paying off house

ArmyDoc · #41 09/02/10, 02:48 PM

If you have savings = to 3 to 6 months monthly expenses, and you don't have any higher interest debt, I would say paying of your mortgage is probably a good bet. If you wanted to put a percentage of it towards the debt and a the rest into a diversified mutual fund, I wouldn't argue with that either, but remember paying off your debt is a sure thing. The market is not.

If you elect to pay off your mortgage, take the money you would be spending on your monthly payment and save it. You will need some of that money to pay the insurance and taxes that your mortgage is probably currently paying for you. (a small amount of your monthly payment but it can come as a surprise at the end of the year unless you plan for it.)

WhiteWillow · #42 09/02/10, 02:57 PM

I've not read all of the messages yet because I am bursting at the seams to say....I WOULD PAY OFF THE HOUSE!! In a heartbeat. If there were other considerations than I guess a compromise might be to pay a portion on the house (say $35,000) and then save the rest.

Patt · #43 09/02/10, 03:13 PM

We just paid ours off and it is a wonderful freeing feeling! I say pay it off!

RedTartan · #44 09/02/10, 03:15 PM

If someone handed me 50K right now, I'd get my emergency fund where I want it and plunk every last bit of the remaining on the mortgage. So another vote for paying off the house.

Your husband is operating on financial advice from another time that no longer applies.

SueMc · #45 09/02/10, 05:10 PM

I agree with most here! Pay off the mortgage. Most of the investment advisers say so. The only other thing that I would definitely do first would be pay off any/all higher interest loans/cards first. Our mortgage is paid and it's a great feeling. I did recently buy 35 acres and set it up to be paid off in four yrs, while saving to build on it. We're in our mid-fifties and have no intention of having long term payments on anything.

Brooks WV · #46 09/02/10, 05:33 PM

Finally something I can talk about!

Yep, pay off the mortgage, for reasons already stated.

I forgot who posted it here, about your money being insured if the bank fails. That not exactly the case. You're insured to $100,000. Anything over that, you lose. The $100,000 is guaranteed by the FDIC. They are not equipped (funded) to keep bailing out banks at the rate they are failing. You, me--us little guys, we're the 1st to not get paid when push comes to shove. I chose to invest in physical property, that which I can directly put my hands on.

Gold/precious metal- There is no better investment. Yes, the price has risen to 3X it's 2003 value (much to my enjoyment!), but it isn't done going up. It moves opposite the dollar. The dollar is still very weak on the international markets. OPEC is shifting from the dollar being their sole conversion currency to a "basket" of different currencies. Iran and Venezuela do not sell their oil for dollars at all(two of the biggest oil rich countries) What this means, is that the dollar is going to continue to slide, and gold will continue to climb. I buy and sell my gold on Ebay and C/L. I deal only in cash. The good uncle dislikes this because it's untracable. Drawn your own inference there.
The biggest draw to gold (for me) was on Sep. 12 2001 when the Stock exchanges closed indefinitely. What did I have? Nothing. A computer screen telling me I had money in company X and Y. I had ZERO recourse to get my funds. I switched to gold, and kept it in my safe at home. It goes up and down, just like the market, but I have physical control of it. The markets can close, the economy can destruct, but I will always have my gold in hand. It sells/trades very easily, and trust me $50K of gold takes up far less room than $50K in cash!

Joshie · #47 09/02/10, 05:40 PM

Do you have just that $50,000? Any extra? Any savings? Assuming that you have other savings, I'd pay off that house so fast that it would make your head spin.

Do you have other debt? Any debt with a higher interest rate? I'd pay that off before the house.

If you don't have any other savings I'd pay the house way down and make sure you have 6 months of living expenses in case of emergency. If you were laid off would you have the money you need to live on? Of course, if your house is debt free you'd certainly need far less as far as living expenses go. I'd also make sure that I had the money for emergency house repairs and savings at least started for a new car in case your goes kaput. Do you have retirement savings?

There's no reason in the world to keep a mortgage in my book. I have a friend who believes that you should always have a mortgage on the most expensive house you can afford. Hmmm, that's not the way to build wealth.

**clovis** · #48 09/02/10, 05:52 PM

Pay off the mortgage...and do it right away.

We just paid off our mortgage. It is an awesome feeling!!!!!!!

FWIW, my wife's employer has made the employees jobs really tough in the past few weeks, and things are not going to get easier. I told her to quit. No mortgage means that we'll make it, even without her income.

