Community Chat

[croemer]

On 1/6/2015 WenGirl42 said:

On 1/6/2015 glb613 said:

You are paying interest on a mortgage to get a tax deduction. I'd rather not have any debt and invest my money or contribute to my IRA.

I understand that, but it has nothing to do with getting a tax refund or not. If you do it right you're getting a higher return on your investment in your home than you're paying in interest, AND you're reducing your tax liability. Most people aren't doing it right (and I can't speak to whether Kalli is or not), but it's just a different investment strategy when it comes down to it.

You make a point WENGirl...we just have so much less stress knowing our home is finally paid for. We went back and forth...listened to friends who feel your way and decided the peace of mind of having our home paid for outweighed all options.

[WenGirl42]

On 1/6/2015 croemer said:

On 1/6/2015 WenGirl42 said:

On 1/6/2015 glb613 said:

You are paying interest on a mortgage to get a tax deduction. I'd rather not have any debt and invest my money or contribute to my IRA.

I understand that, but it has nothing to do with getting a tax refund or not. If you do it right you're getting a higher return on your investment in your home than you're paying in interest, AND you're reducing your tax liability. Most people aren't doing it right (and I can't speak to whether Kalli is or not), but it's just a different investment strategy when it comes down to it.

You make a point WENGirl...we just have so much less stress knowing our home is finally paid for. We went back and forth...listened to friends who feel your way and decided the peace of mind of having our home paid for outweighed all options.

I totally agree, and we'll be paying off our mortgage very early for that same peace of mind! Besides, we don't live in the kind of area nor have a mortgage high enough for this investment strategy to make sense for us... ETA: To clarify, I am not arguing in favor of carrying a mortgage to gain the deduction, just correcting some apparent misconceptions about it

[croemer]

On 1/6/2015 WenGirl42 said:

On 1/6/2015 croemer said:

On 1/6/2015 WenGirl42 said:

On 1/6/2015 glb613 said:

You are paying interest on a mortgage to get a tax deduction. I'd rather not have any debt and invest my money or contribute to my IRA.

I understand that, but it has nothing to do with getting a tax refund or not. If you do it right you're getting a higher return on your investment in your home than you're paying in interest, AND you're reducing your tax liability. Most people aren't doing it right (and I can't speak to whether Kalli is or not), but it's just a different investment strategy when it comes down to it.

You make a point WENGirl...we just have so much less stress knowing our home is finally paid for. We went back and forth...listened to friends who feel your way and decided the peace of mind of having our home paid for outweighed all options.

I totally agree, and we'll be paying off our mortgage very early for that same peace of mind! Besides, we don't live in the kind of area nor have a mortgage high enough for this investment strategy to make sense for us...

Yes...we were in the same situation...we had put so much down and paid so much off... it no longer worked for us either. Best of luck...you will love knowing it is pd. for...now if only we will not have to sell one day because of the high taxes. grrrrrrrrrrrrr

[WenGirl42]

On 1/6/2015 croemer said:

On 1/6/2015 WenGirl42 said:

On 1/6/2015 croemer said:

On 1/6/2015 WenGirl42 said:

On 1/6/2015 glb613 said:

You are paying interest on a mortgage to get a tax deduction. I'd rather not have any debt and invest my money or contribute to my IRA.

I understand that, but it has nothing to do with getting a tax refund or not. If you do it right you're getting a higher return on your investment in your home than you're paying in interest, AND you're reducing your tax liability. Most people aren't doing it right (and I can't speak to whether Kalli is or not), but it's just a different investment strategy when it comes down to it.

You make a point WENGirl...we just have so much less stress knowing our home is finally paid for. We went back and forth...listened to friends who feel your way and decided the peace of mind of having our home paid for outweighed all options.

I totally agree, and we'll be paying off our mortgage very early for that same peace of mind! Besides, we don't live in the kind of area nor have a mortgage high enough for this investment strategy to make sense for us...

Yes...we were in the same situation...we had put so much down and paid so much off... it no longer worked for us either. Best of luck...you will love knowing it is pd. for...now if only we will not have to sell one day because of the high taxes. grrrrrrrrrrrrr

Yeah, that stinks. Our taxes are pretty low (relative to other areas), but our school system is terrible. Which is a fine tradeoff for us since no kids.

[Qwackertoo]

On 1/6/2015 WenGirl42 said:

On 1/6/2015 glb613 said:

You are paying interest on a mortgage to get a tax deduction. I'd rather not have any debt and invest my money or contribute to my IRA.

I understand that, but it has nothing to do with getting a tax refund or not. If you do it right you're getting a higher return on your investment in your home than you're paying in interest, AND you're reducing your tax liability. Most people aren't doing it right (and I can't speak to whether Kalli is or not), but it's just a different investment strategy when it comes down to it.

I understand what you're saying. Depending on your particular market . . . in years gone by the "thinking wisdom" was buy as much house as you could absolutely possibly afford . . . and then even more for some folks . . . and in some markets when a house was increasing in value, sometimes quite rapidly . . . say for example 200,000 house was now worth 350,000 in 3-5 short years . . . thus the housing "bubble" that was created and a whole lot of other various factors. So there was incentive to buy as much as you could knowing it would be increasing in value and that the interest was tax deductible. And even prior to that . . . buy as much as you could because you knew your salary would be increasing at a nice pace for example a newly hired college graduate at a starting salary for their particular area of expertise.

