Thinking of paying off mortage instead of investing in mkt (1 Viewer)

[tommyboy]

Im of the mindset i want the tax writeoff. Ive been looking for a second home, but finally decided to drop $200k into an addition. Serves the same purpose for tax reasons and gives my family needed room. We have zero debt outside the home.

Just challenging you here...but why do you want a tax writeoff? That still means you're paying someone interest.

I have two jobs, one of them is a business I own and it makes me quite a bit of pre-tax cash. When I add that to my regular yearly career income I have a fairly large tax liability every year, so I'm ok with spending some money on the front end to save some money on the back end.

 

[Random]

Im of the mindset i want the tax writeoff. Ive been looking for a second home, but finally decided to drop $200k into an addition. Serves the same purpose for tax reasons and gives my family needed room. We have zero debt outside the home.

Just challenging you here...but why do you want a tax writeoff? That still means you're paying someone interest.

I have two jobs, one of them is a business I own and it makes me quite a bit of pre-tax cash. When I add that to my regular yearly career income I have a fairly large tax liability every year, so I'm ok with spending some money on the front end to save some money on the back end.

So you prefer paying a $1 in interest to save $0.30 in taxes?

 

[Tiger Fan]

So, knocked it out at 37? Did you ever end up having a child?

I turn 36 this month. Yes, have 2 kids

 

[Tiger Fan]

Im of the mindset i want the tax writeoff. Ive been looking for a second home, but finally decided to drop $200k into an addition. Serves the same purpose for tax reasons and gives my family needed room. We have zero debt outside the home.

Just challenging you here...but why do you want a tax writeoff? That still means you're paying someone interest.

I have two jobs, one of them is a business I own and it makes me quite a bit of pre-tax cash. When I add that to my regular yearly career income I have a fairly large tax liability every year, so I'm ok with spending some money on the front end to save some money on the back end.

are you (or spouse if you have one) maxing out the other job's 401k (if available)? would assume that's a better way to reduce taxable income?

 

[pantherclub]

Yeah I don't know. Not to piss in your Cheerios but 2009 wasn't the time to stop investing.

I'd seriously like to know if he cares. Its about as bad of a time frame as it gets but I'd bet he still doesn't care.

Not one bit.

what do you do for work?

Playing devil's advocate...why does it matter? It's all about spending way below your mean, setting a goal and working towards it.

Because if you are in a volatile industry then its smart to pay off, if you feel your job is secure and is long term then invest

 

[Bull Dozier]

Congrats TF! Very jealous of your situation. You've got a lot of life to live with an immense amount of financial freedom.

 

[tommyboy]

Im of the mindset i want the tax writeoff. Ive been looking for a second home, but finally decided to drop $200k into an addition. Serves the same purpose for tax reasons and gives my family needed room. We have zero debt outside the home.

Just challenging you here...but why do you want a tax writeoff? That still means you're paying someone interest.

I have two jobs, one of them is a business I own and it makes me quite a bit of pre-tax cash. When I add that to my regular yearly career income I have a fairly large tax liability every year, so I'm ok with spending some money on the front end to save some money on the back end.

are you (or spouse if you have one) maxing out the other job's 401k (if available)? would assume that's a better way to reduce taxable income?

I max my 401k every year for the last 11 years. I save money in both my business account and my personal accounts. Wife doesn't work, raises my 4 kids. Only writeoff we have is 4 kids and a mortgage. There's some charitable deductions, but that's it.

 

[dhockster]

Congrats TF!

To get an idea if you think it was a good idea to pay it off: if someone came to you now and said "Hey, since you have a paid off house, why don't you take out a mortgage on it, and invest the proceeds? you could make a killing!"

Would you do it?

 

[Tiger Fan]

Yeah I don't know. Not to piss in your Cheerios but 2009 wasn't the time to stop investing.

I'd seriously like to know if he cares. Its about as bad of a time frame as it gets but I'd bet he still doesn't care.

Not one bit.

what do you do for work?

Playing devil's advocate...why does it matter? It's all about spending way below your mean, setting a goal and working towards it.

Because if you are in a volatile industry then its smart to pay off, if you feel your job is secure and is long term then invest

Gotcha. That was one of my reasons for paying it off...I really wanted to stay in the city I lived and didn't want to be subject to "having to move for work". Luckilly, the work has picked up where I am, so I got the best of both worlds.

