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I didn't like this part either:

Without getting into a long, drawn-out philosophical discussion of what risk is, the fact remains that while the expected return on stocks might be 6-10%, there will be many years where the return is much lower. It is not a guaranteed return. Thus, you are comparing the guaranteed return available by paying off your debt to a non-guaranteed return available by investing. That's apples to oranges. You must risk adjust the returns.

This is where you have to get into a long, drawn-out philosophical discussion of what risk is. This guy thinks volatility is risk. A definition I like much better is that risk is the "chance of permanent loss of capital."

Over some reasonably long time frame--like the length of a typical mortgage--the chances of losing money owning a low-cost index fund are pretty close to zero. Over that same period, the chances of making a lot of money are really good. So from a risk/reward standpoint buying an index fund and holding is much better than paying down the mortgage.
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I have some problems with # 13 Liquidity is Overrated. All that great advice, and then I come across this:

Retirees don't need emergency funds. Their entire nest egg is their emergency fund.

WTF??? Like hell I don't need emergency funds. I have about five years of very comfortable living in cash within my IRA because I don't EVER want to be in the position of HAVING to sell stocks because of some calamity, regardless of whether the market is up or down. I fueled that with sales this month, in a year that the market has been very good to me.

I've been debt free since before retirement, and have been retired well over a decade. I just bought a house. 20% down came out of my IRA, with a pound of flesh for the IRS. If I had paid cash I would have had to pull it from my IRA. That much in one year would have raised my marginal tax rate beyond mere pain. So I too on DEBT, 30 years at 2.75%. The increment in my marginal tax rate would have been WAY more than 2.75%.

When I sell my old house I will have a nice pile of cash. Not enough to pay off the new mortgage, but considerably more than half of it. I have no intention to use it that way. Some of it will probably add solar to my new house (without borrowing). Some will probably buy the Tesla I want (not getting any younger). Some will pay the taxes on IRA-to-ROTH conversions over a year or two. Some will just be money I live off instead of pulling from my IRA.

Maybe when I reach the age of RMA's from my IRA I will have more withdrawn than I need and will pay down some principal. I'll have to see what it looks like then.
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I think the point is that people feel a need to have a large amount of cash but over history, you are better off having it invested and sell regardless of whether it is an up or down market. The cash drag hurts your returns more than selling in a down market.

I think over at bogleheads forum this has been talked about tons of time.

Of course it is true until it isn't.
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Of course it is true until it isn't.

Or you actually have a sense of "enough." More isn't always better.
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I think the point is that people feel a need to have a large amount of cash but over history, you are better off having it invested and sell regardless of whether it is an up or down market. The cash drag hurts your returns more than selling in a down market.

It can play out that way, but it can also play out the other way, particularly if you run into a bear market in your first few years of retirement (which I and many others maintain are more important to your long term success than later years--"sequence of returns risk" and all that).

I am a year or two from retirement (been saying that for a year or two now), and have moved three years worth of expenses into cash. I view it as a hedge against a bear market occurring in the near future. It may play out to be the lesser move, or it may not. The good news for me now is I'm still above my minimum "number" for retirement even if I exclude the three years cash, so at the moment it's icing on the cake, that I don't expect I'll ever have any difficulty "eating".
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WTF??? Like hell I don't need emergency funds. I have about five years of very comfortable living in cash within my IRA because I don't EVER want to be in the position of HAVING to sell stocks because of some calamity, regardless of whether the market is up or down. I fueled that with sales this month, in a year that the market has been very good to me.

Terminology.

When living off your money it's prudent to have some years of living expenses not volatile assets.

I don't have an "emergency fund". I do have about 7 years worth of expenses in cash and bonds. That's the fixed-income portion of my asset allocation.
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I agree, AdrianC. Terminology is the key to the interpretation of
Rule 13: Retirees don't need emergency funds. Their entire nest egg is their emergency fund.

The Rule could have been worded differently, too, to make it understood what was meant by “nest egg.”

Sometimes you have to break a few to make an omelette and the Rule makes it sound as if your entire asset allocation is the nest egg instead of the cash living expenses set aside for potential years.

