Debt Free

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Spammage
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Re: Debt Free

Post by Spammage » Wed Mar 06, 2019 10:17 am

Ware wrote:
Wed Mar 06, 2019 9:37 am
NewLawnJon wrote:
Wed Mar 06, 2019 9:06 am
...I have thought about paying down the mortgage and student loans, but since those are 100% tax deductible for interest I am waiting until they are paid down enough to where I can't use the deductions anymore, and then I will make a lump sum payment to get rid of them...
I do not buy into the idea of continuing to pay interest because it is tax deductible - I see that as a losing proposition. Here is a good example.
I agree.

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Re: Debt Free

Post by NewLawnJon » Wed Mar 06, 2019 11:22 am

Ware wrote:
Wed Mar 06, 2019 9:37 am
NewLawnJon wrote:
Wed Mar 06, 2019 9:06 am
...I have thought about paying down the mortgage and student loans, but since those are 100% tax deductible for interest I am waiting until they are paid down enough to where I can't use the deductions anymore, and then I will make a lump sum payment to get rid of them...
I do not buy into the idea of continuing to pay interest because it is tax deductible - I see that as a losing proposition. Here is a good example.
I agree with the Dave Ramsey method for most people since most people are not going to take the extra money and invest it. At the moment I get more interest from my investments than I pay on the mortgage from a percentage rate, so it financially makes more sense to invest (which most people wouldn't do).

Working in the financial industry I have done the same modeling for corporations (take on debt for stock buybacks and paying interest vs. using cash reserves that are invested and earning interest), and I apply the same principles to my own personal life.

Each person is in a different situation, and as a whole it is positive to pay off as much of your debt as possible, and invest in yourself.
Last edited by NewLawnJon on Wed Mar 06, 2019 11:41 am, edited 1 time in total.

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Re: Debt Free

Post by pennstater2005 » Wed Mar 06, 2019 12:15 pm

Congrats @Ware! That’s huge. I did a 30 year fixed and hope to put more on it once our student loans are paid off.
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Re: Debt Free

Post by Ware » Wed Mar 06, 2019 12:46 pm

As dfw noted on page 1:
dfw_pilot wrote:
Tue Mar 05, 2019 3:22 am
...the best answer to invest or pay down debt is always: yes!
What I disagreed with is the notion of continuing to pay interest to get an income tax deduction for it - which simply does not work out in favor of the borrower. Despite being “100% tax deductible”, when it washes out the interest paid is more than the income tax saved - and there are arguably better ways (e.g. giving) to trade more money for less taxes. :thumbup:

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Re: Debt Free

Post by NewLawnJon » Wed Mar 06, 2019 12:54 pm

Ware wrote:
Wed Mar 06, 2019 12:46 pm
As dfw noted on page 1:
dfw_pilot wrote:
Tue Mar 05, 2019 3:22 am
...the best answer to invest or pay down debt is always: yes!
What I disagreed with is the notion of continuing to pay interest to get an income tax deduction for it - which simply does not work out in favor of the borrower. Despite being “100% tax deductible”, when it washes out the interest paid is more than the income tax saved - and there are arguably better ways (e.g. giving) to trade more money for less taxes. :thumbup:
That is correct, and I didn't put that in initially that keeping debt just for a tax deduction doesn't make sense if you aren't doing something with the money other than sitting on it or spending it. You need to invest and make sure that they return a higher rate than you are paying.

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Re: Debt Free

Post by HoosierLawnGnome » Wed Mar 06, 2019 1:38 pm

With recent tax law changes increasing the standard deduction 2x for many, there is even less of a reason to carry a mortgage for tax purposes.

Once you pay that house off it is really eye opening how much we pay in taxes. Many people couldnt even afford the taxes if they had a huge house free and clear.
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Re: Debt Free

Post by dfw_pilot » Wed Mar 06, 2019 2:04 pm

NewLawnJon wrote:
Wed Mar 06, 2019 9:06 am
one of our paychecks just goes right into savings.
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Re: Debt Free

Post by rhanna » Wed Mar 06, 2019 7:11 pm

NewLawnJon wrote:
Wed Mar 06, 2019 9:06 am
Very nice. I am similar in the my wife and I live well below our means, and one of our paychecks just goes right into savings.

I have thought about paying down the mortgage and student loans, but since those are 100% tax deductible for interest I am waiting until they are paid down enough to where I can't use the deductions anymore, and then I will make a lump sum payment to get rid of them.

