Posted on 12/16/2020 5:30:44 PM PST by SteveH
i paid off my home mortgage yesterday.
(it was a really good refinance rate, but whatever.)
to do it, i liquidated some rollover stock (SPY) (i am retirement age, so it gets taxed as regular income, i believe).
then i did a bank transfer from my broker to a local bank.
finally, the local bank ,happened to hold the mortage, so i simply paid the full mortgage owed amount as of yesterday from my checking account to my mortgage account.
it still has not registered today, but i am not expecting a problem since i have a receipt that shows the internal transfer of the full amount as determined by a visit to the bank office immediately prior to the transfer (the amount evidently changes every day due to compound interest).
otherwise, the mortgage would have taken about 8 more years to pay off at the normally scheduled rate of payoff.
i need to take out about 33+% + 11+% extra money out of the IRA for federal and state taxes. this bumps me up two IRS tax brackets for this year.
in return, however, i get some peace of mind knowing that at least i own my home free and clear if anything serious should start to happen and interfere with ordinary commercial transactions (i have some conjectures about worst case scenarios which i won't go into in this post-- perhaps everyone does) (i have not spoken with any of my neighbors, most of whom are suburbanites who keep to themselves and if i am to believe voting records are somewhat liberal, with many newly arrived middle class professional immigrants from asia).
ok... good, bad, ugly? one person on FR said earlier not to do this. however, i am just too nervous.
along the way, i had an unsettling experience. i am already used to less bank branch offices being open, and those that are, with reduced hours and reduced customer occupancy.
however, last friday at 3:30 PM i was on the freeway listening to the radio and heard the USSC news. so i tried effecting a wire transfer over cell phone. the first attempt, the line went dead, and the second attempt, the wait time increased from 5 minutes to 25 minutes. i thought this was strange since i had been promised over the phone the previous day that this would be a snap to perform over the phone. after driving a couple of exits, i turned around and went back to my brokerage to perform a wire transfer to my local bank in preparation for the mortage payoff.
the brokerage local office appeared deserted, with only two cars in the parking lot. in fact it was open, but there was only one person present, only one desk and only one working monitor in the entire office, which was only dimly lit. a teller appeared on the monitor screen. i was told that no one could help me at that time and that i should try using the phone. they also had a drop box but i had no papers to fill out and there did not seem to be a printer there. i felt nervous and frustrated, and left immediately. later i heard that the brokerage employees were in fact working from home.
the situation was more normal at my usual bank, but the brokerage seemed to me to be a harbinger of a lowered level of service that might be given at the banks if things progress far enough with the bug.
anyways, the entire process took me about 5 business days not including a day or two of investigating different options of proceeding. i could probably have reduced this to three days if i went at a fast pace, and maybe shaved off another day off of that if i had known exactly what to do and when, and let it be the one and only priority for those two business days.
Yeah, I’m still holding out hope, but my hope is going downhill.
You can risk your kids and wife’s beds for the sake of Facebook, Twitter, Instagram, apple stocks all you want but the market is over priced based on trillions of stimulus dollars. It’s a fools game. If I can get 4% returns on debt it’s a good deal.
The market will correct in 2021 - when is Tbd.
We get at least a few months to get mortgage payments typically caught up.
That was a dumb move. You should try to unwind those actions ASAP. Find a great CPA to help.
“The market will correct in 2021 - when is Tbd.”
Then you should have your cash liquid for the big buys!
My wife and I are also big fans of Dave Ramsey.
The goal is not just financial security, it is peace of mind.
Peace of mind is priceless.
I do. But honestly I often am wrong when applying common sense to the market. Many business have been destroyed. Just because there are no other choice fo investment other than the market, doesn’t make it right. Makes it a bubble. I would pay debts at a guaranteed rate oof return over 3% than risk it in the casino of sheep. JMHO. Again, I am often wrong.
“You can risk your kids and wife’s beds for the sake of Facebook, Twitter, Instagram, apple stocks all you want but the market is over priced based on trillions of stimulus dollars. It’s a fools game. If I can get 4% returns on debt it’s a good deal.”
No facebook, no twitter, no instagram. Some Apple with a 10,000% gain.
Lots of solid stocks paying 2-4% in dividends and increasing them each year. The increase averages about 7% a year.
That means that I sleep really well! Particularly considering the tax savings of qualified dividends.
I don’t worry about a correction. My stocks have a multi-decade record if increasing dividends.
My largest holding has gone from 20 to 120 in the last ten years while paying 3% dividend each year. Compounding is amazing!
I didn’t buy it all at 20 but for example:
100 shares @ 20 was paying $60 a year. That same 100 shares is now paying over $300 a year.
My brother is paying ZERO tax on his dividends. I am averaging about 10%.
I'll have to look this up, never heard of it, is it universal or only in some states (I'm in Texas)?
Thanks
It lowers how much you need to live off each month, and it gives you financial peace. Good choice.
“It lowers how much you need to live off each month, and it gives you financial peace. Good choice.”
It lowers your income and lowers your ready reserve for emergencies
They tried to laugh me off this site for buying Tesla.
It’s always good to be debt free.
“something external, large and unexpected could still happen”
Like what? I mean I can see the benefit of changing home and flood insurance to your benefit but not much else. With both the mortgage and market investments using compound interest the market offers higher returns than the cost of a mortgage. That’s all I’m saying.
That’s a good buy. I’m saying right now there aren’t many good buys out there. Most are way over priced right now. There is a disconnect between the economy and stock indexes today. The only thing pushing it up is the free money from stimulus spending. There are good times to buy and good companies but generally right now it’s hard to find bargains. I like the things Elon musk is doing.
Moving on March 1 to Trump country. No more mortgage, no more HOA, no more Covid BS.
Paying down ones’ mortgage during a bad economy makes more sense. It’s as solid a choice as putting money into bonds, but far less liquid for when buying opportunities come up. Who gets a loan on their fully paid off house to buy the next Facebook? However, you can sell a bond or a bond fund without issue.
Dave Ramsey is an excellent mentor and he does reduce the ongoing pain for people in a palpable manner. His approach of paying of the smallest debts first allows one to get immediate wins, having no check to ever write on such accounts. However, fiscally, the better choice is to pay down the highest interest rate first, leaving all accounts still in need of monthly checks until that top interest rate one is paid off (which might be the biggest debt one has). It could be years before the smaller, lower interest accounts are ever addressed.
Psychologically, I see how his approach causes people to truly know and show they are going to rid themselves of debt, but on paper, the other approach saves much more money.
Congratulations! A couple of housekeeping items are important if you have not done them already. Get a “release of lien” from the mortgage company, showing it paid in full. Take a copy of that to your register of deeds so they can record it. Send a copy to your homeowners insurance. It might be that the register of deeds does that, can’t remember. You don’t want to have the mortgage company listed on your homeowners insurance. Best wishers for the future!
> Moving on March 1 to Trump country. No more mortgage, no more HOA, no more Covid BS.
congratulations! i wish moving to trump country were in my cards...
You’ve throught it through, not made an impulsive decision.
Good luck!
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