Our mortgage will also be paid off in about 5 years. I plan to talk to our accountant at tax time but for anyone who has paid off recently, did you find a big difference in your taxes not having the deduction?
No, the tax difference isn't huge. People who say, "I won't pay off my house because I want to keep the tax break" simply haven't done the math -- they've looked at one line rather than the big picture.
I am concerned about our tax bill going up when our now-16-year old is no longer a tax deduction. That change, coupled with a couple other things may put us into a difficult situation. The thing to do is to plan ahead for these things and shelter more dollars into a pre-tax retirement account. We all need to save for retirement anyway, so this helps in two ways.
Even if we pay off our mortgage in the next few years, we still have 3 kids to put through college, so we don't have questions like yours!
Yeah, I could say the same thing (except I only have two kids). We're coming into the college years not with "extra money" but with enough to comfortably pay for a state school without borrowing money or selling our blood. We can still put aside retirement money, pay cash for our girls a car when they graduate, and be comfortable. We'll be able to retire mid-50s, build a nice house on our land, and live modestly but comfortably. THAT is what working hard to pay off the mortgage earlier in our marriage has done for us.
Holy cow! $210K?
We have already told our kids that they can go to the local 4 year college and live at home. We will cover that. Anything more, they cover the difference. They can go to a big name school for grad school! on their own dime!
Now, this is all said and thought when they are nowhere near college age, SO, ask me again in about 10 years as our opinions/reality may be far different, but the above is what we are thinking we *can* do financially and since many parents won't even pay for their kids' college, I think it is a reasonable offer.
Dawn
My kids are near college age -- we're touring colleges now -- and we're telling ours that we'll pay for 4 years at a state school: tuition, dorm, meal plan. We'll expect them to save their summer paychecks for books, and we'll expect them to work part-time during the school year for spending money. In addition, IF they earn scholarship money that pays more than 50% of their education, we'll buy them a small new car for graduation. IF they choose a more expensive school or an out-of-state school, we will give them the money we would've given them, and they must figure out how to make up the difference.
As our oldest is getting serious about college plans, she is very appreciative of this offer. She already grasps the idea that graduating from college without debt will give her a freedom and an easier start in her professional career -- one that many of her classmates will not share.
The one thing I'd question about your plan is the living at home part. I know you live near a major university (and we toured it recently), but it doesn't offer all courses of study. That could be a sticking point.
Any tips for a new homeowner? . . . I had suggested to DH that even if we had $60 extra each month, to put that on top of our mort payment, but he thought that was a bad idea...
You're exactly on the right track. Have you looked at an amortization chart for your mortgage? If you're typical, you're probably only paying $20 or so per month towards your principle (yes, out of all that payment only that tiny bit goes towards actually getting you out of debt), so if you throw $60 extra towards your principle every month, it's like wiping out 2-3 months of future payments. The long-term savings is huge.
How to convince him: Run an amortization chart (it's easy to google a calculator) for your regular payment . . . and another for your regular payment + $60. How many years shorter is the +$60 payment?
We bought our first house in 1990 when we were first married, and we pay an extra $50 at first (which, sadly, was more money than it is today). After a while, we were able to increase that amount. We did it from the very beginning, so it wasn't a hardship. BUT we weren't required to do it. If we'd had job loss or other financial crisis, we could've dropped back to our regular payment. It was one of the best financial decisions we've ever made.
The other thing to do is to avoid "trading up". So many people buy more house and more house and more house as they grow older and their income increases -- but they'll never get it paid off. We're in our second house, and we've never had a mortgage on it. Yes, most of our friends have bigger, nicer, newer houses, but ours is comfortable and PAID FOR. Now that we're mid-40s, many of our friends are concerned about their kids' college educations and their own retirement . . . but we're not, and having chosen to stay in a modest house is one of the biggest reasons that's true. We've never been particularly high wage earners, but we've done a great deal with what we have.
In reality I know there will be a difference but our intention is to invest and pay for 3 kids to attend college. Between what we have already (and continue to) put away for college we should not need much more to pay it off for them.
The people are loosing their moral while becoming modern. The society needs to be attentive that moral value I am very pleased with the thought and dont feel like adding anything in it. It a perfect answer.
