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« Copywriters On The Vital Few | Main | Winner #11 - JP Maroney »

April 09, 2007

Comments

Becki Maxson

My husband and I were 9 and 10 years, respectively, paying off our college loans. That's a burden on any young marriage. Our goal is to get our house paid off in time to help our sons through college debt-free, or as close to it as possible. We don't carry other loans, doesn't make sense.

A few years ago we accomplished the biggest goal, getting 100% completely out of debt. That's an unbelievable feeling of freedom, options, etc!

With a change in our situation, we have relocated and did get house debt again, but we carry the balance on an equity line so we can pay it down in chunks...again, the goal is to get rid of that sucker in just a couple more years.

I agree that the argument for having a mortgage for 'tax reasons' doesn't hold any water when you look at the reality. Pay 70 cents in interest to save 30 cents in taxes? Makes no sense.

Great topic, Ryan, especially to teach to our teens too.

Carolyn Warren

Here are some pearls of wisdom...

1) Tailor your desires to your budget, not the other way around.

2) Don't charge luxuries you can't afford to pay off when your credit card bill comes.

3) Use your credit card as a convenience, not as a means of going into unnecessary debt.

4) Never use a mortgage as an excuse to get a tax deduction. You can get the same tax deduction by donating to charity. Is the mortgage company your favorite charity?!

5) If you make one extra payment a year on a 30-year mortgage, you will cut off approximately 7 years, depending on your interest rate.

6) An interest-only loan will cost you more money in the long run.

7) Avoid ripoffs and save money by following the advice in the brand new book, Mortgage Ripoffs and Money Savers. (See amazon or barnesandnoble.com.)

Carolyn Warren
www.mortgage-helper.com

Lee Little

Living debt free is an honorable goal but some of the tax advice offered here isn't particularly accurate.
The USA tax code is written to favor mortgage interest (back in the Regan years your charitable came off the top; now you have to itemize to use it).

There's good debt and bad debt and as long as you understand all forms of money and use them appropriately, you can achieve your objectives.

Investing in a business and an education is good debt—as long as it isn’t used to indulge in consumables.

That said, one of my proudest accomplishments is getting my kids thru school and out into the world debt free.

Carry on--Lee

Perry

Debt is something that sneaks up on you and bites you in the behind if you aren't careful. I'm with my friend Carolyn. Paying $10,000 a year in interest to save $3000 in taxes is a lousy trade. But since I certainly couldn't come up with the $328,000 I needed to pay cash for the house I live in I had to borrow some of it. We did put $200,000 down so it's not all bad. I'm not complaining that the government is subsidizing my purchase via a reduction in my income tax owed.

Like Ryan says: Debt can and will enslave you. In fact your employer probably secretly wants you to be in debt. It makes it harder to leave your job.

I think when you are self-employed it's a little easier to gain perspective on what it is really important to spend your money on.

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