First, I’d like to say that posts in this thread may not represent a typical cross-selection of society, as the posters are all self-selected. When I had over $76K in non-mortgage debt, I didn’t really sing in the streets telling people about it.
So, three years and 78 days ago, I finally paid everything off, and nowadays, I’m happy to tell anyone who asks (and some who don’t ask) that I’m debt free. Because I cleverly bought a condo at the peak in 1989 and had it foreclosed ten years later, I was not tempted to buy real estate during the recent bubble, so I’m still renting (maybe forever, for all I know) and have a healthy amount of savings, but not so healthy that I don’t worry about money every day.
My mortgage, which is currently at about 2/3 of the value of the house, so I don’t consider that too much of a burden.
Nothing, other than that. Oh, we have a few thousand on credit that my husband uses to buy toys (guitars, lately), but he buys & sells them, plus we have enough cash in savings to pay it completely off and still have a bunch left over. We mostly just leave that money on a credit card to remind him that he really doesn’t need 5 guitars (or whatever) because they do cost money. So I don’t really count that as debt, since if we paid it off we’d still be in the black, cash-wise.
Well, here is the argument. Let’s say you have $100,000 mortgage at 5% and $100,000 sitting in a savings account in the bank earning nearly nothing. You’ll pay $5,000 in interest, you get (lets say a 25% bracket - all numbers here picked because they are easy) a 1250 deduction and are (3750)
Pay the mortgage off and you are out the miniscule interest on the savings account, but save yourself $3750.
Lets say you take that $100,000 and instead of getting nothing in a savings account, you put it in Kinder Morgan Partners, having a 7.5% yield. You pay $3,750 in interest, but make $7500 in dividends (on which you pay taxes). Voila, you have leveraged your home and are now several thousand ahead.
But now lets say KMP pulls an Enron - and now you are out your $100k - which is why, IMHO, you shouldn’t leverage your house.
Not sure about the situation, but isn’t it also possible that the home interest deduction gets him over the standard deduction limit that lets him then deduct other items such as health care costs? Maybe there’s some part of his tax picture we’re not seeing in a few lines.
Cash in pocket: $150ish
Money in bank account: $400ish
Value of 403(b): in the neighborhood of $10,000; I haven’t checked recently (it hurts too much).
Someone else do the math. I’d prefer not to think about it.
Mortgage: $360,000 at 4.625%
Car: $19,000 but it’s 0 interest for the life of the loan so I don’t consider that real debt.
Furniture store: $2,200, but again at 0%, so no reason to pay it off early.
That’s it. No other loans; no credit card carry-overs.
About 50$ on a credit card, with more than enough money in the bank to cover it. I always pay month-to-month. We currently don’t have anything on monthly payment plans, since our last furniture bill has been paid off. We rent, and own both cars outright. My husband makes enough money to help me pay for school, so I don’t have any loans, and never have.
Unless you’re getting some kind of mortgage tax break like US Americans get (we don’t get those tax breaks in Canada), I’d pay it off as soon as possible. Part of my retirement planning is living in a mortgage-free house (possibly even looking at a reverse mortgage since we have no kids, but I’m quite wary about those).
You can get money back out of your home - it’s called a home equity loan. It’s not my preferred way to go if you can help it, though - you get a little money, the bank gets your house if you default. I would (and did) go for an unsecured line of credit before I’d go the home equity route.
Your husband isn’t wrong about the life insurance on the mortgage, but he isn’t completely right, either. I don’t think making insurance part of your financial planning is sound. He might live to a 110; then you’ll wish you’d paid off the mortgage. What about his financial burden, too, if you die? Then he’s paying off the mortgage without you. My gut says debt is bad, and pay it off as soon as possible.
$240k on the mortgage (will be down to $100kish at the end of this year though, putting us on track to pay it off by 32 - earlier if we’re really dilligent)
$370k on the investment property, which pays for itself
So $610k in debt between me and my husband. Sell the properties and we’re up about $350k (though homeless)
I don’t think there are any tax breaks for owning your own home here. I know you get penalised by work if you are a public servant - rented housing is slightly subsidised but the minute you buy the subsidy is cancelled.
I have life insurance unconnected to the house, so I suppose he’d have to use that to pay down the loan to a more manageable level.
He does get a big payout when he retires and the plan is (on his side) to use half the money to pay down a large part of the remaining debt so that the final years of repayment are very small, but then if he can’t get another job (retirement is TOO early in Japan and people have to scramble for low paying part time jobs to make ends meet… Don’t get me started.) then how will we live??
Another truly frightening thing is that houses in Japan do not hold their value but depreciate like a car. After about ten years the house has no resale value at all, no matter what work you have done on it. Only the land holds value, IF you live in an area that is likely to remain popular. Sigh… It’s all very complicated and alien to what I learned in England.
210 k mortgage, at 800 euro’s a month.
Hubby has to pay off 80 bucks a month student loan.
Otherwise, no debt.
I got 30.000 savings, but they’re all in stock, so the value might go up and down.
Hubby got in our marriage with 8 k in consumer debt, but he paid it all off these past five years.
A home equity loan or a line of credit against your house is secured by your house. They can go after it. That’s why you usually get a better interest rate than with an unsecured loan. And why you can write off the interest on your taxes.
