Are you paying extra on your mortgage?

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IronWing

No Lifer
Jul 20, 2001
72,403
32,982
136
On traditional IRAs vs Roth IRAs: Your expection concerning what future Congresses might do has to be factored in. I find it implausible that future politicians won't tax Roth IRAs.
 

iversonyin

Diamond Member
Aug 12, 2004
3,303
0
76
Originally posted by: Pliablemoose
The author is also assuming that if you do this, you'll invest the extra $ or pay off high interest CC debit.

Most consumers do neither and wouldn't.


That is why he's giving you a wake up call PEOPLE. That you should stop buying junk and start buying stocks and bonds.

Dont you guys ever learn outside of school?
 

Engineer

Elite Member
Oct 9, 1999
39,230
701
126
Originally posted by: iversonyin
Originally posted by: Budmantom
The only guaranteed "investment" is my 6% mortgage.


Tom


The house you living in is an investment? :confused:


If you're not paying it anymore, you're guaranteed to save 6%.
 

Originally posted by: Engineer
Originally posted by: iversonyin
Originally posted by: Budmantom
The only guaranteed "investment" is my 6% mortgage.


Tom


The house you living in is an investment? :confused:


If you're not paying it anymore, you're guaranteed to save 6%.
There is no guarantee in the housing market.

 

CrimsonChaos

Senior member
Mar 28, 2005
551
0
0
Originally posted by: SampSon
Originally posted by: Engineer
Originally posted by: iversonyin
Originally posted by: Budmantom
The only guaranteed "investment" is my 6% mortgage.


Tom


The house you living in is an investment? :confused:


If you're not paying it anymore, you're guaranteed to save 6%.
There is no guarantee in the housing market.

You're not understanding. He's not talking about the appreciation of the house. He is talking about the 6% (or whatever) interest rate over 30-years that you WILL pay on your house, unless you pay extra toward it and pay it off sooner.

Paying off the house GUARANTEES you will not pay the full accrual of this 6% interest rate.


 

rahvin

Elite Member
Oct 10, 1999
8,475
1
0
Originally posted by: ironwing
On traditional IRAs vs Roth IRAs: Your expection concerning what future Congresses might do has to be factored in. I find it implausible that future politicians won't tax Roth IRAs.

I believe the courts would toss any attempt to collect taxes on Roth's. Sure they may eliminate the tax free growth at some point in the future which would mean they could collect taxes on growth after that date but they can't back tax, such things have been shown to be unconstitutional. Roth's are a great idea, and I doubt they could politically eliminate them. Fact is congress recently started talking about ROTH 401k's. The idea is a good one, they get the tax revenue now which given our current spending is a good idea.
 

markgm

Diamond Member
Aug 23, 2001
3,291
2
81
Originally posted by: CrimsonChaos
Originally posted by: markgm
Originally posted by: dxkj
Originally posted by: markgm
blah blah blah
blah blah blah
blah blah blah.

Yes, it's true they are both eventually taxed. However, if you are investing with pre-taxed dollars, then you are basically using more money that will compound interest over time.

Example, let's say you can afford to invest $100/mo post-tax. That means you should be able to afford about $125/mo pre-tax (rough estimate). Obviously this gives you more investment power, and will return more interest on a compounding basis.

The point is if you invest $500 a month for 30 years at 8%, you invested $180,000, but made $508,959 in interest. I'd rather just pay capital gains of 15% and be done with it rather than be subject to income tax on the money.

More info on Roth or traditional IRA's

http://www.fairmark.com/rothira/bigroth.htm
 

z0mb13

Lifer
May 19, 2002
18,106
1
76
like what some people already mentioned:
not paying more on the mortgage only makes sense if you can get a greater return than what you are paying in your mortgage interest.

In fact I know some people that keep refinancing their mortgages, pulling equity out and investing it in other areas such as buying another property or the stock market.

This idea is only good for people that are financially disciplined, able to actually invest the extra money rather than spending it on a new car..

of course a scenario that the author didnt mention is if house prices FALL!
if prices fall, people that dont pay extra can be upside down in their mortgages. Even if they sell their house they cant make up the mortgage.
 

Liviathan

Platinum Member
Feb 21, 2001
2,286
0
0
Originally posted by: rh71
Originally posted by: Pliablemoose
The author is also assuming that if you do this, you'll invest the extra $ or pay off high interest CC debit.

Most consumers do neither and wouldn't.
You missed his point about rising salaries while your interest remains the same.



I don't buy the argument about salary rising as much. I am going backwards in life. I make less now than I did in 2001. I was laid off in 2003 took me a while to find a real job, and now here I am. Making less.