Pete 🍳
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As someone who is, well, very comfortable it’s not complicated. Like #14. We both work, never had debt other than real estate (our home or rental properties) - yes, including cars. Drive em 10 or more years. Save/invest 20-25% right off the top. Got degrees and better paying jobs. Didn’t divorce.

When I got raises they went to investments. Don’t marry a spender. Don’t worry about keeping up with the Jones...those fools are up to their eyeballs in debt.

Dollar cost averaging and index funds. Voila. Everything you need.
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No. of Recommendations: 5
As someone who is, well, very comfortable it’s not complicated. Like #14. We both work, never had debt other than real estate (our home or rental properties) - yes, including cars. Drive em 10 or more years. Save/invest 20-25% right off the top. Got degrees and better paying jobs. Didn’t divorce.

When I got raises they went to investments. Don’t marry a spender. Don’t worry about keeping up with the Jones...those fools are up to their eyeballs in debt.

Dollar cost averaging and index funds. Voila. Everything you need.


What? Get rich slowly via the power of CAGR and automatic investments from each paycheck over time by holding the entire market? No get rich quick scheme with shares of Fastly? No Snowflake? No Peloton? No Zoom? No Cloudfare? ;-)


BB
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Blasphemy!!
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I have some problems with # 13 Liquidity is Overrated. All that great advice, and then I come across this:

Retirees don't need emergency funds. Their entire nest egg is their emergency fund.

WTF??? Like hell I don't need emergency funds. I have about five years of very comfortable living in cash within my IRA because I don't EVER want to be in the position of HAVING to sell stocks because of some calamity, regardless of whether the market is up or down. I fueled that with sales this month, in a year that the market has been very good to me.


I have difficulty understanding why one would keep five years worth of living expenses in an IRA unless one's IRA custodian pays extremely high interest on one's cash balances. I keep my five years of living expenses at my credit union where I earn significantly more in interest than the .01% that my IRA custodian is willing to pay.

One problem I've discovered since turning 70-1/2 is that the dividends and interest earned by my IRA investments doesn't exceed the RMD that the IRS insists that I withdraw each year. In my opinion, it is far better to keep my IRA fully invested to minimize the stocks and bonds that I will need to sell each year.

Of course my views may be different from yours simply because I didn't get around to retiring and claiming Social Security benefits until I was 68. Social Security and two small pensions provide more than enough income to satisfy my annual living expenses. RMD is simply transferred from my IRA account to a taxable investment account and invested for future needs and wants.
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As I understand it one should start drawing down IRAs and 401Ks at 59.5 so that when the inevitable RMD is imposed it will be less, giving you less taxable income, and therefore paying less tax overall. You have to live on some funds, so it's better to live on those within a vehicle that eventually you will be required to withdraw from anyway. Let your taxable brokerage ride.

I don't recall now where I read that. Might have been intercst, or might have been some other source on managing retirement. I just remember that suggestion because it made sense to me.

1poorguy (57.5 and counting, not retired quite yet)
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I have difficulty understanding why one would keep five years worth of living expenses in an IRA unless one's IRA custodian pays extremely high interest on one's cash balances.

It may be a case of "you play the cards you have in your hand."

If most of your financial assets are in your retirement accounts, that's where your cash cushion or bond/CD ladder is going to be. While it may make sense to keep your cash in an after-tax account for easiest access, that presumes you have that kind of cash available in after-tax accounts. Unless you face RMDs that are well above your spending needs (in which case, you have a "first world problem"), it often might make sense to either keep your money in a Traditional type retirement account or convert it to a Roth IRA instead of taking it out as regular withdrawals. That would lead to cash cushions and Bond or CD ladders being held within the retirement account structures instead of in ordinary accounts, even in cases where the income from those assets would otherwise be minimal.

Regards,
-Chuck
Discovery/HR Home Fool
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I have difficulty understanding why one would keep five years worth of living expenses in an IRA unless one's IRA custodian pays extremely high interest on one's cash balances.

They don't. It has to do with my particular circumstances.

The five years of cash is in my IRA because it costs too much in taxes to take it out, other than slowly as I need it. The only significant funds I have are in the IRA (85%) and ROTH (15%). I don't expect to ever spend my ROTH, though I will if the IRA ever runs out.