 

[Tiger Fan]

Im of the mindset i want the tax writeoff. Ive been looking for a second home, but finally decided to drop $200k into an addition. Serves the same purpose for tax reasons and gives my family needed room. We have zero debt outside the home.

Just challenging you here...but why do you want a tax writeoff? That still means you're paying someone interest.

I have two jobs, one of them is a business I own and it makes me quite a bit of pre-tax cash. When I add that to my regular yearly career income I have a fairly large tax liability every year, so I'm ok with spending some money on the front end to save some money on the back end.

are you (or spouse if you have one) maxing out the other job's 401k (if available)? would assume that's a better way to reduce taxable income?

I max my 401k every year for the last 11 years. I save money in both my business account and my personal accounts. Wife doesn't work, raises my 4 kids. Only writeoff we have is 4 kids and a mortgage. There's some charitable deductions, but that's it.

Good job (didn't meant to come off harsh if it was taken that way...wasn't the intention)

 

[Tiger Fan]

Congrats TF!

To get an idea if you think it was a good idea to pay it off: if someone came to you now and said "Hey, since you have a paid off house, why don't you take out a mortgage on it, and invest the proceeds? you could make a killing!"

Would you do it?

Why would I want to start back again with a mortgage? Not sure if I'm following you though...

 

[dhockster]

Congrats TF!

To get an idea if you think it was a good idea to pay it off: if someone came to you now and said "Hey, since you have a paid off house, why don't you take out a mortgage on it, and invest the proceeds? you could make a killing!"

Would you do it?

Why would I want to start back again with a mortgage? Not sure if I'm following you though...

Then you made the right decision. The whole point of keeping the mortgage was to invest the proceeds and come out ahead financially. But the fact that you don't want to go into debt now to invest the proceeds and come out ahead financially means that you made the right decision for yourself. Sorry if my point was confusing.

 

[Buck Bradcanon]

Thread making me feel so far behind. And we are starting to pay lip service to getting more house. Have a smallish house now by many standards. If we are trying to benchmark in here, without disclosing salary and home value, can that be done in % terms? Example: Wife and I both work, home purchase price (not current value) is roughly 80% of current gross household salary.

I like to imagine if we waited longer on having kids we'd be further along..but if I'm being honest with myself I know I/we would have blown the cash on travel and hoodrat stuff.

What Im trying to say is.. congrats TF, Koya, and others!

 

[Skinny]

Thread making me feel so far behind. And we are starting to pay lip service to getting more house. Have a smallish house now by many standards. If we are trying to benchmark in here, without disclosing salary and home value, can that be done in % terms? Example: Wife and I both work, home purchase price (not current value) is roughly 80% of current gross household salary.

I like to imagine if we waited longer on having kids we'd be further along..but if I'm being honest with myself I know I/we would have blown the cash on travel and hoodrat stuff.

What Im trying to say is.. congrats TF, Koya, and others!

Are you saying that if gross household income is $100k, then you live in a house that you bought for $80k? If so I think you are way ahead of the game.

I'm trying to pay off my mortgage, and while it is not of Otis proportions, it is a long slog. I am currently at about 100% current mortgage value to gross household income. If I look at the purchase price (5 yrs ago) and did the same math you allude to above, I would be about 200% (i.e. 2x my current household income).

But perhaps I am not giving others enough credit for what their math would be.

 

[Buck Bradcanon]

Thread making me feel so far behind. And we are starting to pay lip service to getting more house. Have a smallish house now by many standards. If we are trying to benchmark in here, without disclosing salary and home value, can that be done in % terms? Example: Wife and I both work, home purchase price (not current value) is roughly 80% of current gross household salary.

I like to imagine if we waited longer on having kids we'd be further along..but if I'm being honest with myself I know I/we would have blown the cash on travel and hoodrat stuff.

What Im trying to say is.. congrats TF, Koya, and others!

Are you saying that if gross household income is $100k, then you live in a house that you bought for $80k? If so I think you are way ahead of the game.

I'm trying to pay off my mortgage, and while it is not of Otis proportions, it is a long slog. I am currently at about 100% current mortgage value to gross household income. If I look at the purchase price (5 yrs ago) and did the same math you allude to above, I would be about 200% (i.e. 2x my current household income).

But perhaps I am not giving others enough credit for what their math would be.

