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  1. #21
    Join Date
    Jul. 31, 2007
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    Quote Originally Posted by texan View Post
    I would pay down the mortgage and any other bills that i had. e.g. credit card.
    Oh yeah. Damn straight. Eliminate debt that has interest rates up in the double digits first.
    The armchair saddler
    Politically Pro-Cat



  2. #22
    Join Date
    Sep. 7, 2009
    Location
    Lexington, KY
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    17,467

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    Quote Originally Posted by mvp View Post
    Exactly. That's what I mean by a "math problem." If you are paying more in interest than you are making (all other things being equal), you are doing it wrong.

    But meupatdoes looks right to me on the investment front, too: Rental property is the new "Plastics" so far as I'm concerned.
    Not exactly. Interest on the mortgage is deductible (of course, how that impacts your bottom line depends on your income) and retirement, if you take advantage of IRA's, 401(k)s, etc, can earn interest/dividends tax free.

    It's complicated.
    "We can judge the heart of a man by his treatment of animals." ~Immanuel Kant



  3. #23
    Join Date
    Jun. 7, 2006
    Posts
    8,600

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    Quote Originally Posted by mvp View Post
    Didn't you buy your place, like, 10 minutes ago? Be sure to ask about the tax implications of looking like a flipper. I think you need to be in a primary residence at least 2 years to be exempt from too much tax on your profits.

    (Ask my horse trainer friend who put $20K into fixing up/staging her home *before* she explored this basic question how she knows.)
    I bought it December of last year so if I hold onto it a year before selling I get capital gains treatment on any profits.

    There probably won't be any profit though, I am fine with staging it enough to break even after closing costs. The duplexes I am interested in are going for roughly the same price as the house so I am hoping to essentially do an even trade, and then just have the duplex tenant pay my mortgage instead of me.



  4. #24
    Join Date
    Jul. 31, 2007
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    15,179

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    Quote Originally Posted by LauraKY View Post
    Not exactly. Interest on the mortgage is deductible (of course, how that impacts your bottom line depends on your income) and retirement, if you take advantage of IRA's, 401(k)s, etc, can earn interest/dividends tax free.

    It's complicated.
    True, but you can only add $5K/year to your Traditional IRA. Roth IRA contributions are with post-tax income. So if you got a butt load of money, you can't make all of it work for you tax-free right now. (Oh and you do pay taxes on the earnings from the Traditional IRA later-- you must start spending it at 70.5 years or so when your tax bracket might be higher.)

    OP, don't wig out too too much about taxes. If you received less than $5M before 12/31/12, you probably got that without paying inheritance tax. That was a huge gift from the Bush family to you. Thank your deceased family member for his/her timing as well.
    The armchair saddler
    Politically Pro-Cat



  5. #25
    Join Date
    Apr. 24, 1999
    Location
    New England
    Posts
    1,264

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    Total Money Makeover by Dave Ramsey.
    Work the 7 steps.
    Pay off any debt ( credit cards,car, etc).
    Set aside 6 month emergency fund,
    pay down mortgage,
    save for retirement.


    3 members found this post helpful.

  6. #26
    Join Date
    Jul. 31, 2006
    Location
    VA
    Posts
    2,732

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    I would pay down the mortgage but not refinance for more years unless you are getting a a substantially lower interest rate. Mortgage interest deduction is one of the things they are considering cutting. I would put some in your retirement fund and the rest in an emergency fund.
    Free bar.ka and tidy rabbit.



  7. #27
    Join Date
    Jun. 24, 2005
    Location
    Alabama
    Posts
    8,400

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    I would pay down the mortgage principle. However, my understanding is that unless you refinance using the extra money it won't change your payment. Paying on the mortgage amount shortens the number of payments, but the monthly payment stays the same. And if you have outstanding debts (car or credit card payments), pay them off first because they cost so much.
    You can't fix stupid-Ron White


    1 members found this post helpful.

  8. #28
    Join Date
    Mar. 26, 2005
    Location
    Back to Normal.. or as close as I'll ever get
    Posts
    9,424

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    Thanks all, you've mentioned things I've already considered (and should have put in my OP).

    I'll be paying off the one CC I have and setting aside some Emergency Fund $$.
    Even after taking care of these things& the planned repairs/improvements to house & barn, I'd still have enough left to pay down the mortgage.

    My mortgage is a 30yr fix @ 4.5% and I have done the Refi Dance twice already on this place.
    I'll be talking to my bank about the possibility of going to a 15yr if it lowers the payment & interest rate enough to interest me.

    It would take an Act of Will for me to save on my own.
    Historically, if it does not come out of my paycheck it does not get saved.

    Currently I am in a profit-sharing plan w/employer match that allows retirees to contribute and since retirement {knock wood} is a little over 3yrs away I could continue that.

    And yes, every 2nd or 3rd month the mortgage eats up the bulk of my paycheck leaving me scrambling to pay other bills. This has not always been the case, just in the last year or so.

    I've already found some places I can economize - like wireless cell/internet package that adds up to more than the salesman forecast.
    I can adios the contract phone for a pay-as-you-go model and use my employer discount for the internet, cutting that bill in half.
    With a lower mortgage payment that half could go to the retirement fund.

    Keep the ideas coming!
    *friend of bar.ka*RIP all my lovely boys, gone too soon:
    Steppin' Out 1988-2004
    Hey Vern! 1982-2009
    Cash's Bay Threat 1994-2009



  9. #29
    Join Date
    Apr. 24, 1999
    Location
    New England
    Posts
    1,264

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    If you are paying a large chunk of $ to the mortgage then a) be sure it goes to principle only and b) make your bank reamortize the payment schedule ( most will do this if you are paying 10k or more.)

    Once you know the new payment then you have 2 options... 1) keep paying the old mortgage payment(be sure to specify that the overpayment is for principle- cause it will go to interest otherwise) or 2) immediately increase your payroll deductions to maximize what goes to retirement (if you are 5 yrs or less from retirement then your max plus catchup provisions could be a very large amount). Talk w/a tax advisor AND a financial advisor to determine if the employer plan (pretax$) or a Roth (after tax$) is best for your portfolio.



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