When I bought a new house the 20% down payment came out of my IRA, reducing my cash. I now have a mortgage, and other monthly bills went up. Stated another way, less cash on hand and more bills to pay than before. Meanwhile my portfolio is up by a crazy amount this year. I thought it prudent to turn a bit of that gain into cash on the chance the market will take back what it so generously provided this year. I certainly wasn't going to do that in the ROTH, so the cash is in the IRA, where the tax situation will keep it until needed.
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Of course my views may be different from yours simply because I didn't get around to retiring and claiming Social Security benefits until I was 68. Social Security and two small pensions provide more than enough income to satisfy my annual living expenses. RMD is simply transferred from my IRA account to a taxable investment account and invested for future needs and wants.

I retired in my mid-fifties, again my particular circumstances. My wife was ten years older than me, already retired, and with one small pension I started early, her SS, and her IRA we got along alright. I converted my 401k to an IRA, joined Stock Advisor, and for the first time took control of my investments. That was eleven years ago. When my wife passed I started getting survivor benefits off her SS; in a couple of years I will take my own SS, which was always going to be higher and will be 32% higher than that because of waiting until 70 to start. I have been, and could easily continue, to live modestly. But with my portfolio being where it is, I can easily relax and spend a bit. What hurts is that by the time we had the money to splurge my wife wasn't well enough to do much, and now she has been gone for a couple of years. So I am going to spend a bit on travel (if that ever becomes practical while I am able), and a few other things, including helping out some family members.
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Uncertainty around when death happens makes some plans difficult.
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The only significant funds I have are in the IRA (85%) and ROTH (15%). I don't expect to ever spend my ROTH, though I will if the IRA ever runs out. - RHinCT

----------------

Since you and your wife are both retired, you likely are in a low tax bracket. You should consider doing Roth conversions each year to use up the remainder of whatever tax bracket you are in.

I have been doing this for years. One of the mistakes I made early on was to have 20% of the converted amount withheld for federal taxes. So only 80% of my IRA dollars were making it to my Roth. I wised up a few years ago and stopped the withholding on the conversion so 100% of the converted amount made it to the Roth. I starting paying the taxes with funds from an after tax account. Also keep an eye on IRMAA adjustments to your Medicare premium, Roth conversions count towards that calculation.
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You are absolutely right about doing ROTH conversions. I missed doing them for years because I didn’t know about them. I’ve done just one. My wife died, so my tax brackets have been pretty much cut in half, filing single now. And with all my funds in the IRA there was no other place for the money to cover the taxes to come from.

But I will soon be putting my old house on the market. When it sells (fingers crossed) it will mean a pile of cash not tied up in an IRA. I will be using some of that for the taxes on ROTH conversions.
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Since you and your wife are both retired, you likely are in a low tax bracket.

This is an interesting assumption. There are ways to make this happen but for people who prepared and didn't trust that pensions and SS would necessarily be there, it's possible that they have more than enough and may not be in a low tax rate.

And even if you planned well, going from filing MFJ to single pretty much blows up the planning. Get to 65 and then the Medicare surcharges also comes into play.

Confession - I have plenty but most is in a Trad IRA. My son wasn't happy with the return on his emergency fund so I am borrowing 10K from him until Feb(with a better interest rate than he can possibly find). He asked what to do with it to get a better return, I suggested this and he offered it at no interest. I explained the situation and insisted on interest - telling him how much it would cost me to use IRA money particularly this late in the year.. (He bought his house, recently bought a rental condo that has a year long tenant and has totally topped out on anything for retirement plus very, very likely qualifying for a pension)
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It may be a case of "you play the cards you have in your hand."

One of the cards that I was dealt was a wife who felt that only money held in bank and credit union accounts was real. To assuage her fears of not having enough money, I likely saved more money in bank and credit union accounts than most married couples.

Unless you face RMDs that are well above your spending needs (in which case, you have a "first world problem"), it often might make sense to either keep your money in a Traditional type retirement account or convert it to a Roth IRA instead of taking it out as regular withdrawals.

I might have what you call a "first world problem". In the seven years that the IRS has insisted that I make annual RMD withdrawals, I have yet to use any of the RMD to pay taxes on the RMD withdrawals or to pay normal living expenses. I withdraw the RMD at the beginning of each year and transfer it to an investment account where it is invested for the future.