I have 29 more years of mortgage payments on my current house that we built last year, so I am sure it will take some time to hit that threshold, and by then we might be looking to build again.
I’m surprised you are still itemizing. Plus, even though they are tax deductible, you are really only getting the benefit on the amount over the standard deduction

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Re: Debt Free

Post by NewLawnJon » Wed Mar 06, 2019 8:10 pm

rhanna wrote:
Wed Mar 06, 2019 7:11 pm
NewLawnJon wrote:
Wed Mar 06, 2019 9:06 am
Very nice. I am similar in the my wife and I live well below our means, and one of our paychecks just goes right into savings.

I have thought about paying down the mortgage and student loans, but since those are 100% tax deductible for interest I am waiting until they are paid down enough to where I can't use the deductions anymore, and then I will make a lump sum payment to get rid of them.

I have 29 more years of mortgage payments on my current house that we built last year, so I am sure it will take some time to hit that threshold, and by then we might be looking to build again.
I’m surprised you are still itemizing. Plus, even though they are tax deductible, you are really only getting the benefit on the amount over the standard deduction
My interest on the home gets me to the threshold, then property taxes, student loan interest, and charitable giving.

I will say that my tax rate went up a lot this year due to the new tax laws. I miss having the persona and dependent exemptions.

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Re: Debt Free

Post by macdawg » Wed Mar 06, 2019 10:21 pm

Congratulations Ware. Amazing milestone. Loved your July 4th video BTW.

Back to the subject, you made a great point about having the wife on board. There is a strong correlation between sharing and attacking financial goals with your spouse and financial success. This has been a key struggle for us but we are on the same page and I feel winning. I love Dave Ramsey, my wife loves Louis Vatton :lol: . We have to compromise and we budget together on the everydollar app. We work hard and play hard, on baby step 4 and 6, I really am delaying on 5. Sticking to the Dave Ramsey plan otherwise. Should have house paid in a few years. I already invest 15% into retirement, no need to do more than that until the house is paid IMO. Babystep 3 is actually my favorite step, it is where "financial peace" kind of starts to kick in. I am sure at baby step 6 it gets real peaceful. Just staying the course.

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Re: Debt Free

Post by agillespie » Thu Mar 07, 2019 7:02 am

@Ware it made me very happy to see this post. When my wife and I first got married we dove hard into paying off some previous bad decisions, did awesome, and then stopped. After getting hurt this winter we had a wake up call, and are diving back in. Seeing someone I (somewhat)know being successful at getting completely free from debt is way more encouraging than a random person in a book or on a radio program. Thank you again for sharing.
Last edited by agillespie on Thu Mar 07, 2019 7:04 am, edited 1 time in total.

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Re: Debt Free

Post by Ware » Thu Mar 07, 2019 8:24 am

macdawg wrote:
Wed Mar 06, 2019 10:21 pm
Congratulations Ware. Amazing milestone. Loved your July 4th video BTW.

Back to the subject, you made a great point about having the wife on board. There is a strong correlation between sharing and attacking financial goals with your spouse and financial success. This has been a key struggle for us but we are on the same page and I feel winning. I love Dave Ramsey, my wife loves Louis Vatton :lol: . We have to compromise and we budget together on the everydollar app. We work hard and play hard, on baby step 4 and 6, I really am delaying on 5. Sticking to the Dave Ramsey plan otherwise. Should have house paid in a few years. I already invest 15% into retirement, no need to do more than that until the house is paid IMO. Babystep 3 is actually my favorite step, it is where "financial peace" kind of starts to kick in. I am sure at baby step 6 it gets real peaceful. Just staying the course.
Thanks!

I enjoy listening to Dave Ramsey to hear the success stories. I think the babystep plan works/helps a lot of people, and have even gifted Financial Peace University to some friends/family, but I would be lying if I said we followed it to a T.

We use a credit card for most of our transactions, replaced a 14 year old vehicle with a new one several years ago, invested >15% in our retirement accounts throughout the process, and hold some taxable investments that could have been used to pay off the mortgage sooner.

I think Dave Ramsey would probably snarl at all of those decisions, but there are many roads to Dallas, and I think the key is to just do something - set some goals, make a plan, do our best to stick to it, and then make adjustments as needed. Sort of the same way we take care of our lawns! :thumbup:

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Re: Debt Free

Post by daniel3507 » Thu Mar 07, 2019 9:26 am

I really enjoy seeing how many people are on their own path here. Some of us might be getting there a little slower, but its still nice to see.

I agree with Dave Ramsey when it comes to getting out of debt. I don't agree with some of his other recommendations.

