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Thread: Life after debt?

  1. #21
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    Yes it makes sense to me when people keep their low interest rate mortgages. When we were young rates were high.

  2. #22
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    Quote Originally Posted by Teacher Terry View Post
    Yes it makes sense to me when people keep their low interest rate mortgages. When we were young rates were high.
    Iíve seen some pretty impassioned debates on that topic. You need to balance emotional and financial considerations, as well as alternative uses of the funds, risk, projecting future rates, the need for liquid reserves, taxes, etc. People can get positively nasty with each other about it.

    You also see some heated discussions about the best Social Security claiming strategy. People get emotionally invested in their decisions.

    In my mind, hanging on to a low rate mortgage makes sense because I want a fairly large liquid position in the early, sort of exploratory phase of retirement. Iím not giving up that much in mortgage interest versus what my cash reserves earn, and I want to be prepared to handle surprises. I could wipe out the balance of the mortgage but I want to keep my powder dry for 2-3 years in case my planning proves a bit faulty.

  3. #23
    Senior Member catherine's Avatar
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    Quote Originally Posted by LDAHL View Post
    Iíve seen some pretty impassioned debates on that topic. You need to balance emotional and financial considerations, as well as alternative uses of the funds, risk, projecting future rates, the need for liquid reserves, taxes, etc. People can get positively nasty with each other about it.

    You also see some heated discussions about the best Social Security claiming strategy. People get emotionally invested in their decisions.

    In my mind, hanging on to a low rate mortgage makes sense because I want a fairly large liquid position in the early, sort of exploratory phase of retirement. Iím not giving up that much in mortgage interest versus what my cash reserves earn, and I want to be prepared to handle surprises. I could wipe out the balance of the mortgage but I want to keep my powder dry for 2-3 years in case my planning proves a bit faulty.
    I'm debating both those issues (mortgage vs pay it off and social security now or at 70)

    Regarding the mortgage, it would be so tempting to sell my NJ house and pay off all debt, including the VT house, but that would leave me with a fairly small reserve. And my interest rate is around 4%--not bad. My NJ house is only 3.25.

    I'm 90% sure I'm going to wait until 70 to collect SS (4 years from now) because it makes a considerable difference in my monthly check, but I play with the idea of just taking it now, continuing to work, and just socking the money away. But given I'm very healthy, and my relatives who didn't do themselves in with bad lifestyle choices lived a very long life, so I'm probably smarter to wait.
    "Do any human beings ever realize life while they live it--every, every minute?" Emily Webb, Our Town
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  4. #24
    Senior Member herbgeek's Avatar
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    but I play with the idea of just taking it now, continuing to work, and just socking the money away.
    Have you looked into how much of your social security would be taken back by taxes if you took it now with your high income, versus waiting until 70, when you'd presumably not still be employed?

  5. #25
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    Quote Originally Posted by herbgeek View Post
    Have you looked into how much of your social security would be taken back by taxes if you took it now with your high income, versus waiting until 70, when you'd presumably not still be employed?
    +1

  6. #26
    Simpleton Alan's Avatar
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    Quote Originally Posted by herbgeek View Post
    Have you looked into how much of your social security would be taken back by taxes if you took it now with your high income, versus waiting until 70, when you'd presumably not still be employed?
    Based upon what Catherine had told us, she is now 66 years of age. The full retirement age for persons born between 1943 and 1954 is 66 years of age. Once a person reaches their full retirement age there is no restriction on earnings which would impact their monthly benefit.
    "Things should be made as simple as possible, but not one bit simpler." ~ Albert Einstein

  7. #27
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    Our house was paid for but when interest rates went down to 3% we took some out to have more liquid assets. We took a 30 year and our mortgage is 400.

  8. #28
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    Quote Originally Posted by Teacher Terry View Post
    Our house was paid for but when interest rates went down to 3% we took some out to have more liquid assets. We took a 30 year and our mortgage is 400.
    As rates rise you may have reason to be very pleased with that decision in the near future.

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