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(Yahoo)   Paying off your mortgage to get ready to retire? Sorry, bub - you're doing it wrong   (news.yahoo.com) divider line
    More: Interesting, Debt, Credit card, Loan, lower interest rates, credit cards, Money, loans Americans, Interest  
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6734 clicks; posted to Main » on 30 Sep 2022 at 11:38 PM (9 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



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2022-09-30 11:41:01 PM  
Stripper debt not on the list? What a fail that is.
I would much rather pay off my mortgage than my student loans, not like they can come take back your degree.
 
2022-09-30 11:41:39 PM  
Keeping a mortgage for the possible tax deduction is stupid. The reason you're getting a deduction is because you're paying interest. Why pay interest if you don't need to?
 
2022-09-30 11:42:57 PM  
It's pretty basic. Start with your highest interest rates, then work your way down. If you're fixed below 3% might as well pay anything else down first. Heck, pile money into tax advantaged retirement before paying down that 3% loan.

I remember one of the personal finance pundits advocating paying off your smallest debt first. I think they were trying to create a sense of making progress, even if other things made better sense.
 
2022-09-30 11:43:09 PM  
Did Braveheart run away? Did PAYBACK run away??

Fark user imageView Full Size
 
2022-09-30 11:46:21 PM  
DONT YOU EVEN F*CKING THINK ABOUT PAYING THAT MORTGAGE BUB.

This is another one of those 'don't you know how interest rates work' stories.
 
2022-09-30 11:46:59 PM  
How about just not taking on a bunch of debt?
Some are necessary, especially when you are young, but that should end way before you are ready to retire.
Car loan and credit card debt shouldn't be something people have for very long (if at all).
 
2022-09-30 11:48:37 PM  

The Dog Ate My Homework: Keeping a mortgage for the possible tax deduction is stupid. The reason you're getting a deduction is because you're paying interest. Why pay interest if you don't need to?


And that interest deduction doesn't apply against FICA, so it's worth about half of what it appears to.

Mortgages are still a better debt than car loans or unsecured credit cards by a long shot though.
 
2022-09-30 11:48:49 PM  
To each their own.

I'm not rich but I'm not in debt either.
 
2022-09-30 11:49:24 PM  
We're a couple of years away from paying off the mortgage and the monthly cash flow that's going to free up will create a few options moving forward (working less as not as much income is needed, setting more aside/investing, paying down other debts ( which are locked in at a fairly low rate so it's not horrible carrying it)).

Between the increased standard deduction making itemizing on the taxes not worth it, the cash flow freed up, and the feeling of ownership, prioritizing getting that paid off makes sense for us right now.
 
2022-09-30 11:51:55 PM  

groppet: Stripper debt not on the list? What a fail that is.
I would much rather pay off my mortgage than my student loans, not like they can come take back your degree.


Gold digger did my father in, she was more of an in house stripper than a club employee though judging by the estate files we had to sort through.
 
2022-09-30 11:53:05 PM  

wildcardjack: It's pretty basic. Start with your highest interest rates, then work your way down. If you're fixed below 3% might as well pay anything else down first. Heck, pile money into tax advantaged retirement before paying down that 3% loan.

I remember one of the personal finance pundits advocating paying off your smallest debt first. I think they were trying to create a sense of making progress, even if other things made better sense.


agreed.  another method is to calculate the total fees and interest per month and pay that one off first, whether it's the largest balance or the largest rate or a little of both.   If your fees and interest are less than inflation, do something better with that money.
 
2022-09-30 11:53:46 PM  
Does the mortgage industry have a timer for pushing these articles?
 
2022-09-30 11:59:16 PM  
This article has been brought to you by Bank of America. Refinance your mortgage with Bank of America today!
 
2022-10-01 12:01:22 AM  
It's true, because if you wait, Biden is going to pardon the  mortgages of those living in houses less than 2000 square feet right, before he leaves office.    The rest of you can suck it.
 
2022-10-01 12:01:54 AM  

wildcardjack: It's pretty basic. Start with your highest interest rates, then work your way down. If you're fixed below 3% might as well pay anything else down first. Heck, pile money into tax advantaged retirement before paying down that 3% loan.

I remember one of the personal finance pundits advocating paying off your smallest debt first. I think they were trying to create a sense of making progress, even if other things made better sense.


TIPS are paying 9.62%.
 
2022-10-01 12:03:21 AM  

TedCruz'sCrazyDad: wildcardjack: It's pretty basic. Start with your highest interest rates, then work your way down. If you're fixed below 3% might as well pay anything else down first. Heck, pile money into tax advantaged retirement before paying down that 3% loan.