We had to pay the last month's interest, which came to $269. It made me sick to send them that much money...just for the balance due on the interest. We could have had a short vacation with what we gave them in interest!!!!

We are big fans of Dave Ramsey too.

Pelenaka · #49 09/02/10, 08:50 PM

K, don't know about you but when ever the Gods know that I have dead presidents laying around things break, like the car.

My mortgage is 4.5% - for every $100 bucks I put down on the principle I knock off an extra $55 and some change. If you paid it off early & there is no penality you migh not owe 50k.
That being said I wouldn't use the whole $50,000 on the house. Opportunities knock when only cash will do. Then there's the whole emergency fund coffee can in the freezer.
For me I would find a way to end the paper trail on this money.

~~ pelenaka ~~

haypoint · #50 09/02/10, 09:13 PM

Other, higher intrest debt, should be paid off first.
If, in the next couple of years, you plan a big purchase, you might not want to pay off the house,
Closing costs can run 2 or 3 thousand bucks. If you pay off the morgage, that closes that contract. If you buy another house, like a vacation home or rental property, you'll be paying closing costs all over again. Think about how you will be spending your money in the future.
Let's say you want to buy a field down the road. Most banks won't loan money on raw property. If they do, its a high interest rate. If your house is paid off, you could borrow against the house to buy the field. However, they'll stick you with closing costs, again.

Lots to consider.

paintboy · #51 09/02/10, 09:17 PM

pay the house off yesterday. Do it do it do it. You will sleep better. The flowers will smell better. If life hits the fan you still have your house. Do it.

greif · #52 09/02/10, 10:12 PM

pay it off, maybe save 5-10k for emergenies.... gold-silver is stupid price will dive in year or so...... any one sell gold silver is a sam artist going for scare tactic... evil people

GoldenCityMuse · #53 09/02/10, 10:31 PM

Pay off the house. Discipline yourself to then save the mortgage payments for a year to yourself. Then maybe start saving less and develop a home based part time business.

There is good advice in buying distressed properties, but you need to pay the house off first. No job is secure in this economy.

#54 09/02/10, 11:08 PM

Don't buy gold and silver because if TSHTF it won't be worth anything. It is very inflated now anyway. If the entire economy goes to hell you won't have a job, the food distribution system fails, gas and electricity fail, and the zombie hords go scavaging. Look at any natural disaster and this is what happens. I will have canning jars, chain saw chains, preserved food, and guns and ammo. Thes items will be necessary to survival and can be bartered for things you need. I would not trade a can of beans for a bar of gold under those circumstances.

If the S does not HTF then we will have tremendous inflation. We owe so much, we are printing money, and we have too many entitlement programs. Inflation is the result. Once again I want to hold the items mentioned above because they will go up in value along with inflation. The problem I forsee is that your property taxes will go up along with the inflated value of your property. They could go up so high you couldn't pay them and lose your property.

I would go ahead and pay off your home if you think the economy will last for another few years. You save the money you would be paying in interest and could rapidly build up savings. Invest some of the savings in inflation proof items. You want to be sure you don't wind up needing to sell your home and being unable to do so. That is the way things are right now.

wogglebug · #55 09/03/10, 12:50 AM

The beauties of compound interest! They always work for the investor, and against the borrower. Let me lay out a simple example. Assume you're paying 10% interest (far FAR worse if it's credit card debt), then for every dollar you owe,

after one year you owe $1.10
after two years you owe $1.21
after three years you owe $1.33
after four years you owe $1.46
after five years you owe $1.61
after six years you owe $1.77
after seven years you owe $1.95
after eight years you owe $2.14
after nine years you owe $2.36
and so on.

Hard to see tax advantages making that up, particularly in a depressed property market.
It works the other way too. The quicker you pay it off, the less money you lose in dead interest.

First, call it debt, not a loan. It's true, and it's bad - let it sound bad.

Pay off your high-interest debts (for instance, credit cards) and make sure they'll never recur. Cut up the plastic. Maybe keep one card, frozen in a margarine container full of water in the bottom of the freezer, and use it once a year to keep it active in case you need a source of instant credit.
Pay off the personal loans/debts (except maybe student loans - think hard about that - they usually have fairly low interest and easy terms if you get into financial trouble - keeping them active and paying them off regularly may do good things for your credit rating, if you can invest money to match the interest you are paying. Its a sure bet nothing else will let you do that.)

