Where’s that list of things to do?

I think I can scratch a few things off of it today. I got the garage cleaned out. Sort of. I feel sorry for our trash guys on Monday. I have a mountain (err a small foothill at least) of trash. One man’s trash … It feels good. It’s part of my plan to simplify things and and getting rid of the clutter. I caught wife in the right mood. She helped! I was told if I ran across anything that might have a bit of sentimental value to not tell her. It was great!!! We got the junk out. Need to weed through the remaining stuff a bit more, but I can live with it.

We’ve been discussing the plan to get out of debt (yes, including my home. With what I make we can do it in 6 years and 11 months. That means Wife will have to fund vacations and misc. expenses while I engage the bills. Following this plan ( provided I figured interest rates properly the Honda Pilot will be paid off 6 months early. I’ll have paid off 2 credit cards in 6 months, a third in a year, then the Pilot. Once the pilot is done we finish another card then house payments really accelerate. By almost 2.5 times!! This still leaves the income tax refund free for improvements/investments or to further accelerate paying the house off. Then imagine what my to do list will look like!

Found that list and scratched a few off …

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4 Comments

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4 responses to “Where’s that list of things to do?

  1. Alicia

    I like your plan. However, I would debate you on the benefits of paying off your mortgage! There are better things to do with your money, IMHO!

  2. If I can take that money saved by not having a house payment, drop it into my 401K making 10% that is more than I’ll save in paying intrest to avoid taxes. The “tax shelter” of home ownership is a myth. One option I have after paying it off is buying a rental property. And I then have the “tax shelter” with someone else paying for it. Buy paying the house off in 6 years and 11 months I save myself over $80K plus I earn intrest (averaging 15% this past year) on that money in my 401K. How is that bad? Granted, the investing starts later as opposed to “now” but in 7 years, what investment is going to pay out $80K? Not one I know of based on the money I bring home.

  3. Alicia

    Actually “owning” your home is myth, too. If you don’t believe me, skip a property tax payment. You’ll see who really owns your home! Run your income tax return figures without a mortgage . If you’ve earned 15% in interest this year, consider yourself lucky and don’t plan on that being the norm. Your current mortgage is probably in the 5-6% range (and then deduct the mythical tax benefiit to see how much the mortgage actually costs.) You made 15% in your 401k? Where would your money have been better invested? If you could make 15% , I’d take out a second mortgage and invest where you’ll make 15%.

    If you earned dividends and LT capital gains right now, you will only pay 15% in taxes. When you go to withdraw your money from your 401K all those dividends and capital gains will be taxed as ordinary income. Tax rates are historically low, what will they be like by the time you reach 59 1/2? 401k’s are nice, but they’re not the only answer. I wouldn’t invest anymore than what your company matches in a 401K, after that, I’d be looking at a Roth IRA or 529’s for college as well as investing on your own. I haven’t even hit on the time value of money and what you lose by waiting 6-7 years.

    This is a subject I’m passionate about, can you tell? I can see you’ve done your homework, but I encourage you to think outside the box. If you were certain that you would not ever use another credit card, I’d encourage you to wrap those bills and the car payment into a home equity loan and pay that off rapidly. But, you should only do that if you’ll never ever use credit cards again, otherwise, you are gambling with your house.

  4. I found a website that will give you a breakdown of what you should do based on current financing vs. payoff.

    http://www.hughchou.org/calc/payoff_v_borrow.cgi

    what it all boils down to is what your interset rate is and what you feel you can safely make investing the money. with current interest rates hanging between 5.5% and 7% it makes sense to keep the loan, however if your interest rate is higher you are better off to pay it off.

    i think it just depends on your mindset. right now my mindset is “i want to be debt free”. I’m approaching the point in my home loan that the benefit of paying it off in 7yrs is more of an advantage to me than keeping the payments.

    with regards to missing a tax payment .. there are only 2 things in life that are certain, taxes and death. the taxes are not that big of a deal. i did miss a payment once when we refinanced. i was under the impression the new loan included the taxes in an escrow account. when i found my name in the paper for being delinquent for my taxes i freaked out. i got it paid right away and called the mortgage company to setup the escrow. it didn’t affect my home owners insurance since it was already paid for the year. i had to send a check to the escrow company to make sure there was no shortage when the time came to pay it again.

    right now for me it’s a mindset. the less i owe the more i own. plans are to pay off this house, use the equity to buy a new lot and build a home. of course that will be financed (can’t avoid that unless i find that rich uncle and i’m a favorite nephew).

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