example of anything positive as far as I am concerned.

The mortgage interest deduction alone is a silly o...

2009-05-07T15:35:00.000-05:00

The mortgage interest deduction alone is a silly objection. To determine whether to pay the mortgage off early you should estimate and compare two numbers:
A = the amount you save by paying it off early.
B = the amount you get by investing the extra payments instead. The answer will depend on individual circumstances, not on what multi-millionaires think.

I would rather keep that money in my pocket. Payin...

2009-05-07T12:24:00.000-05:00

I would rather keep that money in my pocket. Paying off your mortgage guarentees you have a place to live and retire in, or sell and retire in something smaller.
Paying off your mortgage should be everyone's priority!!!
Not only that but saving to have a huge down payment should be your priority first. I am renting until I can put at least 20% down on a house I can afford!!!

I think I would rather give that money to the bank...

2009-05-07T10:02:00.000-05:00

I think I would rather give that money to the bank than to the IRS. The bank will at least try to make money and lend, the federal goverment will only waste it and give it away (Chrysler for example).

HS