Yeah you got it spot on. Just curious if the ratio is similar for those like TF who paid theirs off in a 5ish year window. They prolly make more than I do, but pretty certain their homes are worth more (and paid off!) as well.

ETA: let us not overlook the fact that your avi is amazing, Skinny.

 

[Tiger Fan]

Thread making me feel so far behind. And we are starting to pay lip service to getting more house. Have a smallish house now by many standards. If we are trying to benchmark in here, without disclosing salary and home value, can that be done in % terms? Example: Wife and I both work, home purchase price (not current value) is roughly 80% of current gross household salary.

I like to imagine if we waited longer on having kids we'd be further along..but if I'm being honest with myself I know I/we would have blown the cash on travel and hoodrat stuff.

What Im trying to say is.. congrats TF, Koya, and others!

Are you saying that if gross household income is $100k, then you live in a house that you bought for $80k? If so I think you are way ahead of the game.

I'm trying to pay off my mortgage, and while it is not of Otis proportions, it is a long slog. I am currently at about 100% current mortgage value to gross household income. If I look at the purchase price (5 yrs ago) and did the same math you allude to above, I would be about 200% (i.e. 2x my current household income).

But perhaps I am not giving others enough credit for what their math would be.

Yeah you got it spot on. Just curious if the ratio is similar for those like TF who paid theirs off in a 5ish year window. They prolly make more than I do, but pretty certain their homes are worth more (and paid off!) as well.

ETA: let us not overlook the fact that your avi is amazing, Skinny.

At the time we bought the house, the outstanding mortgage was about 105% of our gross income, so without knowing anything else, you're in a better starting position than I was. We did get some raises and bonsues that weren't factored in orginally and obviously helped expidite...but it's all about living below your means and sticking to a plan. Not easy, but achievable.

 

[Random]

Sheesh, ours was about 200% when we bought our "forever" home. Its about 75% now.

I think our first place was about 100%. Both of us work.

 

[NewlyRetired]

I need to think back, it was 20 years ago......

I think we were making maybe $85-90k combined and purchased a home for $249k. Mortgage was $159k that we then paid off in about 6-7 years. Our salaries both took off after we bought the home.

 

[Buck Bradcanon]

In line with what I was thinking. My basic point was you guys aren't making $500k and paying off a $150k house. You are just living below your means and gettin 'er done.

The gist is for me personally, w/ 2 kids and wife and I both working, we will gross b/t $150 and $200 this year and pay down ~$8k of mortgage principal, despite having a 15-yr note, and despite not coming anywhere CLOSE to maxing out retirement account options. That needs to change. This thread and others makes that readily apparent.

Sadly, I bet my case is much the norm.

 

[Random]

Nothing wrong with pushing yourself to do better, but thats about all ours will go down too with having about 12 years left on our 15 year mortgage. If its a newish mortgage, it really wont start to go down for a while.

 

[Tiger Fan]

In line with what I was thinking. My basic point was you guys aren't making $500k and paying off a $150k house. You are just living below your means and gettin 'er done.

The gist is for me personally, w/ 2 kids and wife and I both working, we will gross b/t $150 and $200 this year and pay down ~$8k of mortgage principal, despite having a 15-yr note, and despite not coming anywhere CLOSE to maxing out retirement account options. That needs to change. This thread and others makes that readily apparent.

Sadly, I bet my case is much the norm.

The fact that your ratio is as it is and a 15 year mortgage leads me to believe you're much better off than the norm

 

[mr roboto]

We bought a 360k home with 25% down last fall. We make about 140 so maybe around 200%. But with such low rates the payments are easy for us.

 

[Sand]

In line with what I was thinking. My basic point was you guys aren't making $500k and paying off a $150k house. You are just living below your means and gettin 'er done.

The gist is for me personally, w/ 2 kids and wife and I both working, we will gross b/t $150 and $200 this year and pay down ~$8k of mortgage principal, despite having a 15-yr note, and despite not coming anywhere CLOSE to maxing out retirement account options. That needs to change. This thread and others makes that readily apparent.

Sadly, I bet my case is much the norm.

Yep - the switch from being rich to being wealthy is a great one to strive for.

We bought a 360k home with 25% down last fall. We make about 140 so maybe around 200%. But with such low rates the payments are easy for us.

