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4 Comments

  1. Dave @ Married with Money

    I had a comment on Twitter recently regarding the mortgage interest deduction. Most people get the math wrong. It only matters if you itemize, and even then it’s ONLY on the amount ABOVE the standard deduction that you itemize.

    With the recent increase to the standard deduction of $13,000 for married couples, that means you’d have to be paying more than $1000 in interest each month to even get anything back above what you’d get for just existing and filing your taxes.

    It’s something to keep in mind, but I really think we need to stop claiming that mortgage interest deduction is a good reason to keep a mortgage around when the stakes are so high to even benefit significantly from it.

    Also, regarding the stock market, a few caveats:

    – Obviously, historic performance doesn’t guarantee future returns.
    – The longer your timeline (for both using the money invested and paying off the mortgage), the more it makes sense to invest due to market volatility.
    – A guaranteed 4% return is nothing to scoff at.

  2. Laurie Blank

    Thanks for the comment, Dave! These are all great points. I think so much of the decision rests on one’s risk tolerance as well. We do invest in the stock market, but the majority of our extra cash goes toward paying off debt. It’s just what makes us feel most comfortable.

  3. Steven Goodwin

    This is a great article and definitely provides a lot to ponder. We’ve been working to pay down our home faster by refinancing so we can cut the term and cut the interest rate. So far, we’ve done that twice and are down to about 14.5 years after being in the house for 7.5. We haven’t made extra payments since we are working to get 15% of our income to go towards retirement first (we follow the Dave Ramsey baby steps). I don’t mind paying a little bit in closing costs if it’s going to save me the overall interest over the life of the loan.

    I do struggle with wanting to pay off the mortgage faster to free up the cash flow monthly, though. But, I feel that I’d have regret on missing out on the compound interest from the investments. I guess the last option is to go out and make more money to throw at it! Thanks for the comprehensive, in depth look at both sides!

    • Laurie Blank

      Thanks, Steve. I appreciate your thoughts!! We’re doing the hybrid plan as well. I think it’s best for those with indecisive minds. 🙂

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