Zero CC debt

[onewhippedpuppy]

Originally Posted by DARISC

Right.

Rough figures, If you owe $100k @ 5% on your house, that $100k that you've borrowed is really only costing you about 3% after you write the interest off your taxes, i.e., your mtg. is effectively at 3%.

So, if you have $100k in investments paying 5% and you use it to pay off your $100k mtg,, which is really at 3%, you're losing 2%, maybe more, depending on your tax situation.

I think a lot of people don't realize this or don't care because it's psychologically comforting to them to have their house paid off.

True, but.......... If you lose your job, you can quit paying into your investments. You can't quit paying your mortgage. Would you borrow against your house and use that money for investing? Because by not paying off your mortgage, that's essentially what you're doing. Not saying that your approach is wrong, but there's some risk involved.

There's a reason why those who are debt free sleep better at night.

[dmcummins]

Originally Posted by onewhippedpuppy

True, but.......... If you lose your job, you can quit paying into your investments. You can't quit paying your mortgage. Would you borrow against your house and use that money for investing? Because by not paying off your mortgage, that's essentially what you're doing. Not saying that your approach is wrong, but there's some risk involved.

There's a reason why those who are debt free sleep better at night.

Yep. I retired last year at 50 with no debts. Like everyone else I'm taking a beating in the market, but with no mortgage or other debt I don't need as much to get by. I'm sure glad I decided to pay off the house instead of invest the money elsewhere. The tax write off is only good for the amount greater than the standard deduction. In my case I was paying 5% and at the time there were few places that would guarantee that rate for 15 yrs.

My Dad is 74 yrs old and has never had a credit card. He retired at 57 and is doing fine. He use to say if you cant pay cash you can't afford it. He did have lines of credit at the bank and at local business's but always paid them off at the end of the month.

[DARISC]

Originally Posted by onewhippedpuppy

true, But.......... If You Lose Your Job, You Can Quit Paying Into Your Investments.

the Investments I Was Thinking Of Are Stocks, Bonds, Whatever, Not Ones That You're Investing In On A Monthly Basis.

You Can't Quit Paying Your Mortgage. Would You Borrow Against Your House And Use That Money For Investing? Because By Not Paying Off Your Mortgage, That's Essentially What You're Doing.

no, But If You're Going To Live In The House And Not Sell It Soon And Qualify For A Line Of Credit On It, If You Lose Your Job You Can Take Money Out For Living Expenses Until Employed Again, And, Of Course, Your Mortgage/heloc Payments Are Part Of Those Living Expenses.

Stop Paying Your Cc Bill And Your Debt Grows Rapidly And Your Credit Rating Suffers.

Not Saying That Your Approach Is Wrong, But There's Some Risk Involved.

i Don't Understand What The Risk Is. You're Just Using Some Of Your Equity At A Low Interest Rate As Opposed To Sitting On It And Paying A Cc Company A High Interest Rate.

I've Had An Established $250k Line Of Credit For Years With The Bank That Holds My Mtg. Don't Need It, But The Money's Right There For Emergencies As Opposed To Taking A Cash Advance On A Cc At A High Rate Or Liquidating An Investment That's Paying More Than My Heloc Costs. I Never Used It Until I Bought A New Car In Feb. - Low Interest And Tax Deductible.

I'm No Cfp And I Know Situations Differ, But My Case It's A No Brainer To Keep My Mtg, And Heloc For The Right-offs..

There's A Reason Why Those Who Are Debt Free Sleep Better At Night.

that's For Sure.

..,,That's bizarre! What the heck did I do to make the first letter of all the words in the respose above caps?

Edit: While I owe on a mtg. and a HELOC, I consider myself debt free because I'm using them for tax deductions - I can pay them off tomorrow, but I'd then pay more taxes in addition to losing income from the investment/s I'd have to sell to make the payoff. This approach to debt I am comfortable with - it's not really, in a sense, debt if it's making me money.

[imcarthur]

Originally Posted by onewhippedpuppy

those who are debt free sleep better at night.

Yes, they do.

We paid cards & house off 4 years ago. Of course, in Canada, we don't have the mortgage/tax write off you guys do so it was even more clearcut.

Ian

[onewhippedpuppy]

Originally Posted by DARISC

..,,That's bizarre! What the heck did I do to make the first letter of all the words in the respose above caps?

Edit: While I owe on a mtg. and a HELOC, I consider myself debt free because I'm using them for tax deductions - I can pay them off tomorrow, but I'd then pay more taxes in addition to losing income from the investment/s I'd have to sell to make the payoff. This approach to debt I am comfortable with - it's not really, in a sense, debt if it's making me money.

Two different ways of looking at it. Until I save more in taxes than I pay in interest, I'll always consider a mortgage a losing proposition. But like I said, I hate debt.

[DARISC]

Originally Posted by onewhippedpuppy

Two different ways of looking at it. Until I save more in taxes than I pay in interest, I'll always consider a mortgage a losing proposition. But like I said, I hate debt.

I agree; that's exactly what I'm saying. I added the HELOC debt because I was paying more tax than I wanted to. Now I pay less and come out ahead - no other reason to do it. People with no deductions pay a whole lot more in taxes than people with deductions.

[targa911S]

Fully retired, no CC, no car payment, no mortgage, just gotta eat and pay taxes. Absolutely the best feeling in the world. Kinda makes ya feel like you could tell everybody to piss off!