Posted on 10/27/2010 1:25:57 PM PDT by Kaslin
LOLOL - this thread needed a comedy break.
I have very little worry about my debts in the coming era of inflation. What I (and anyone else who gets it) need to worry about is keeping my income ahead of the inflation curve. If you are retired and on a fixed income you are in a for a world of hurt.
I have to take out double what I have taken out for the prior years....puts me in a higher tax bracket so I will probably be paying more income taxes which I haven't had to pay outside of what I tell my guy to deduct from my IRA.
Paying off a mortgage early is a terrible financial choice.
I base this on the following:
1) All variable interest debts (Credit cards, heloc, etc) must be paid off first. Because:
2) Inflation is set to get off an running in a big way, meaning..
3) fixed interest loans will be bargains in a new economic reality, because new loans will have high interest rates and variable interest instruments will run up with inflation.
Hopefully, the mortgage interest deduction will still offer you added incentive by knocking down your tax exposure, effectively lowering your fixed interest rate even further.
And hopefully, your 401k investments are better suited to match inflation and increase your nest egg than equity in a fixed asset with questionable liquidity; your home.
We paid off our house and have nothing else saved.
Was that correct? Probably not, but we have a lot of confidence that we will survive the future. We lost practically all our retirement in stock market failure after we had paid off house.
We are in our middle and late 60’s and will probably be left on social security retirement, but at least our home (condo) will be paid for.
It feels good whether it was correct or not.
If I'm reading your question directly, it's not the state, it's the lender that imposes any early prepayment penalties.
We paid off both our homes years early, and have never ever come close to regretting it - "tax deductions" and whatever contrary advice be damned.
There is absolutely no better feeling, unless you're a 16 year old boy getting boinked by a hot teacher, than getting the 'note paid' letter on your home.
Each to his own.
I could pay mine off tomorrow but am pleased as could be that they will loan me money below 5% fixed for 30 yrs and let me deduct the interest.
No, medical expenses will likely eat that up.
I thought it made sense to me to do it at this point in time, since 0b0z0 and the Dems have designs on 401(k) and IRA plans. However, once 0b0z0 and the Dems get thrown out of power, I shall resume saving and making regular mortgage payments.
“and for some reason they need to know the age of your oldest child) neither myself or my financial guy know why this is necessary.”
I think it’s because once you die, the IRA reverts to your designated beneficiary(ies) and IRS uses age of oldest child to figure out drawdown rate even if you’ve named multiple children.
http://www.estateattorney.com/irabenef.htm
Obviously, they could get this info after you died, but maybe they want it declared in advance to avoid any shenanigans.
I think there is a law that despite the loan's contract as to fees for early pay off, I think there is a law that after 7 years they can not add a fine for paying off early.
I heard something like that. I'm not sure, so I put it out there. I'm like 90% sure on that one though.
You want to see people lose homes though, if taxes go on homes based on market values a lot of people would have to give up their homes. It would be like having an additional $500 a month each month to the state for no good reason.
$500 when you get older or retire or if you big pay days were in times when people got paid less is a lot of money a month.
In CA when they remove prop 13, all hell will break loose IMO.
Baby steps 4, 5 and 6 discussion. Thanks Day10 for the heads up.
Dave Ramsey Fan Ping List.
If you would like to be added to the “Live like no one else, so that you can LIVE like no one else” list, feel free to Freepmail me.
“I could pay mine off tomorrow but am pleased as could be that they will loan me money below 5% fixed for 30 yrs and let me deduct the interest.”
Keep in mind that in essence this would mean that you are sending the bank $10K to avoid sending the gov $3K. (yes, the numbers are examples only.)
Don’t forget I have the use of the borrowed money (the principal that I took out). Based on my 40 yr investing record (thank you Lou Rukeyser) I sleep well at night.
You ruin the conversation when you come in with actual indisputable logic.
>>or do repair costs in retirement magically rise to equal the amount previously paid to the mortgage lender?<<
Looking back I have to say they do because now you have time to all those little things that you contemplated years ago such as putting in the brick fireplace, extending the deck, correcting the irrigation flaws. You know those little things that you could get by without doing when you were working.
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