Now, pay off the mortgage. Psychologically, working through the debts from least to biggest works better, rather than the arithmetically correct way of hitting them in order of interest rate.

It's a sure bet that you'll never get a better rate of return than paying off debt.
Nothing else will make you feel better either.
DO IT DO IT DO IT!

mightybooboo · #56 09/03/10, 12:55 AM

Quote:

Originally Posted by Nimrod

Don't buy gold and silver because if TSHTF it won't be worth anything.

OK,I said I wont comment but that scenario has NEVER happened in recorded history,please quote me otherwise.Gold has NEVER been valueless,and in economic collapse holds great value relative to goods.

What famine (is that your scenario?) are you referring to when gold was valueless? People starved in the potato famine,with GOLD they ate well,FACT. What economic collapse (is that your scenario?) had valueless precious metal? I can quote just the opposite,the last one being Argentina,currency collapsed,gold could be spent in World big name banks at the WORLD value.They also took silver,at the WORLD price. They did NOT take beans, shovels or ammo,all worthless for paying your mortgage,taxes etc to the bank/gov.

Poo in fans,how about Nazi Germany (is that your scenario,escape the death chamber?) It got a lot of folks out by paying bribes,they werent smuggling Jews for beans or shovels.Hiding Jews bought food with gold when whole gov was looking to run em thru the ovens.They werent on the run with canned foods and chainsaw blades,it was gold and diamonds,great wealth in little packages.

Thats just incorrect that precious metal is valueless,you may think so,history says it isnt true.

I dont think you can quote any factual historical scenarios where precious metal collapsed.If you think Katrina folks couldnt spend metal it was only because they were trapped in their homes.Maurauding hordes vandalized just fine.Had nothing to do with whether or not you had metal or greenbacks.Same story for an earthquake,fire etc.Has nothing to do with where your wealth is stored or in what form if you burn alive or a house falls on you,or a flood washes away your home.

Good luck holding off the golden horde of zombies,you arent that big or strong enough ,neither am I.We are not islands unto ourselves,and there is ALWAYS someone bigger,badder or MORE of em than you.Survival fiction not withstanding,just look at what happens during ethnic wars,the populous better run or youre dead,they dont hold onto the farm against the killing hordes.See Bosnia/Serbia for that war history lesson.

Even THEN gold will have tremendous trade value,ALWAYS has,even in the most dire of situations.ALWAYS.

BTW,if gold is so valueless why do the Worlds Central Banks,the purveyors of fiat currency,their bread and butter,hold tons and tons and tons and tons and tons and tons and tons and tons and tons of GOLD?? NOBODY knows more about what money is than the Bankers who control and issue it.
Because its worthless,thats why they hold it???? Not hardly,if anyone knows Golds value its the Bankers.And they LOVE IT!

Texasdirtdigger · #57 09/03/10, 03:41 AM

We thought it prudent to pay our home off a few months ago. I was freaked at first, just at the thought of letting the cash go. But, now I am relieved. I think it was a smart move.... for us at least.
Good luck in your decision.

gilberte · #58 09/03/10, 04:42 AM

Man, I'll never get this gold thing. If TSHTF what would you do with it? Eat it? Keep warm with it? The only way it's worth anything is if/when things got better I guess, you know, after folks was well fed and warm again.

Oh yeah, and pay off that house if you can, that is, as long as you don't have any higher interest loans too. Then the only monthly payment you'll have on your home is to the tax man.

po boy · #59 09/03/10, 04:54 AM

Pay it off and put what would be your monthly house payment in a savings account.

fordy · #60 09/03/10, 07:45 AM

Quote:

Originally Posted by Momof2kids

I have the money now to pay off house( 50,000) But my husband thinks we should put it in the safe and not pay off the house. He says that all house should have some type of morage. WHY?

................In the current economy I would , NOT , payoff the house ! Because , with cash you have lots of choices , when sudden emergencies present themselves you don't have too rush down too the bank and ..."Beg" for a loan ! If , this property has a market value that exceeds the loan payoff then you can still seli the property If , for some reason you have too move too another area . What happens If , a close relative gets sick and one or both of you'll have too move back and take care of this person until their recovery or demise ? You'll need money too accomplish that plan . Try paying and extra amount against the principal each month and keep the cash for emergencies ! , fordy