I remember one of the personal finance pundits advocating paying off your smallest debt first. I think they were trying to create a sense of making progress, even if other things made better sense.

TIPS are paying 9.62%.


Do you also listen to the Tim Ferris podcast?
 
2022-10-01 12:06:04 AM  
School loans? Mrs Shirley's CalState stuff was probably paid off by 1980. I've never had one, since my engineering degree was covered by my "socialist" (West German) government.

Credit Cards? Balance is paid off every month.

Auto loans? Haven't had one of those since 2004.

We have two mortgages with a fixed rate, and the property values on both places keep on rising.

Do we get a prize or something?

A flag?

With fringes?
 
2022-10-01 12:06:15 AM  
That article had the same 'aura' as those stories about for-profit college$ telling high school seniors not to discount going to traditional college (as opposed to tech schools, apprenticeships, OJT, etc.)

If you can afford to pay off the mortgage before you have less income, I say you should do it. It's not as if house upkeep costs nothing, so why add another bill every month?
 
2022-10-01 12:06:48 AM  
Two things:
- Pay off the mortgage ASAP
- Don't take financial advise from Yahoo.
 
2022-10-01 12:12:32 AM  

The Dog Ate My Homework: Keeping a mortgage for the possible tax deduction is stupid. The reason you're getting a deduction is because you're paying interest. Why pay interest if you don't need to?


Please explain. I pay interest with every one of my mortage payments. It knocks down what I own to the government come tax season. If I completely paid off my mortage, I wouldn't be paying any interest anyway.

If I owed the government some $3000 in income tax, but paid $8500 in interest on my home, it basically negates what I owe.  Am I missing something? I've done my own taxes for decades now
 
2022-10-01 12:12:56 AM  
The deductibility is barely an argument for 95% of America.  With the standard deduction as high as it is now, even full-tithe-Mormons often find that they don't get anywhere by itemizing.

The best reason to pay off your mortgage for retirement is that you can have lower realized income for the same general lifestyle. Lower 1040 income could mean you're in the zone where you don't pay any income tax on Social Security benefits, it could mean you're in the 0% bracket for qualified dividends/long-term capital gains, it could mean (at the low end) you qualify for supports and Medicaid.  And if you retire before 65, it could mean you qualify for PPACA exchange plan subsidies.
 
2022-10-01 12:20:01 AM  
That's right, old people! Why leave a house for your children when you can invest in a Reverse Mortgage? Have your children abandoned you because you constantly blast Fox News at Thanksgiving dinner? Are they not even looking into the cheapest nursing home they can put you in?

Sell your house to rent-seekers now and you can show those stupid kids that you are self-sufficient! Fox News will comfort you as you die alone
 
2022-10-01 12:26:57 AM  

TorpedoOrca: That's right, old people! Why leave a house for your children when you can invest in a Reverse Mortgage? Have your children abandoned you because you constantly blast Fox News at Thanksgiving dinner? Are they not even looking into the cheapest nursing home they can put you in?

Sell your house to rent-seekers now and you can show those stupid kids that you are self-sufficient! Fox News will comfort you as you die alone


Everybody dies alone.
 
2022-10-01 12:28:17 AM  
Even though other debts have higher interest, folks who are retired are on fixed income, and the mortgage takes the biggest bite. 

$1600 house payment every month or $200 card payment every month. THAT's the economic reality people face.

I suppose I'll be told to skip drinking coffee so I can buy another yacht.
 
2022-10-01 12:28:59 AM  
Any debt below 3% APR is pretty much free money.  It's fairly easy to do the calculation comparing the returns on investing the value of paying off a loan vs the amount of interest paid.

There is also value in liquidity.  If something comes up and you need cash iat's a lot easier to sell a stock then sell a house.  Plus loans are the best way to leverage your assets.  I.e. rather then paying off your house you can use the cash to buy another house and bring in more income.

The rich aren't getting richer by paying off their loans. The poor are getting poorer because they are forced into taking on high-interest debt.
 
2022-10-01 12:32:06 AM  
Keeping a mortgage I would highly recommend for a tiny amount because you essentially buy lawyers who will help you defend against quit deed fraud. Its a super serious problem for people with no liens.
 
2022-10-01 12:32:07 AM  

wildcardjack: It's pretty basic. Start with your highest interest rates, then work your way down. If you're fixed below 3% might as well pay anything else down first. Heck, pile money into tax advantaged retirement before paying down that 3% loan.

I remember one of the personal finance pundits advocating paying off your smallest debt first. I think they were trying to create a sense of making progress, even if other things made better sense.


Ideally you pay off the higher rates first but you can create capacity to attack the higher rate debts if you clear the small stuff out of the way first. Like everything else it depends on your individual situation.
 
