Comments on: Financial Wake-Up Call 3-15-2007 http://www.pfadvice.com/2007/03/15/financial-wake-up-call-3-15-2007/ Bridging the gap between saving money and investing Fri, 10 Feb 2012 02:42:04 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: 32xjh52rqf92h http://www.pfadvice.com/2007/03/15/financial-wake-up-call-3-15-2007/comment-page-1/#comment-28026 32xjh52rqf92h Fri, 16 Mar 2007 06:07:57 +0000 http://www.pfadvice.com/2007/03/15/financial-wake-up-call-3-15-2007/#comment-28026 The author of the article first says that investing in stocks may give better than returns than a home. Then he says that one should pay off the mortgage early. You should not pay off the mortgage early if you can get better returns for your dollar than you save in interest my prepaying your mortgage. Since the mortgage interest is tax deductable you need to consider that when you consider that. If you can get 10% in the stock market over the long term then does it make sense to pre pay your 6% mortgage if you're in the 30% tax bracket? If you don't have to pay taxes on the money you pay for interest you save about one third of that 6% which makes your mortgage about 4%. The author also says that renovations don't pay off when you sell. This is not true in my condominium comples. Units with renovated kitchens and bathrooms sell for $20,000 - $30,000 more, which is much more than the renovations would cost. The author of the article first says that investing in stocks may give better than returns than a home. Then he says that one should pay off the mortgage early. You should not pay off the mortgage early if you can get better returns for your dollar than you save in interest my prepaying your mortgage. Since the mortgage interest is tax deductable you need to consider that when you consider that. If you can get 10% in the stock market over the long term then does it make sense to pre pay your 6% mortgage if you’re in the 30% tax bracket? If you don’t have to pay taxes on the money you pay for interest you save about one third of that 6% which makes your mortgage about 4%.

The author also says that renovations don’t pay off when you sell. This is not true in my condominium comples. Units with renovated kitchens and bathrooms sell for $20,000 – $30,000 more, which is much more than the renovations would cost.

]]> By: 32xjh52rqf92h http://www.pfadvice.com/2007/03/15/financial-wake-up-call-3-15-2007/comment-page-1/#comment-28014 32xjh52rqf92h Fri, 16 Mar 2007 05:41:05 +0000 http://www.pfadvice.com/2007/03/15/financial-wake-up-call-3-15-2007/#comment-28014 "you shouldn't be buying more than you need for the house you live in because you feel it's a good investment " A simple thought experiment proves this point: People do not buy houses and leave them empty as an investment. You either buy as an alternative to renting or you buy and rent it to other people. Any unused or unneeded space in your own house is empty real estate. “you shouldn’t be buying more than you need for the house you live in because you feel it’s a good investment ”

A simple thought experiment proves this point: People do not buy houses and leave them empty as an investment. You either buy as an alternative to renting or you buy and rent it to other people. Any unused or unneeded space in your own house is empty real estate.

]]> By: abe http://www.pfadvice.com/2007/03/15/financial-wake-up-call-3-15-2007/comment-page-1/#comment-27963 abe Fri, 16 Mar 2007 00:52:32 +0000 http://www.pfadvice.com/2007/03/15/financial-wake-up-call-3-15-2007/#comment-27963 I think that's the point. The house should not be looked at as an investment. You should buy a house that meets your needs, not the biggest one you can get. I also think that if you invested the money you saved renting, you'd come out well ahead of owning a house. The problem is that people just don't have that type of discipline in my opinion. I think that’s the point. The house should not be looked at as an investment. You should buy a house that meets your needs, not the biggest one you can get.

I also think that if you invested the money you saved renting, you’d come out well ahead of owning a house. The problem is that people just don’t have that type of discipline in my opinion.

]]> By: Reza http://www.pfadvice.com/2007/03/15/financial-wake-up-call-3-15-2007/comment-page-1/#comment-27942 Reza Thu, 15 Mar 2007 23:24:58 +0000 http://www.pfadvice.com/2007/03/15/financial-wake-up-call-3-15-2007/#comment-27942 You're calculating all the money the homeowners spent on their mortgage, but not calculating the amount the renters would have spent on a place to live. Isn't one of the biggest advantages to buying a home that you get to live in it as well? You’re calculating all the money the homeowners spent on their mortgage, but not calculating the amount the renters would have spent on a place to live. Isn’t one of the biggest advantages to buying a home that you get to live in it as well?

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