"NOYB" wrote in message
.net...
"P.Fritz" wrote in message
...
"John H" wrote in message
...
On Wed, 23 Mar 2005 14:22:04 -0500, "P.Fritz"
wrote:
"John H" wrote in message
m...
On 23 Mar 2005 10:57:44 -0800, "basskisser"
wrote:
John H wrote:
On 23 Mar 2005 09:44:18 -0800, "basskisser"
wrote:
John H wrote:
On 23 Mar 2005 05:01:54 -0800, "basskisser"
wrote:
NOYB wrote:
wrote in message
oups.com...
But, I thought that you had to get an interest only
loan?????
The bank was offering me either loan...conventional, or
interest-only.
I chose the interest only loan over the conventional 30-year
fixed,
because
it gives me the option to pay principal on the loan (but only
if
*I
*decide
to do so). Right now, it makes more sense for me to put
$25-30k
per
year
away in a qualified pension plan than to pay principal on a
home
mortgage.
In 4 1/2 years, I'll only be 38...and I'll have an extra
$6000/mo
(before
taxes) to put towards principal and/or retirement savings. At
that
time, I
can get a 20 year conventional fixed mortgage, and pay the
home
off
before
I'm 60.
Yeah, sure, whatever.......
basskisser, is that the best you can do when you see a good idea
put
in place?
--
John H
No, but you know how NOYB is, no sense in trying to make him think
anything other than what he does, says, where he lives, his
occupation,
his thoughts, and on and on, are anything less than superior to
anyone
else in the universe. Just ask him! Now, as far as a "good idea",
he's
admitted himself that he is financially stretched tight.
My daughter has commented to me about having a negative balance, on
occasion, in
my checkbook. To her, who has bounced a check to me, this was really
something
to 'catch her dad' with.
There are times when it is beneficial to one's longer term interests
to be
somewhat 'stretched tight'. That is not, necessarily, a sign of bad
financial
management. I financed my house for 15 years instead of 30. The
additional
payment amount stretched me a little more than I had been, but I
think that the
long term benefits will be worth the stretch.
Ah, now, paying off a loan quickly is right the opposite of an
interest
only loan! You are purposefully paying off the principal quicker,
while
he isn't paying ANY of it off. I've got a 30 year fixed, and it will
be
paid off in 17 years because of extra payments applied directly to the
principal. I don't care what anybody says, I don't like being in debt.
I don't take out car loans, I save until I have cash to buy a car,
therefore I don't pay anybody to use their money. Same principal.
Well, once you read my other post you'll see why your idea isn't
necessarily the
best.
If he us using the money he saved on the principle of the home loan to
pay
off
the business loan (with perhaps a higher interest rate) sooner, then
it
seems as
though he's doing a smart thing.
Wouldn't you think that he knows more about his finances than you do?
A tree stump knows more about finances than the "King"
Paying off the house early is like buying a 2-1/2% bond.
I expect he'll get very mum on this subject shortly.
I doubt it, he has been beating his head against the wall about this for
months. I think the basic problem (besides him being the "King of the
NG idiots") is that if you are in the low end tax bracket, it may not
make economic sense. Those in the highest brackets can see the economic
benefits clearly.
Add to the above.........the choice of paying an extra 200 a month to
your mortgage (money taken as income) or to your 401k
(pretax).........you take the 200 a month as income, at 33% and you
netting 130 to the principal..(likely less than that because of medicare
tax and and state and local income tax) .....saving you 2-1/2% of that
amount..........in the meantime you could have taken the entire 200
pretax in a 401 or SEP even at a modest return of 5% a year.....you are
going to be even further ahead.
Ding, ding, ding, ding. We have a winner!
The funny thing is that asslciker claims to be self employed.......anybody
that is self employed would realize the benefits of the pre tax investment
(especially since they raise the limits of the SEP / 401K )
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