On Wed, 31 Dec 2003 04:02:09 CST, "Elizabeth Richardson"
<erichktn[at]worldnet.att.net> wrote:


- quote -

Hopefully he read and understood your comment.

The 2003 Standard Deduction for MFJ is $9,500. One way to look at
that is unless his "deductions" exceed the Standard Deduction, he does
not benefit. He would have received that amount anyway.

And if his deductions do exceed that level, the first $9500 he spent
doesn't count.

So whenever someone mentions to me their "after-tax" mortgage cost, I
enjoy asking, "Are you figuring into your calculation that you blew
the first $9500?" You wouldn't believe some of the looks I get.
<grin
-HW "Skip" Weldon
Columbia, SC

Hi BMS,

Yup, that sounds about right. Our tax bracket isn't effected too much by
eliminating the 4k fed tax deduction. As for other investments, we've got
two IRA's that are just begging to have some more money pumped into them
and the wife has a 401k at work that's being fed the max allowed. We don't
carry any other debts, credit card or otherwise. I don't think it's
possible to earn back $600.00 off of a $4000.00 investment, unless you were
really, really good at manipulating the stocks. :')

However, if we were to eliminate the mortgage payment and put that money
into investments, IRA, etc, surely that would work out better in the long
run? We could take the tax writeoff and be building something for our
future. I like that idea better than paying full term, compounded interest
and all, on the mortgage.

BMS wrote:

- quote -

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For Caroline
The link is: http://quantumonline.com/ There are several charts at this site. Look under "Income Tables" for "Exchange
Traded Income Securities" I dl the table I'm interested in to Excel and sort by first Quality rating and secondly by return.
I look for AA or better and 6 1/2% or better. I don't, for the most part, invest (gamble) in what's termed "junk bonds."
Although from time to time, when the mood strikes, I do put some bucks into something I don't feel real comfortable with just
to keep the blood pumping.

For John A. Weeks III
All you say is true. Generally they are around 4% BUT..they cut me a deal to get my business. When they asked why I hadn't
done any business with them in the past, I told them that the few times I had, they couldn't even keep a checking account
correctly and in balance (they were always off by $1 to $100 every month). One thing let to another with me proving the
point at each step about their bank. Then the president (a friend of a friend) got into it and the rate ended up being cut
PROVIDED I move some of my other accounts to their bank, which I did. So far, it's proven to be a good thing.
I said in my original post that the tax thing ended up being nothing. I just don't like to pay anyone to use their money if
I can get it for free. All my credit cards cost me nothing..no annual and no interest..I pay them off every month. Visa and
M/C have never gotten a penny of my money and they will not in the future. I use other peoples money when ever I can and
bitch and complain if I have to pay to use it, plain and simple.
BTW, I was only talking about my pay..I don't have to be paid to use something that some other person or company owns and get
a gain from it, do I? Driving a company car costs me nothing but.... If you're good or have a smart accountant, you can
find ways to benefit from others' ownership.

For Chip G
I look at the equity line as a short term loan (I consider 2 yrs as short term). I doubt that the Fed is going to raise
rates in the near term and I don't envision them raising much when they do go up. The economy is in shambles, with massive
unemployment, companies closing and jobs and manufacturing moving overseas. The Fed is going to keep pumping the economy
through '04 to keep the illusion of prosperity so Bush will get elected but after that, your guess is as good as mine. This
next year will be good going into the election but the year after will "tell the tale." I think that the economy will fall
HARD in '05 with what we've seen to this point being a prelude to a REAL recession in '05. By then, I hope to have the house
out of hock and everything in treasuries.
I've been thinking of selling the house and moving to Mexico. The US will pay SS anywhere and I can provide an offshore
account for interest to be paid into. But the wife is not interested..to far from the kids (hers)
R. Wink

On Wed, 31 Dec 2003 11:52:43 CST, "Caroline" <caroline10027remove[at]earthlink.net> wrote:

- quote -

"R. Wink" <rwwink[at]evansville.net> wrote
snip
For instance say I find a PINE paying 7 1/4% and borrow for 2%, I gain 5 1/4%
for
- quote -

snip
- quote -

I Googled and group.googled for the definition of PINE and turned up nothing.
Would you please post a link or definition?

- quote -

with your "AA or better ratings" above. Would you please explain?

Also, what fraction of your total investments is in junk bonds?

For the purposes of discussion, I would segregate the fraction of the portfolio
in junk bonds from the fraction of the portfolio in investment grade bonds. The
difference in risk between the two is so great that I think this is warranted.
Two cents.

Thanks for sharing your experiences. All very interesting and helpful to the
"database." :-)

In article <lsn5vvk9dhto5t7m8f584a70bpnps717sa[at]4ax.com> , R. Wink
<rwwink[at]evansville.net> wrote:

- quote -

What???? First, where do you find a home equity line of credit
for 2%? These things are at 4% to 5%, and that is a variable rate.
The 2% might be a promotional rate, but if it is, it will not last
all that long, 6 months at best. Second, if you are paying only 2%,
what kind of tax savings can you get? You are not paying enough
interest to start with, and your income that you report is so low
that you are in a tiny tax bracket. The net tax effect is so close
to zero as to not worry about. I think you are pulling my leg here.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

"R. Wink" <rwwink[at]evansville.net> wrote in message
news:lsn5vvk9dhto5t7m8f584a70bpnps717sa[at]4ax.com...
- quote -

Mr Wink,
Thank you for sharing the details of your strategy with us. I like the
overall approach but would be a bit concerned about totally financing your
home through an equity line. Granted the rate is low now but rates are at
historically low levels. Choosing to go this way is great as long as you
maintain the ability to keep your home if interest rates start to go up
rapidly. It was not clear to me how much you owe on the home but it seems
like you took a very methodical approach and probably thought about these
potential ramifications.