For example, we strictly use credit cards for all transactions. We make sure and pay it all off before we get hit with interest though and still get the benefits of the security and cash back/points.

He also seems to be very against car payments. Public transportation is not an option where I live and the peace of mind of having my wife in a reliable car with full warranty is worth the low interest rate.

The biggest issue I had though reading the book was not investing in retirement while paying off debts. No thanks. I would rather not turn down the free money you get from 401K match.

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Re: Debt Free

Post by wardconnor » Thu Mar 07, 2019 10:33 am

Congrats John I can not wait until I am there. Hopefully that comes soon.

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Re: Debt Free

Post by Ware » Thu Mar 07, 2019 10:41 am

agillespie wrote:
Thu Mar 07, 2019 7:02 am
Ware it made me very happy to see this post. When my wife and I first got married we dove hard into paying off some previous bad decisions, did awesome, and then stopped. After getting hurt this winter we had a wake up call, and are diving back in. Seeing someone I (somewhat)know being successful at getting completely free from debt is way more encouraging than a random person in a book or on a radio program. Thank you again for sharing.
I'm glad sharing this milestone was helpful. To be honest, I was on the fence about posting it.

I would say our "wake-up call" was a few years ago when the company I work for was put up for sale. There was a lot of uncertainty and we were ultimately purchased by a company that was about the same size, so there was inevitably some duplication of roles. I came out alright, but I saw some good people lose their jobs. We were already doing pretty well with our finances, and I could find another job if I needed to, but it was the catalyst we needed to finish what we started. As you can imagine, our monthly expenses are now minimal, so our emergency fund will stretch even further should we ever need it. It's a great feeling. :thumbup:

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Re: Debt Free

Post by iFisch3224 » Thu Mar 07, 2019 6:36 pm

daniel3507 wrote:
Thu Mar 07, 2019 9:26 am
I really enjoy seeing how many people are on their own path here. Some of us might be getting there a little slower, but its still nice to see.

I agree with Dave Ramsey when it comes to getting out of debt. I don't agree with some of his other recommendations.

For example, we strictly use credit cards for all transactions. We make sure and pay it all off before we get hit with interest though and still get the benefits of the security and cash back/points.

He also seems to be very against car payments. Public transportation is not an option where I live and the peace of mind of having my wife in a reliable car with full warranty is worth the low interest rate.
The key to success here; is YOU pay the CC in full every month - 98% of the population does NOT. As do I - I have the financial discipline and have for years. I only use a debit card for cash withdrawals - and yes I use cash a lot locally - harder to spend physical paper - easier to just swipe and go and not take into account what you actually spent.

But I'm very young, and quite experienced in this field.


I believe the standard rate on car loans now is 6.7% with the average loan at 66 or 68 months. In the next 1-3 years, 75 months and 84 months will be the average car note, with the cost of vehicles skyrocketing. I don't foresee the rates dropping anytime soon, especially with longer, and longer car notes being written. I've sold quite a few 84 month loans @ Ford while I worked there.

Furthermore, the average American spends like $575/month on car payments. I just can't afford that on a single income. My little 14 year old Lincoln keeps purring and spitting out the miles. I'm sure the peace of mind is worth something if I were married, or in a serious relationship, but I'm in neither - and right now, this journey to freedom is my choice. If "she" comes into my life, if, or whenever that happens, at least I'll be in a good position financially, and for my future. I hope to contribute to this thread a few years down the line, and celebrate being mortgage and debt free for the 30, 40, 50 years I have left.

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Re: Debt Free

Post by macdawg » Fri Mar 08, 2019 6:37 pm

Furthermore, the average American spends like $575/month on car payments.

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Re: Debt Free

Post by SCGrassMan » Mon Mar 11, 2019 2:03 pm

We’re just beginning our journey with this - this is one of several “random pings” on this subject, seemingly unrelated, that have popped up lately.
2019 Lawn Journal:
viewtopic.php?f=26&t=7338

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Re: Debt Free

Post by cglarsen » Thu Mar 14, 2019 12:36 pm

So your next youtube video is your debt-free scream, am I right?

Well done, sir; well done.

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Re: Debt Free

Post by ctrav » Fri Mar 22, 2019 10:35 pm

Ware wrote:
Mon Mar 04, 2019 9:37 pm
I made my last mortgage payment today. :beer:

This topic is to discuss becoming and staying debt free.
CONGRATS!!
MY JOURNAL

Much of your pain is self chosen!

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