Approximately 7.6% of my current net worth is held in bank and credit union accounts, 33.2% is in taxable investment accounts, and 59.2% is in traditional IRA accounts.

Funding a Roth IRA account presents several interesting problems. As I am retired, I have no "earned income" to open and fund a Roth IRA. A conversion to a Roth IRA from a traditional IRA also has issues. First and foremost, the annual 100K+ RMD can't be used to fund a Roth IRA conversion. The conversion must be made with funds transferred after your RMD withdrawals have been made.

Given the size of my RMD withdrawals and that my wife died last year, the amount being converted will be taxed at the Federal 32% marginal tax rate and California 9.3% tax rate. I don't have enough income from other retirement sources to cover the taxes. Were I to withdraw $100K for a Roth IRA conversion, how long would it take to recover the $41.3K withheld for taxes?

It seems to me that Roth IRA conversions are viable options only for those that retired at a young age and don't have "earned" income or have nominal income. They don't make much sense for those that have started RMD withdrawals.
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"It seems to me that Roth IRA conversions are viable options only for those that retired at a young age and don't have "earned" income or have nominal income. They don't make much sense for those that have started RMD withdrawals."

You have just articulated why I went ahead and retired at 62. I saw no point in accumulating so much money in my sheltered accounts that I ran into a 'tax bomb' in which my investment income plus my SS plus my RMD's combined to subject me to a much higher tax rate at the age of 70. Why not take some of that money out annually before I have to withdraw RMD's, pay a 22 or 24% tax on it, and grow it in lightly or untaxed unsheltered investments like Berkshire Hathaway, lightly taxed growth stocks, or tax advantaged munis, or a Roth IRA or some combination of the above?

And enjoy a few extra years' worth of retirement as well?
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The Wrong Way to Think About Debt
https://www.whitecoatinvestor.com/the-wrong-way-to-think-abo...


I have to disagree with some of that article. We're paying the minimum on a low-interest mortgage and investing the difference, and we're well ahead of where we'd be if we'd thrown everything at the mortgage. As he said in the article, mathematically it is correct.


I scanned through this website once and there's a fair amount of misinformation. Take this one, for example:

https://www.whitecoatinvestor.com/what-do-advisers-think-abo...

Here’s an Example for an Ameriprise Financial Adviser Job:

What are they looking for? Well, mostly prior sales experience it seems to me. Finance degree? Nope. MBA? Nope. CFA or CFP (designations that actually mean something)? Nope. The only technical requirement is a series 7 and a series 63 license. How long does it take to get those? Well, I’m not exactly sure, but there is a “Dummies” book for it. Here’s what some advisers say about it:

“Study your b---s off for a week and you will pass!
I read the book, and then spent the weekend before taking practice tests over and over."


He's "not exactly sure" how long it takes to get a Series 7 license, so he'll google some random internet troll comments to find out! The truth is, it takes about a month of studying, 40 hours a week or more, to pass the test. It's a real ordeal. And it's not even an advisory license -- it's a transaction license. With it, you can open accounts and initiate transactions (ie., take orders), but you can't give advice. For that, you need a Series 65 or CFP. He refers to the CFP as "actually meaning something", but what does it mean, exactly? The exam covers investing and retirement principles, same as the series 7 and 65, but it also covers tax planning, estate planning, and insurance. Or does it? A CFP credential does *not* bestow the authority to prepare your tax returns or represent a client to the IRS. It does *not* bestow the authority to make insurance recommendations, or to sell insurance. And it certainly does *not* give one the authority to practice law for estate planning. It's simply a license to give financial advice, same as the series 65.

Credentials are good, but some of them are over- and under-hyped, and I wouldn't evaluate them based on an article written by a doctor who did a quick google.
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he amount being converted will be taxed at the Federal 32% marginal tax rate and California 9.3% tax rate.

....

They don't make much sense for those that have started RMD withdrawals.




Depends on how confident you are that you will never pay higher than a 32% marginal and 9.3% state tax rate.