Best wishes,
Chip

I'm not a pro by any stretch of the imagination but here's what I just did and the reasons behind it (feel free to comment if
you want..I'll comment on something of substance.)

I'm 58 yrs old, Own a small company earning $18K/yr part time (figure to close sometime this year)
the wife is 61 with a $15K/yr job (mainly for the insurance)
$350K in stocks and bonds..split about 50/50 currently returning about 8%
House [at] 7 5/8%, 1 car [at] 1.9%, 1 car [at] 0% (both cars total $500/mo with less than 3 years to go on the longest)

I went to a local bank and got an equity line [at] 2% and paid the mortgage off, essentially moving from 7 5/8% to 2%. Still
get all the tax savings but am paying a whole lot less per month and can, for the cost of interest, delay payment in a bad
month. The house will be paid for in 5 yrs, if I maintain a reasonable payment schedule which is a lot easier [at]2% than at 7
5/8%. I my case, the tax saving of about $800 didn't outweigh the forced repayment and inflexibility built into the
conventional mortgage loans. AND I'm now in a position where IF I find something that interests me in the market, I can
borrow [at] 2% against any return I get. For instance say I find a PINE paying 7 1/4% and borrow for 2%, I gain 5 1/4% for
moving money around without bothering what I already have invested until I can get out gracefully.
I'm now accumulating the difference between the payments in an account and investing in PINE's (currently paying 7 1/4% with
AA or better ratings), IDS's and high dividend paying stocks with a growth portion (what other people call "high return"
stocks). I'm shooting to have over $500K by the time I retire in 8 yrs. At that time, if I can get 8% of $500k or $40K/yr,
the wife and I can get about $1800 a month combined or $21600/yr from SS with Medicaid and Medicare, we should be able to
live fairly well. Total income should be north of $60k/yr with no outlays other than taxes and medical.

My advice to you is to find a low cost mortgage provider and move your loan. Reduce your interest cost. Take the extra
money and invest, either in extra payments or in the market. If you're interested in PINE's provide your email addy and I'll
provide a link to where I find them on the web.

Anybody care to comment on this..poke holes in it or point out a better method? We are currently moving into revocable
trusts for the wife and I, splitting assets about 50/50 between us, with a special purpose trust to be setup for the benefit
of the other on death. We've been advised to manage the assets this way by a estate planning attorney to prevent probate and
nursing home attaching the assets.

R. Wink



On Tue, 30 Dec 2003 20:16:21 CST, Jerry McBride <mcbrides9[at]comcast.net> wrote:

- quote -

"Jerry McBride" <mcbrides9[at]comcast.net> wrote in message
news:itl9c1x6or.ln2[at]spinner.my.domain...
- quote -

Depends on what rate of return you can get on the money and what the rate is
on your mortgage. What is your tolerance for risk? What is your time horizon
for your investment alternatives? What would the impact be to your
day-to-day life if you totally lost the alternative investment... would you
lose your house?... fail to feed your family?... etc. If you are disciplined
as an investor, I would imagine that you will do a lot better investing it
than you would paying off the loan. Definitely keep a cushion in case hard
times hit... personally I like to see people keeping at least 6 months of
total living expenses (including housing) but many of my colleagues
recommend only 3 months or some even less. With the recent economy it has
been taking some people up to a year or more to find a new job after
layoff... hope it will never happen to you but plan as if it might.

As you calculate your alternatives, remember to calculate the tax
ramifications of the proceeds from your alternaprod investments for
comparison purposes.

Hope this helps,
Chip

"Jerry McBride" <mcbrides9[at]comcast.net> wrote in message
news:itl9c1x6or.ln2[at]spinner.my.domain...
- quote -

How much is the standard deduction? Is it more than $4000? If it is, then
you get the deduction even if you don't have a mortgage. Why send the money
to the bank instead of keeping it for yourself?

Elizabeth Richardson

Assuming a 25% tax rate for convenience, that $4,000 tax deduction is only
getting you $1,000. You are throwing away $3,000 a year on interest. Of
course, that $1,000 "savings" will decrease each year as the amount of
interest paid decreases.


"Jerry McBride" <mcbrides9[at]comcast.net> wrote in message
news:itl9c1x6or.ln2[at]spinner.my.domain...
- quote -

**
- quote -

The strategy I would use depends on the answers to the following questions:

Do you have an emergency fund to cover six months to a year of expenses of
sudden unemployment?

What's your mortgage interest rate?

Do you have a car loan? If so, what's the interest rate?

Do you have any credit card debt?

Do you have kids who will go to college? If so, are you invested in a savings
plan?

Do you have an IRA?


"Jerry McBride" <mcbrides9[at]comcast.net> wrote
- quote -

Don't let the tax tail wag the dog. Your 4k deduction only reduces your
taxes by your tax rate. If you are in the 15% bracket, it is only $600
savings.

The question is what the return would be on the 4k reallocated.

What are your other investments and what are you planning for?

"Jerry McBride" <mcbrides9[at]comcast.net> wrote in message
news:itl9c1x6or.ln2[at]spinner.my.domain...
- quote -

**
- quote -

Would one of you financial pros offer me a bit of help?

I'm in the position of being able to pay off on my mortgage and I'm getting
all kinds of advice what to do... Some of it pure stupid too...

Basicly I can either pay off my mortage and loose the $4000.00 fed tax
deduction, but be able to invest the money I would normally spend on the
mortgage or.... invest the cash I would use to pay off the mortagage and
not be able to save any additional monies and write off $4000.00 in fed tax
for the next 23 years.

My question is, which is a better strategy? Is there a better one?



--

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