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Another Retirement Thread!

Discussion in 'Non-Vegas Chat' started by VegasGroove, Oct 10, 2019.

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  1. VegasGroove

    VegasGroove VIP Whale

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    As I get on in years, I find myself researching retirement almost daily. I've started a couple retirement threads here on VMB and always enjoy reading others' thoughts on various retirement subjects.

    Here's another one:

    In retirement, I want the remaining amount of my mortgage to be as low as possible so I am thinking of doubling up on payments to go toward the principal.

    For those of us who carry mortgages, have you done this? Do you double up monthly amounts? Add a couple hundred per month? Add a couple thousand? Or add what/when you can?
     
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  2. nostresshere

    nostresshere Mr. Anti Debit Card

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    Part of it depends on other factors.

    Where would you get the money to pay down the mortgage?
    What rate is your mortgage at?
    What rate will you paying in taxes?
    Are you itemizing or standard deduction?

    Thoughts:
    If you have money sitting around and not taking out of IRA or something else, then probably good use of money.
    If you have a very low rate, less incentive. If you have a higher rate - then more incentive to pay down.
     
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  3. TrewBrew

    TrewBrew I may be right, I may be Crazy.

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    We pay extra every month. The amount varies depending on our other revolving debt, but in general it is $300-$500. comes to 3-4 extra payments a month. We were mortgage free until last year when we bought a ranch style that we can retire in instead of steps up and down. The new house shoud be paid off in about 10 years.

    IF you have a high rate, why do you still have a high rate.
     
  4. shokhead

    shokhead No big spender unless eating drinking having fun!

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    No house payment, no loans, no debt when I retired. Cars and house paid for
     
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  5. Joe

    Joe VIP Whale

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    I've been retired almost 12 years now, but I couldn't imagine retiring while I still had debts. Just my 2 cents.
     
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  6. ken2v

    ken2v This Space For Rent

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    With our move a year ago we were able to cash out this house with proceeds from the sale of the previous home. This was a job-related move not retirement but one of the things we did put in the mix when making the go/no-go decision was being debt-free. Our next move will be for retirement and we'll likely move into a higher-value market so will have some decisions at the time on house size and utility vs. backfilling with additional (liquid) funds.
     
  7. ken2v

    ken2v This Space For Rent

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    I imagine that puts you guys -- and others of us like that -- in the distinct minority in America. But as some only live on credit I think there are no-debters who also don't really get that debt in and of itself is not a terrible thing.
     
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  8. Joe

    Joe VIP Whale

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    I don't disagree. While working we used debt leverage a lot. But before retiring, I made sure everything was paid off. Just for piece of mind and no surprises.
     
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  9. nostresshere

    nostresshere Mr. Anti Debit Card

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    Okay... have to add this in.

    Before paying down a house mortgage, I assume there is no credit card debt. No high rate car loans. Nothing else.

    I still run into folks that are paying credit card interest. Talked to a relative recently that asked about buying XYZ stock thinking it might go up 10-20%. I pointed out a way to earn 22% on their money - guaranteed. I paused a bit to get their attention and eventually pointed out they are paying 22% on credit card debt. Pay that down first.
     
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  10. ken2v

    ken2v This Space For Rent

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    I wonder if it's just a thing for "superior" Americans or if the rest of the western world suffers from the same level of economic idiocy?
     
  11. shokhead

    shokhead No big spender unless eating drinking having fun!

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    Don’t agree about debt isn’t a bad thing
     
  12. ken2v

    ken2v This Space For Rent

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    That's OK. The world isn't going to stop revolving.
     
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  13. DESPERADO

    DESPERADO VIP Whale

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    :wave: i don't like to give advice because we are all different and have different ideas etc. anyway just want to say congrats on your up coming retirement. sounds like (2 me) you are doing some positive thinking. good luck!!:beer::usa::usa::usa:
     

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  14. topcard

    topcard Here's to $10 3:2 two-deck, $5 Craps, and $5 UTH!