Considering where taxes are very likely to go in the future, there may be a bit of financial benefit to pay taxes on your IRA dollars at current tax rates (even if that means realizing some gains on your taxable assets since they also have favorable tax treatment) to avoid potentially higher taxes in the future. Might even be reasonable to work toward a goal that gets your RMD low enough to reduce your annual tax rate.

If you are sitting on your taxable gains with the intent to pass them on with stepped up cost basis, than may go away too (though I hope their is a wealth/Date of Death Value calculation as a part of that).
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I didn't like this part either:

Without getting into a long, drawn-out philosophical discussion of what risk is, the fact remains that while the expected return on stocks might be 6-10%, there will be many years where the return is much lower. It is not a guaranteed return. Thus, you are comparing the guaranteed return available by paying off your debt to a non-guaranteed return available by investing. That's apples to oranges. You must risk adjust the returns.

This is where you have to get into a long, drawn-out philosophical discussion of what risk is. This guy thinks volatility is risk. A definition I like much better is that risk is the "chance of permanent loss of capital."

Over some reasonably long time frame--like the length of a typical mortgage--the chances of losing money owning a low-cost index fund are pretty close to zero. Over that same period, the chances of making a lot of money are really good. So from a risk/reward standpoint buying an index fund and holding is much better than paying down the mortgage.
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So from a risk/reward standpoint buying an index fund and holding is much better than paying down the mortgage.

Especially now, when you can get a 2.5% or 2.75% mortgage. I mean, my heavens, IWD (Russell 1000 Value ETF) has 3% yield.
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I paid off my mortgage. True, my self-directed 457b would have almost doubled that money so far this year but in terms of balance I now have $1k more a month forever from pension income. In terms of profits, bad idea. In terms of risk management, good idea.
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I paid off my mortgage...I now have $1k more a month forever from pension income. In terms of profits, bad idea. In terms of risk management, good idea.

Maybe — I agree generally, having paid mine off six years ago.

This analysis seems very academic in some ways since everyone’s situation is unique. One reason I paid off my mortgage early was that, at the time, I didn’t have very much left on it; the interest rate was 4.5% and the cost of a refi to lower it was not worth the benefit; and I was otherwise putting more cash overall in investments.

It has been nice these past years to have the extra $ to invest, especially since 2018.

Pete
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I have to disagree with some of that article. We're paying the minimum on a low-interest mortgage and investing the difference, and we're well ahead of where we'd be if we'd thrown everything at the mortgage. As he said in the article, mathematically it is correct.

Sure. If we were still saving for retirement we'd probably take advantage of a low-interest mortgage to leverage our stock investing somewhat. We did it when mortgage rates were very much higher than now. Back then all our investments were in stocks.

Now we're FIRE there's no need for that hassle, and we have more in cash and bonds than our mortgage could be. No point borrowing at 3% to lend at <1%.

Another reason to not have a mortgage is to allow a lower realized income. Important when you're FIRE and buying health insurance through the ACA.
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I have to disagree with some of that article. We're paying the minimum on a low-interest mortgage and investing the difference, and we're well ahead of where we'd be if we'd thrown everything at the mortgage. As he said in the article, mathematically it is correct.


My husband and I paid off my mortgage, which was the last of any of our debt, three years ago. We consolidated households a few years before that and much of the payoff came from proceeds from the sale of DH's house. (We had had a commuter marriage; long story, go look in previous posts on the Credit Card and Consumer Debt board if you want the whole thing.)

Though it is correct that we could have had better returns had we invested the money instead, the real impact on our daily lives has been immense. There is much more disposable income now than there was. It goes toward investing, yes. However, that one change meant that, in essence, we were suddenly at financial independence based only on passive income, not on withdrawal of any investment funds. I am fully confident that when one or both of us get to actual retirement age, our pensions (we are federal employees), retirement savings, and investments will lead to being able to live well and still pass a nest egg to the people we care about.

It has changed my mindset dramatically. I suddenly feel much more able to use funds to help others than I ever did before. I also have the slack to do things that I really wanted to do. Some examples of that? We got a housekeeper, started piano lessons, paid for a nutrition coaching program for us both (100+ pounds lost between us!), I became a nutrition coach myself, and we established a small charitable fund to help with reducing obesity, improving nutrition, and reducing food insecurity in my home town and my husband's home town. (Home counties, actually.)

