You only have one more hurdle to go before you are completely debt-free! It's time to pay off your mortgage!
There isn't really much to say about this part. After you have begun contributing to your retirement plan and are saving for your child's college education, tack as much money as possible onto your principal mortgage payment each month. (Be sure you have a little fun with your money now though. After all, you are nearly debt-free including your home!)
The only thing I want to explain today is why it is ridiculous to keep your mortgage around just for the tax deduction. This concept seems to be popular these days, but in reality, it's just plain stupid. Let me explain...
Let's say your mortgage interest each year is $10,000. You can deduct that, right? Yep! Know what you'll get back? About $3,000. Hmmm...wait this doesn't make sense. So if you send $10,000 to the bank just to get a tax deduction of $3,000, you're still losing $7,000? That's right! See how stupid that is?
And here's another thing: If you are thinking about keeping your mortgage just to get a tax deduction, consider this instead: Give that $10,000 that you're wasting each year to a charity. Fully deductible and a MUCH better cause than the success of the bank!
It's up to you, of course, but it only makes sense to me. We certainly won't be keeping our mortgage payment around just for a tax deduction!
What do you think? What are your plans for your mortgage when you are debt-free? I'd love to hear input on what all of you plan to do!
Links to other parts of this series:
Part 1
Part 2
Part 3
Part 4
Part 5
Part 6
1 comment:
You are forgetting the value of your money when placed somewhere other than your mortgage. Safely but properly invested, your portfolio should earn around 7%. I am borrowing from the bank at 5%, get a tax deduction on the interest and am investing that money at 7%. That's a better deal than paying off my mortgage.
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