Plus dividends
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.
Pulled IRA funds to pay cash for new home last year (renting old one) - only downside is that next year I get hit with Income Related Monthly Adjustment to Social Security. Not really fair - didn’t make big bucks last year, just pulled some funds I saved over past 50 years
I do agree the next big loss of freedom will be the slow and systematic gun confiscation of law-abiding Americans. Since it will only be a few individuals at a time, no one else will come to their aid, thinking they personally have been spared. And that's how it starts in earnest.
> If you are worried about the banks though another question might be do you keep your gold/silver in a safe deposit box at the bank or move it home where it is accessible?
The advice I have been given from people in whom i have great trust is not to use safe deposit boxes for gold/silver (maybe papers ok).
i could advise that you may want to find people knowledgeable about such stuff and ask them, not just ask me (on the internet no one knows that you are actually a dog, haha).
My mom paid off her mortgage with only 5 years left on it and when she did that and calculated how much she would have spent either way, either by paying it off fully or continuing her ridiculously low mortgage payments, she saved HALF by paying it off of what she would have spent on the last 5 years of her mortgage.
And if someone is close to paying off a 30 year mortgage and miss a couple payments near the end, the bank repossesses it and you are out a home you’ve spent decades paying for.
The money that you are used to paying the mortgage with can be invested. You don’t need to have a mortgage to be able to invest.
Paying off one’s mortgage is a wise thing at this time.
Assuming the government doesn’t move by fiat to take land/homes wholesale your major concern would be paying the yearly taxes.
Taking the financial hit for taxes now and getting your house paid off is a wise thing. We’re expected to prepare in the ways that we can, not that it will always meet with the agreement of others. :)
:)
> After listening to one segment on Dave Ramsey’s show, I decided to pay mine off about 4 months ago; having the same fears about what might happen with the economy.
Thanks. You are the second person in this thread to mention Dave Ramsey who i suppose i need to find. thanks for the tip.
> Be sure your lender sends you a copy of the loan payoff document. Suggest checking at your county clerk’s or whatever agency records lien releases to ensure that the mortgage payoff to your lender is recorded with the property records. I made hard copies of all documents from the time I assumed the previous owner’s mortgage through payoff in case the computer “glitches” and loses the records.
Oh yes, but that is why i transferred money into the bank that holds the mortgage, and did an internal transfer from there (keeping the receipt that documents the transfer). I intend to go back and try to get the documents indicating that the mortgage is fully paid and the deed should follow after a few weeks (in my past experience with another house in a different county).
> Well done!!
Thanks. I am getting some blowback so I will be sure to check up on Dave Ramsey, hopefully that will help!
Being in debt is never good regardless of what any financial advisor tells you. If you are in debt you don’t have money to invest. Pay off the debt first. You never know what unexpected events will occur.
I paid off my mortgage 10 years ago (20 years early). I’m sure a financial advisor would have told me to do something else with that money.
3 months later I was laid off. Not having a mortgage payment while I was unemployed was a great relief. Being unemployed is stressful enough.
“The money that you are used to paying the mortgage with can be invested. You don’t need to have a mortgage to be able to invest.”
If you pay off a $100k mortgage you take $100k out of investments.
And you put back in, say $300. It will take many years to get that $100k back in.
Meanwhile you are missing out on dividends and capital gains.
Perhaps your trolling is getting in the way of clear thinking.
“Paying off one’s mortgage is a wise thing at this time.”
My dividends are paying my mortgage. Each year the dividends go up while my mortgage doesn’t.
Sounds like solid financial planning, and I can definitely see the Dave Ramsey influence. His is a foolproof way to accumulate wealth while living debt free, or as close as is reasonably possible.
“Being in debt is never good regardless of what any financial advisor tells you. If you are in debt you don’t have money to invest.”
If you don’t have any money how do you pay off your mortgage?
> I probably should have added, “While it’s a great time to borrow money, it’s almost never good to be a significant net debtor.”
I was not in that situation but I have been deep long on stocks for the past 4 years (and my prior record on stocks had been somewhat spotty, drama in both directions over the years, school of investment hard knocks lol). I want to ease out of stocks but right now stocks seem to be relatively hot and i have a system (which took me decades to hone). i want to be a certain percentage in cash and also diversified over several accounts in several banks so not to exceed the FDIC insurance limit too much in any one account/bank.
> The best of both worlds is when you have the cash, but can borrow money at an insanely low rate. After all, you can always change your mind and pay your loan off if you don’t have alternative uses for the money.
yes, but at this point i’m not sure i have the guts to use my own home for that. it’s just too good to lose. i made a lucky home purchase out of college, and basically held it ever since instead of flipping like many people seem to do, and having to pay higher property taxes as a result. one remodeling several years ago which bumped up the mortgage — but not to the point that i could not pay it off now. i goosed the mortage a bit to give me a tax dodge, but with joe/kamala potentially taking over, i would rather have added peace of mind than a tax dodge.
so as long as i can avoid major mishaps such as an earthquake or arson, i have a pretty nice castle that i should be able to fall back upon once my SS payment cranks up.
Plus dividends
> Congratulations, you’re at ‘critical mass’ as Bob Brinker once said.
Another name, vaguely familiar at that. thanks, another author to look up and study.
I check mine several times a day, but sleep well with the names I own. No high fliers with 200x price to sales ratios....I really don’t know how those people sleep.
If you can grab a million dollars of debt at .01%, grab all you can and invest it!
My point, using hyperbole, is that there is good debt and bad debt. The Dave Ramsey’s of the world do not paint the full picture.
“I check mine several times a day, but sleep well with the names I own. “
I check them during the day but ignore the futures. If the market is way down I go do something fun.
Wow.
Professional, you sound like the democrat you must surely be.
> Think I’ll go the other way - Overleverage my house and spend $250k on ammo - Come and take it.
I happen to think that that is also a defensible philosophy. I just happened to be in what is probably a more fortunate situation than many people are in. I have been a playing a bit conservative on financial matters (once, long ago, i was homeless with no job— not complaining or unhappy about it, i think i needed to learn from the experience). anyway i would probably do the same if my equity was on the low side. and again i have perhaps not been so hard working or forward thinking as just plain lucky. i still know how to travel very light and become a very unnoticeable target if i need to... anyways, good luck!
“If you can grab a million dollars of debt at .01%, grab all you can and invest it!”
Just make sure you can keep up the payments!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.