Without the elimination of the mortgage, I'm not sure that either of us would have been comfortable doing the first few of these things, which snowballed to the rest. Your mileage will surely vary. For me, though, it was a worthwhile change.

ThyPeace, yep, snowballs work for more things than just debt payoff. It's cool how that works. :)
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Another advantage to having a mortgage is that it's three bills in one. We have the house payment, the home insurance, and the property taxes. When we pay off the house (which we are doing at an accelerated rate), we'll trade one bill for two because we'll still have to pay property taxes and insurance, and they will then be separate entities.

Just a minor hassle, but still a hassle.
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Another advantage to having a mortgage is that it's three bills in one. We have the house payment, the home insurance, and the property taxes.

I try to never have taxes and insurance escrowed with a mortgage - dates back to when savings accounts were paying good interest but I still segregate that money. With escrow, they usually start with two months more than needed to pay the bills.

Also, with at least one mortgage, the city allowed property taxes to be paid with a credit card with no fee - boom - saved 2% with Fidelity credit card.
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Another advantage to having a mortgage is that it's three bills in one. We have the house payment, the home insurance, and the property taxes.

There's an implied assumption here that the mortgage company will actually pay the insurance and taxes correctly and on time. With our first mortgage back in 1982, we were required by the bank to escrow our taxes with them as part of our mortgage payment. Then they managed to screw up the tax payments the first 3 times that they had to be paid. Guess who is responsible for the late fees and penalties? It's not the bank. They did pay them correctly the 4th time, but that was only because it took us that long to refinance, and we have never escrowed taxes or insurance since then. I much prefer being in control of those sorts of things myself so that I can ensure they are actually paid.

We paid off our mortgage at the end of 2017 in anticipation of my retirement in June 2018. The balance was just below 6 figures at that time, the interest rate was going to adjust upward in April, and DH was a lot more comfortable with it paid, so we paid it off.

I have to say that I am very happy that we no longer have the mortgage as it is one less outgo each month, and one less thing to manage.

I realize this is not everyone's choice, but it was the right one for us. Different strokes and all that.
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I try to never have taxes and insurance escrowed with a mortgage - dates back to when savings accounts were paying good interest but I still segregate that money. With escrow, they usually start with two months more than needed to pay the bills.

Best deal I ever had was the mortgage with Telegraph S&L in Chicago. They "capitalized" the T&I. Your monthly T&I payment reduced the principal balance and when they paid the T & I it increased the balance. So effectively they paid you interest at the mortgage's rate. Maybe stuff like this is why the S&L industry went belly up.

Our T&I is something like $3000 a year. Any interest we would get would be trivial, not worth obsessing over. I don't mind the escrow, just because of the convenience.


the city allowed property taxes to be paid with a credit card with no fee - boom - saved 2% with Fidelity credit card.

Lucky you. Our gov't agencies tack on a 3% surcharge for credit cards.
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Another advantage to having a mortgage is that it's three bills in one.

I make 12 mortgage payments a year, which includes taxes and insurance.

Without a mortgage I paid property taxes twice a year, and insurance once or twice.

12 > 4.

8-)
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True, but it's easier to remember "first of the month" than it is "March 1, Sept 1".

I'm still paying off the mortgage at an accelerated rate. We refi'd several years ago to a 15 year, and are still paying more than required. The balance is really starting to come down now as the interest takes up less and less of the payment.

The math says we should pay the minimum and invest the extra, but there is (or will be) some security in having a paid-off home. Plus the other poster mentioned the increase in disposable income when that monthly payment goes away.

I was just pointing out that right now it's a regular monthly thing that is easy to remember. Later it will be a bi-annual (??) event that I will have to note in my calendar or I will forget.

1poorguy
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I make 12 mortgage payments a year, which includes taxes and insurance.

Without a mortgage I paid property taxes twice a year, and insurance once or twice.

12 > 4.

8-)


I don't have a mortgage. I pay property taxes once per year. My property insurance is included monthly on the credit card bill which I have to pay anyways every month. Therefore, I have one bill per year. Now if I could figure out how to automatically pay my property taxes with a credit card, I would be down to zero extra bills.

