Quote:
Originally Posted by ironworks
Yeah, that's what I'm saying, but wouldn't he have more money in his pocket at the end of the year if he did not pay the interest? ( 15 year term instead of 30 year term ) The higher taxes on the money you could have spent on interest (TAX FREE) have to surely be less then the interest paid. So what if it puts you in a higher tax bracket. Your not paying all that interest either.
I understand it all depends on each persons own position, but I think the more money that ends up in your pocket the better.
Back to the shop.
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Yes -- a guy would probably have more money NET in his pocket if he had no payment... but most people have to live somewhere.... and that has a 'cost' attached to it. If you're house is paid for - but that cash is tied up and so is not earning you anything either.
Obviously the best scenario is to have no payment and no taxable income and have enough to live on... but for about 99% of the population that just isn't how it works out.
I keep a mortgage to offset some income that I have that puts me in a higher bracket... and the invested cash earns more than I pay out... but that is NOT the normal situation.