2022-10-01 12:32:15 AM  

The Dog Ate My Homework: Keeping a mortgage for the possible tax deduction is stupid. The reason you're getting a deduction is because you're paying interest. Why pay interest if you don't need to?


As a practical matter the percentage of folks who can pay off their mortgage early AND have enough retirement savings is statistically insignificant. Besides, if you live anywhere I'd want to live a long time the property taxes and insurance make up almost half the payment. Your never REALLY done paying.
 
2022-10-01 12:32:27 AM  
Pay yourself first.
Debt can be used as a tool and if you can sleep at night then you're doing it right.
If you took out loans for your adult children and you're at or nearing retirement you are doing it wrong.
The last thing you want when you retire is a mortgage payment and your child's debt.
Access to the equity in your home is a great savings plan. Pay it off if possible. Any tax benefit will not be more than your mortgage payment.
If you can't pay off your C/C balance every month you're living beyond your means. Every other month is acceptable but beyond that you're in trouble or soon will be.
Get a cash back C/C, points are for suckers.
Be financially liquid especially at retirement. Own things, don't let things own you.
 
2022-10-01 12:36:13 AM  

Strongbeerrules: Everybody dies alone.


Fark user imageView Full Size
 
2022-10-01 12:36:51 AM  

Iamos: groppet: Stripper debt not on the list? What a fail that is.
I would much rather pay off my mortgage than my student loans, not like they can come take back your degree.

Gold digger did my father in, she was more of an in house stripper than a club employee though judging by the estate files we had to sort through.


And the rest he squandered.
 
2022-10-01 12:42:40 AM  

Strongbeerrules: Everybody dies alone.


While I agree on principle, I held my cats paw while we put him down due to an inoperable brain tumor

My parents who sold their house to a reverse mortgage company they saw during the Tucker Carlson White Power Hour will not receive the same treatment
 
2022-10-01 12:44:15 AM  

Trocadero: Iamos: groppet: Stripper debt not on the list? What a fail that is.
I would much rather pay off my mortgage than my student loans, not like they can come take back your degree.

Gold digger did my father in, she was more of an in house stripper than a club employee though judging by the estate files we had to sort through.

And the rest he squandered.


So they say
 
2022-10-01 12:46:30 AM  

wildcardjack: TedCruz'sCrazyDad: wildcardjack: It's pretty basic. Start with your highest interest rates, then work your way down. If you're fixed below 3% might as well pay anything else down first. Heck, pile money into tax advantaged retirement before paying down that 3% loan.

I remember one of the personal finance pundits advocating paying off your smallest debt first. I think they were trying to create a sense of making progress, even if other things made better sense.

TIPS are paying 9.62%.

Do you also listen to the Tim Ferris podcast?


No.  I think he's an insufferable douche.

I read the Financial Times.
 
2022-10-01 12:58:46 AM  
Guess I'm ready to retire, because a mortgage is the only debt I have. :p
 
2022-10-01 12:59:45 AM  
Who has good credit and is paying nearly 8%?!? My credit union is still offering 2.89% on new and <5 year used loans for folks with good credit. RV loans are up to 5%, but that's because there's a risk premium with the used market about to go soft there could be upside down loans pretty quickly where the capital won't cover the remaining balance. Luckily I bought mine in December of 2020 at 4.5% and at a lower price than most have bought since (found a unit that was about to become 2 model years old even though it had only been on the lot 12-13 months). I've actually got enough sitting in my savings account at the credit union to pay the loan off but it's my emergency liquid capital and RV repair fund so I'm not going to pay it off early.
 
2022-10-01 12:59:56 AM  
One thing not stated here is the Income-Based Repayment plans on student loans. If you're retired, your income is a lot lower so your payments are less. And student loans go away when you die, mortgage debt remains attached to the property.

Pay off your house and tell Navient to suck it from beyond the grave.
 
2022-10-01 1:02:14 AM  
Article assumes you have debt other than your mortgage.
 
2022-10-01 1:13:22 AM  

TedCruz'sCrazyDad: wildcardjack: TedCruz'sCrazyDad: wildcardjack: It's pretty basic. Start with your highest interest rates, then work your way down. If you're fixed below 3% might as well pay anything else down first. Heck, pile money into tax advantaged retirement before paying down that 3% loan.

I remember one of the personal finance pundits advocating paying off your smallest debt first. I think they were trying to create a sense of making progress, even if other things made better sense.

TIPS are paying 9.62%.

Do you also listen to the Tim Ferris podcast?

No.  I think he's an insufferable douche.

I read the Financial Times.