PSU
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Later it will be a bi-annual (??) event that I will have to note in my calendar or I will forget.

Treat your personal financial life like a business because it is one. With digital calendars, it take about 20 seconds to note something. In terms of insurance, I can only speak to State Farm but they no longer charge to pay monthly and that can again go to a credit card without additional fee.

I know people denigrate little bits of savings but it's just not that hard to organize my financial life to be efficient and to save money.

I'm still paying off the mortgage at an accelerated rate. We refi'd several years ago to a 15 year, and are still paying more than required.

I am with AJ on this one - I wouldn't pay extra unless paying it off - I would put the extra aside until full payoff and then that would be a considered choice. This is from living through a bunch of crap in my life and when I looked around, a paid off house would have worth less than having more liquid assets on hand. Refinancing opportunities disappear with illness and disability and unemployment and that includes trying to get a new mortgage on a paid off house.
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I was just pointing out that right now it's a regular monthly thing that is easy to remember. Later it will be a bi-annual (??) event that I will have to note in my calendar or I will forget.

1poorguy



I get $200 a month as designer/webmaster for oesac.org.
When I deposit the check I aim it at a savings account from which I will pay my property taxes. Pretty sure your bank could also put x-amount into a savings account made up just for paying property taxes and insurance.

Now, if I could only get rid of my HOA . . .
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Treat your personal financial life like a business because it is one. With digital calendars, it take about 20 seconds to note something. In terms of insurance, I can only speak to State Farm but they no longer charge to pay monthly and that can again go to a credit card without additional fee.

Even if their insurance company does not allow monthly payments with a credit card, the bi-annual insurance payment could not only be noted on a digital calendar as you say but may possibly be scheduled to be paid through a bank bill paying service. With my credit union, I can schedule electronic payments months in advance to be paid on a specified date.

PSU
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"I make 12 mortgage payments a year, which includes taxes and insurance."

Without a mortgage I paid property taxes twice a year, and insurance once or twice. I pay property taxes once per year. My property insurance is included monthly on the credit card bill which I have to pay anyways every month.


I have my mortgage on auto-pay. So I don't need to remember anything and I don't have to do anything. I only need to look at it once a year, to adjust the mortgage payment whenever they refigure the escrow amount. It's all in a dedicated checking account, there is a (monthly) direct deposit into the account on the 1st and the payment goes out on the 10th.

Once you set it up, it is hands off, and no need to even think about it.
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scheduled to be paid through a bank bill paying service. With my credit union, I can schedule electronic payments months in advance to be paid on a specified date.

So automated that I forgot I have at least one like this - lol.
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We will sell our house when we move in to the retirement home. The proceeds from that sale will more than cover the move-in costs at the OFH. Between the mortgage payment, taxes, and insurance plus buying less at the grocery store (and less eating out), we save on the monthly cost. Win, win, win.

CNC
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I have my mortgage on auto-pay.
...
Once you set it up, it is hands off, and no need to even think about it.


I do too, actually. But my mortgage is new. Practically the first thing I did when I got home from the closing was to set up auto-pay for it. Even before the first payment was due I was notified that my mortgage had been sold, and only my first payment would follow the instructions from the closing. So I had to change the pay-every-month instruction to pay-once, and wait for all the new details to set it up all over again for the new payee. I no sooner get that set up than I get a letter from Freddie Mac that they now own my mortgage, and that the outfit I thought bought it is just a payment processing outfit. It isn't even time yet to make that second payment... first to the new address.
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Dollar cost averaging and index funds. Voila. Everything you need.


What's the difference between a violin and a viola? The viola burns longer.
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With my credit union, I can schedule electronic payments months in advance to be paid on a specified date.

Mine also. I tend not to use that. Most of my bills vary (e.g. electric...different every month), so I am enrolled in auto-pay for most all of those. Since we pay extra on the mortgage if we use that service the bank gets extra money that it applies to the following month's payment (I have tried it). To assure it goes to principal I have to log into the bank and specify that the extra funds don't go to interest, or escrow, but are applied to principal.