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    We used 100% of our "excess" income to pay off debt.... in THIS order:
    1. All remaining college/parent loans our kids' incurred.
    2. All remaining credit-card/revolving debt, higher-interest accounts first, then the rest.
    3. Car loans (which had the lowest interest rates... 2.9% & 3.9%).
    4. House mortgage.
    For each of these steps, once one debt was paid off, the entire amount of "excess" income went toward the next debt "in line". By the time we got to the mortgage, that was several 1000 a month. (Be sure to specify that your excess payments are against PRINCIPAL, not interest! This is important.)

    Wife has already retired... I still have a few more years... but I promise you that we will still be debt free on my retirement day!
    :beer:
     
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  15. Frankr163

    Frankr163 High-Roller

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    Same thoughts here.
    In the 2 years before I retired I had a couple of major expenses taken care of beforehand, new roof and a new HVAC system
    I didn't want to be in the hole before I even started off in my "golden years"
    I paid off my mortgage and the only debt I have is a car payment.
     
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  16. Jake13

    Jake13 Low-Roller

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    There are a lot of banks/credit unions and mortgage sites that have tools to figure out how different amounts of extra principal payments can make on the term of the mortgage. If you have a retirement date already determined, you can see how much it will take in extra payments to reach that goal. The payment amount only includes reducing principal of course, and does not include additional property tax payments if included in your payments.
    It is pretty easy to see what an extra $100 or more per month will do to reduce the number of years to pay off a mortgage.
    I also agree with the above comments of paying off higher interest loans first, especially credit cards.
     
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  17. Nevyn

    Nevyn VIP Whale

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    This would depend on where and how you are saving/investing, your interest rate, how long you plan to keep the home, the equity you have in it, etc.

    Paying down could be correct (or at least conservative and risk averse which makes sense for many retirees), but even if it is not I would say the main takeaway is figure out how much you COULD do this, and if you decide not to, make sure the same amount is going into savings/investments.

    The best part about being aggressive about paying down is behavioural. It is essentially forced savings that is more immune to sudden spending impulse or the tendency to spend up to one's available money. It also makes your financial picture similar to manage.

    If you've already got the discipline and the money is either being saved/invested or paid into the mortgage, it is a much smaller argument.
     
  18. ken2v

    ken2v This Space For Rent

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    And as pointed out early on, if you're carrying high-interest consumer debt, don't run off trying to pay down the mortgage (unless that is at 1977 interest rates) while that stone is hanging around your neck.

    Also, your home is an asset, your stereo and other shit bought on time are not. Sure, you never know what the real estate market will do (but so far it has always come back.) You can, however, bank on the fact that that loaded Maxima or 70" TV you had to have will NEVER appreciate.
     
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  19. Electroguy563

    Electroguy563 Vegas Joker

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    I've had the sense of working hard but not quite the sense of saving money. My wife has both. I may have worked hard but I believe she is the reason we are financially sound today.

    I'm glad I had faith in what she was doing. Trust, faith, love.

    Best wishes to all who are retired and are planning to retire.
     
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  20. DDB

    DDB Low-Roller

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    To me, the important factor would be how much of my monthly mortgage payment is interest vs. principle and taxes/insurance. And, does that interest paid help you at tax time?

    If you were to start aggressively paying down the principle, would it leave you strapped if an emergency came up? Big medical bill, car repair, new roof, ect.

    A few years ago I took a closer look at the monthly money going out and was shocked at how much was interest: between the house, credit cards, cars, it was pushing $1000 a month. Crazy. I had a fairly robust checking account balance which was earning next to nothing, so I got to hammering away at the debts and spent most of my money.

    Then, the car I just paid off took a shit and needed to be replaced. Lost my ass in Vegas. Next some medical bills unexpectantly came up. Work slowed down. F***, now I was broke. Maybe I overdid it, but it felt good to save all that monthly interest.

    Now, the interest portion of my mortgage is less than $20, so I don't sweat it. The rest is all principle and taxes/insurance (which will still need to be paid when the mortgage is done). I just paid a few extra hundred every payment, or a few extra thousand (if I hit a royal or AWAK).
     
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