But for MOST people, even IF their home increased from that 200K to 350K . . . it is paper profit as you still need a place to live . . . so unless you were willing to move down in living quarters . . . OR . . . relocate to a much lower housing market . . . the value of the home you live in is just a number on your "net worth" tally of assets.

Is it any wonder why Freddie and Fannie were such a huge mess when things crashed? And that PMI insurance many pay . . . what good did it do?

And . . . what a average home value is in one state varies so greatly from state to state. Some states 350K is pretty nice . . . some states it is just average.

A whole lot of strategies have changed over they years. The housing market and finance market of same has changed, as far as interest rates go . . . for the better. The job market in many segments for the worse but NOT all.

While yes it was nice to have the extra charitable deductions . . . and yes at one time I wanted to buy an even larger house with an even larger payment knowing the interest would be deductible . . . my thinking has changed in less than the last 10 years. IF we do build or buy another house anytime soon, we'll do it with cash and maybe finance part of it until we sell the present house and then pay it off.

Things change, times change and with kids in college and future weddings . . . it is nice to only have utilities, property taxes and food to worry about. And we could always decrease those IF we ever had to, cut the DISH, cell phone and other non-essentials even though they seem quite essential at times.

Which is why the name PEACE University fits so well with Dave Ramsey. There is a PEACE of Mind when one is debt free. While there is something about the guy that kinda bugs me . . . my husband will switch the radio station on a road trip to avoid him . . . but he has helped a LOT of people achieve freedom from debt.

edit typo

[croemer]

Some things Dave R. says is just not do-able for us...but I will use his ideas in the areas it is more realistic for us. I like listening to him and Suzy O...gaining knowledge where I can.

AND...Yes I know some can not stand either...I happen to like some of their advice.

[Financialgrl]

I've read tons of books on finance bc it fascinates me - Orman, Edelman, Bach, Ramsey, Kyobi, Chatzkey, etc. Most offer the same advice on getting debt free except mortgages. Some say put extra toward principle to pay off early; others say mortgage is good debt, don't pay it down early and invest that money instead.

Same premise as income taxes. Some want the refund, others try to break even because they want their money to use throughout the year rather than allowing the government using it interest free.

Neither is a right vs wrong decision - its personal choice. I refuse to pay a mortgage company or the federal government money until its due. I refi'd my mortgage two years back to 3.5% and I can't borrow money that cheaply and the $400 difference in my payment, I now invest half into the stock market and the other half I put into a travel fund and I usually only get a tiny refund or owe a little.

[Qwackertoo]

Also . . . I enjoy setting up multiple accounts much to my husbands dismay . . . with our credit union . . . with the "you name it savings accounts" and once they hit 3K I convert them to money market accounts . . . not that the interest rate is too terribly much more, but it is a bit more . . . but in the last few years I haven't wanted to add even more to the stock market, especially when it is so up & down & up & down every day, so I park "new savings" on the sidelines. Coulda Woulda Shoulda.

Once I paid off those mortgage(s) or car payment(s) . . . I continue like I'm paying them. For me, I set up a NMCP and NMHP (ie no more car payment and no more house payment) accounts among all the other various "named" accounts, hence his not liking so many accounts . . . but then I say I COULD BE SPENDING IT . . . which quiets and ceases his complaints almost immediately . . . well until the next year when the week before April 15th comes along when sorting through all the 1099's . . . but it could be worse right? Could be bills and more bills instead.

So as of last month for example . . . NMCP is over 50K . . . amazing how well "pretending" still making that payment has added up into real money fairly quickly. And while yes, I could easily pay cash for the next car I want, maybe this summer when they refresh the Honda Pilot design for 2016 . . . IF I can get 0% I will . . . I just don't like writing big fat checks. Easier to not miss several hundred dollars a month for a few year vs. forking out a large amount all at once . . . but having the ability to pay it off IF necessary. But that is just my personal preference.

[RetRN]

On 1/3/2015 Margo Channing said:

We are totally debt free. It is a wonderful feeling.

I totally agree with you. Feels comforting for me.

[Kalli]

On 1/6/2015 WenGirl42 said:

On 1/6/2015 glb613 said:

You are paying interest on a mortgage to get a tax deduction. I'd rather not have any debt and invest my money or contribute to my IRA.

I understand that, but it has nothing to do with getting a tax refund or not. If you do it right you're getting a higher return on your investment in your home than you're paying in interest, AND you're reducing your tax liability. Most people aren't doing it right (and I can't speak to whether Kalli is or not), but it's just a different investment strategy when it comes down to it.

WenGirl42, I think you understand. We ARE investing our money. We ARE increasing our wealth, and therefore our retirement funds, though not through a traditional IRA.

When we were completely out of debt, in essence, we were stagnant and our money wasn't making us more money. So we made the decision to go back into debt. We're spending money to make money.

-Kalli