I do have the credit union connected to all my credit cards and mortgage bank so I can use it, but I seldom do. I think once a bank's website was down and it was getting close to due date, so I scheduled it through the credit union. It came in handy then.
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Not sure why this seems to be such a topic. Personally I've never used auto pay for anything since I'd rather not delegate that control. Once a month you sit down and do it manually. No different than credit cards, utilities, etc.

Of course even when you try not to delegate control, things can still go wacky. I used bill pay from one bank and paid some bills. Before I went to sleep I got some messages that seemed to indicate my account was zero or overdrawn but it made no sense to me so I went to sleep.

Got up the next morning and things were fixed (I was on west coast time) but apparently the bank's bill paying mechanism went crazy (I didn't bother reading the details but the headlines said double paid) and drained some people's accounts to zero. Caused problems with those who happened to be out and tried to pay with a debit card.

And yeah, it was lovely Wells Fargo.

https://www.charlotteobserver.com/news/business/banking/arti...
https://www.dealnews.com/features/Wells-Fargo-Online-Bill-Pa...

There are certain things I'm terrible with. Getting gas just seems so tedious I often run my tank close to empty. Dropping things in a mailbox is another. In the old days (before I used bill paying/online) I'd have letters sit in my car for days or weeks despite walking past mailboxes. And yeah a few late fees would occur.
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What's the difference between a violin and a viola? The viola burns longer.

God'll getcha for that.
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Personally I've never used auto pay for anything since I'd rather not delegate that control.

I'm with you -- I like having the control.

On the other hand, I have (as I suspect many here have) for years used electronic banking. A close friend and neighbor who is retired is "old-fashioned" and snail mails his monthly payments every month. I keep pointing out year after year how much time and postage he'd save going electronic, but somehow he feels he needs that kind of control. It's as if he thinks some little old lady is taking his mailed in check and taking it to the bank herself and depositing it.

Pete
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Personally I've never used auto pay for anything since I'd rather not delegate that control. Once a month you sit down and do it manually. No different than credit cards, utilities, etc.

The mortgage payment is the same every month, so it can easily be put on automatic.

However, I used to do it as you say, sit down once a month and pay everything.
Once we were on a 3 week cruise and our tablemates mentioned that they had been on a 60 day cruise. I asked "How do you pay your bills while you are gone?" He said that they used automatic bill pay. For the mortgage is was simple, for the utilities and credit cards he scheduled payment for slightly more than what he expected the bill to be. Even if the CC was more than he paid, no problem. He might pay a little bit of interest but would not get dinged for a missing or late payment.


There are certain things I'm terrible with. Getting gas just seems so tedious I often run my tank close to empty.

I used to do that, too. But I got cured of that one Tuesday. We were on vacation at a resort that week and I had filled up the tank Monday afternoon. Next day, Tuesday, was 9/11/2001. All the gas stations had lines around the block. Then they started closing because they were out of gas.
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I'm with you -- I like having the control.

And if, for some reason, you are unable to exercise that control ?

Until recently, I traveled quite a bit so happy to have things run pretty automatically. Somewhat before that, things went to hell in a hand basket more than once so happy for it there.

Since no one knows you are a dog on the internet, there are ways to get things done but in one case, the first thing done was to automate payments.

I suspect most people don't have similar circumstances but it is easier if there are fewer things to think about. Money is good, too.
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Personally I've never used auto pay for anything since I'd rather not delegate that control. Once a month you sit down and do it manually. No different than credit cards, utilities, etc.

The mortgage payment is the same every month, so it can easily be put on automatic.


I recall reading an article about a woman that lived alone a number of years ago. She had died several years earlier. That she had died wasn't realized until her bank account ran out of money to pay the bills that she paid using her bank's automatic bill payment system.

If you no longer have the ability to manage your bills, it doesn't matter if you write checks or use an automated payment system.
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The mortgage payment is the same every month, so it can easily be put on automatic.

Well, if you have taxes and insurance escrowed, your mortgage payment isn't always 'the same'. Every time your taxes change, your insurance changes and/or they reanalyze your escrow account, your monthly payment is likely to change.

AJ
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What's the difference between a violin and a viola? The viola burns longer.


Aren't they the same instrument? It's just that violinists have big heads.
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Aren't they the same instrument? It's just that violinists have big heads.

That registers with me.

Pete
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