Most of his guests are a bag of digle berries, but sometimes he has interesting guests. But last week he had someone name drop TIPs.
 
2022-10-01 1:15:22 AM  
The worst part of paying off your mortgage is you have to remember to pay the property taxes
 
2022-10-01 1:29:30 AM  

Strongbeerrules: TorpedoOrca: That's right, old people! Why leave a house for your children when you can invest in a Reverse Mortgage? Have your children abandoned you because you constantly blast Fox News at Thanksgiving dinner? Are they not even looking into the cheapest nursing home they can put you in?

Sell your house to rent-seekers now and you can show those stupid kids that you are self-sufficient! Fox News will comfort you as you die alone

Everybody dies alone.


Not necessarily, if you're a pilot or a bus driver.
 
2022-10-01 1:44:08 AM  

ParadoxDice: Even though other debts have higher interest, folks who are retired are on fixed income, and the mortgage takes the biggest bite.


Ha. I'm retired on no income.
 
2022-10-01 1:45:18 AM  
Banks want you to pay off your credit cards and student loans, because there's no collateral. Your home, OTOH.
 
2022-10-01 1:55:25 AM  
So basically dont make bad financial decisions your whole life all the way up until you expect to retire.
1 don't take out student loans for your kids if you plan on retiring in less than 15 years. Explain yo the kid when college is over they live at home and pay your loan back 1st.
2.  Don't have bad credit, by 60 that should not be very hard...and NEVER CARRY A BALANCE.  If you own a home have a line of credit you can draw on in an emergency, lower interest and it's tax deductible.
3. Don't buy an expensive car with a loan right before retirement.  If you want one then at LEAST use the line of credit so your paying low interest and it's deductible.

4.  The average home buyer is 33 and the average loan is 30 years so of you expect to retire by age 63 DONT USE YOUR HOUSE AS A PIGGY BANK.  don't keep cashing out equity with a new 30 year loan.

Basically dont spend more than you make and your fine BUT if you screwed up your whole life chances are you have 0 retirement savings anyway so get used to saying welcome to Walmart.
 
2022-10-01 1:57:37 AM  

pacified: The worst part of paying off your mortgage is you have to remember to pay the property taxes


Uuugh I had to do that for my mom when she got old.  I taped the stub in my wall calendar so I would not forget.  Didn't stop me from checking every month.  It's almost worth having a small mortgage just to not deal with it.
 
2022-10-01 2:04:53 AM  

farkitallletitend: Pay yourself first.
Debt can be used as a tool and if you can sleep at night then you're doing it right.
If you took out loans for your adult children and you're at or nearing retirement you are doing it wrong.
The last thing you want when you retire is a mortgage payment and your child's debt.
Access to the equity in your home is a great savings plan. Pay it off if possible. Any tax benefit will not be more than your mortgage payment.
If you can't pay off your C/C balance every month you're living beyond your means. Every other month is acceptable but beyond that you're in trouble or soon will be.
Get a cash back C/C, points are for suckers.
Be financially liquid especially at retirement. Own things, don't let things own you.


I put everything through my cards.  I pay $75/yr for an Amex that gives me 6% at grocery stored, 3% on streaming services.  Amazon goes on 5% Amazon card, target goes on 5% target card and all the rest goes on citi 2% cash back.  I can almost pay for a vacation with my reward $.
$250 a week grocery bill gets me almost $800... well 725 after the $75 fee
 
2022-10-01 2:15:09 AM  

SurelyShirley: Credit Cards? Balance is paid off every month.


For things you can afford, there's money.
For everything else, there's credit cards.
 
2022-10-01 2:18:00 AM  

Strongbeerrules: TorpedoOrca: That's right, old people! Why leave a house for your children when you can invest in a Reverse Mortgage? Have your children abandoned you because you constantly blast Fox News at Thanksgiving dinner? Are they not even looking into the cheapest nursing home they can put you in?

Sell your house to rent-seekers now and you can show those stupid kids that you are self-sufficient! Fox News will comfort you as you die alone

Everybody dies alone.


Except the people in Grumpy's car.
 
2022-10-01 2:20:43 AM  

donh: Does the mortgage industry have a timer for pushing these articles?


There was a link in article on getting cheaper car insurance (not an ad, mind you)
 
2022-10-01 2:23:44 AM  
of course you pay off all your other debts before you pay off your mortgage.  Your mortgage is your lowest interest rate of all your debts, and in a small way it is deductible (to the degree that the GOP stops attacking SALT deductions).

but after all those other debts, my god, yes, pay off your mortgage.  There is no investment option available today that has 100% certainty of 6% return on investment.   All investments SUCK right now.  Your mortgage is a no-brainer.
 
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