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Dumbass "Financial" Advisor...says

...don't pay off your home because...


1. You'll lose out on that interest deduction

Paying all that mortgage interest has a benefit, and it comes in the form of a potentially sizable tax deduction. If you're in a high tax bracket, losing out on this deduction could mean paying more in taxes, especially if forgoing it pushes you into the next higher bracket. Let's say you're in the 25% tax bracket and currently pay $24,000 in mortgage interest per year. That's a $6,000 tax break you'd be giving up by paying off your mortgage.

The link to their non-sense:

Dear Financial Asswipe,

By paying $24,000 in interest to a mortgage company to get $6,000 back in income taxes means you LOST $18,000 DOLLARS.

Let's do the math and say the extra $24,000 in income you show from NOT having a mortgage payment pushes you into the 35% tax bracket.

Okay, $24,000 extra income in a 35% tax bracket means you pay an additional $8,400 in Federal Income Tax because you don't have the mortgage deduction but you have $15,600 cash in your pocket.

So who's better off the guy with the mortgage who spent $24,000 interest to get back $6,000 tax or the guy without a mortgage who showed $24,000 more income, paid $8,400 in tax on that money but has $15,600 in his pocket BECAUSE HE HAS A PAID OFF HOME? 

Also understand this mathematical fact:

Since the guy without the mortgage has $15,600 more money to spend every year, year after year, do you know how much money you'd have to have on deposit at 3% interest to earn $15,600 dollars per year?

It's $520,000 dollars cash on hand at 3% interest.

Anyone who tells you not to payoff your mortgage because you'll lose the tax deduction is Stuck-on-Stupid and obviously flunked simple math.

Now go take on the day.
Fiduciary Financial Consultant
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