Looking at a house in the exact price range and down payment. What size house does that get you?

 

[mr roboto]

In line with what I was thinking. My basic point was you guys aren't making $500k and paying off a $150k house. You are just living below your means and gettin 'er done.

The gist is for me personally, w/ 2 kids and wife and I both working, we will gross b/t $150 and $200 this year and pay down ~$8k of mortgage principal, despite having a 15-yr note, and despite not coming anywhere CLOSE to maxing out retirement account options. That needs to change. This thread and others makes that readily apparent.

Sadly, I bet my case is much the norm.

Yep - the switch from being rich to being wealthy is a great one to strive for.

We bought a 360k home with 25% down last fall. We make about 140 so maybe around 200%. But with such low rates the payments are easy for us.

Looking at a house in the exact price range and down payment. What size house does that get you?

In a Twin Cities suburb about 2,400 above ground finished and 1,200 basement with walkout finished. Officially listed as 3,600.

 

[MCguidance]

This thread reaffirms the decision I made TODAY with my better half. We are getting married in July and have been semi-house hunting (looking at stuff but not diving into it seriously). I took a step back last night and realized, why are we rushing to buy a house when our current situation is great. We are living in my late grandfather's house (small cape owned by my mother and her brother, with great access to NYC) and only pay the taxes, nothing else. Although Bergen County, NJ taxes suck, we are very close to earning good money.

If we stay put until we have at least a kid, we would be sitting pretty for the long term. We would eventually move because the schools here are not great, but if we are able to save nearly enough to buy a house in cash, why wouldn't we? We then could save for the future kid's college fund, retirement, etc. In short, I won't rush into anything so I can be in a similar situation as TF.

FWIW, I am 32 and my fiance is 28. I'm okay with staying 3-5 years and then buying the exact house I want. Congrats TF

 

[belljr]

Thread making me feel so far behind. And we are starting to pay lip service to getting more house. Have a smallish house now by many standards. If we are trying to benchmark in here, without disclosing salary and home value, can that be done in % terms? Example: Wife and I both work, home purchase price (not current value) is roughly 80% of current gross household salary.

I like to imagine if we waited longer on having kids we'd be further along..but if I'm being honest with myself I know I/we would have blown the cash on travel and hoodrat stuff.

What Im trying to say is.. congrats TF, Koya, and others!

Don't feel bad. I refid back to a 30 at 3%. So I started over a couple years ago. Did save 500 a month and took money out to upgrade my house.

 

[Tiger Fan]

This thread reaffirms the decision I made TODAY with my better half. We are getting married in July and have been semi-house hunting (looking at stuff but not diving into it seriously). I took a step back last night and realized, why are we rushing to buy a house when our current situation is great. We are living in my late grandfather's house (small cape owned by my mother and her brother, with great access to NYC) and only pay the taxes, nothing else. Although Bergen County, NJ taxes suck, we are very close to earning good money.

If we stay put until we have at least a kid, we would be sitting pretty for the long term. We would eventually move because the schools here are not great, but if we are able to save nearly enough to buy a house in cash, why wouldn't we? We then could save for the future kid's college fund, retirement, etc. In short, I won't rush into anything so I can be in a similar situation as TF.

FWIW, I am 32 and my fiance is 28. I'm okay with staying 3-5 years and then buying the exact house I want. Congrats TF

Good plan I O

 

[Sand]

In line with what I was thinking. My basic point was you guys aren't making $500k and paying off a $150k house. You are just living below your means and gettin 'er done.

The gist is for me personally, w/ 2 kids and wife and I both working, we will gross b/t $150 and $200 this year and pay down ~$8k of mortgage principal, despite having a 15-yr note, and despite not coming anywhere CLOSE to maxing out retirement account options. That needs to change. This thread and others makes that readily apparent.

Sadly, I bet my case is much the norm.

Yep - the switch from being rich to being wealthy is a great one to strive for.

We bought a 360k home with 25% down last fall. We make about 140 so maybe around 200%. But with such low rates the payments are easy for us.

Looking at a house in the exact price range and down payment. What size house does that get you?

In a Twin Cities suburb about 2,400 above ground finished and 1,200 basement with walkout finished. Officially listed as 3,600.

Not terribly far off of what we're looking at. Mine is also listed at 3,600 - 6 bedroom, 5 bath. Then again where I am housing is pretty cheap.