Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Re: Are you counting mortgage principal as an expense?
Old 04-27-2007, 04:57 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jul 2005
Posts: 5,464
Re: Are you counting mortgage principal as an expense?

Originally Posted by saluki9
Should I consider my 401(k) contributions and expense too?

Afterall, I can only change them once a year, and I have to 1.quit my job 2. pay a penalty and 3. pay income taxes to get the money. talk about an expense!

a home is a consumption item like art work on my wall or jewelry i wear . until the day comes it stops being a consumption item and can be converted to cash and spendable i dont count home equity in any of my financial calulations other than the bottom line for estate taxes. . since some may never sell there home or if they do they may spend as much on a new home counting home equity may be irrelevent . it just depends why you are counting it.


mathjak107 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Are you counting mortgage principal as an expense?
Old 04-27-2007, 11:32 PM   #22
Recycles dryer sheets
Join Date: Apr 2007
Posts: 196
Re: Are you counting mortgage principal as an expense?

Originally Posted by wab
I don't consider paying myself to be an expense, but a better question might be how to handle your mortgage payment for planning purposes with FIREcalc.

FIREcalc doesn't have an amortization calculator. It also doesn't understand that the principal payment comes back to you, or that the interest payment doesn't go up with inflation.

So, you probably want to exclude your entire mortgage payment from the "expense" entry in FIREcalc, and use the non-inflation-adjusted "increase withdrawals" field for your average interest payment over the remaining life of your mortgage.
I'm realizing based on the feedback that the biggest factor I need to consider is whether or not I plan on eventually downsizing my house in order to recapture the 'savings' that I'm convincing myself of making. If I plan on living in my current house forever, then I would agree with the 'principal=expense' crowd and say that it is indeed an expense, but I am planning (although 20 or so years down the road) of moving to a lower cost locale and getting that principal back, so I guess I'll keep thinking of it as a non-expense.

However, I like wab's 'switzerland' response the best - it seems like the best way to model the situation within FIRECALC w/o caring about whether it is or isn't an expense, and I hadn't considered this previously. (I'm going to try it out right now)

Thanks y'all,

skyline is offline   Reply With Quote
Re: Are you counting mortgage principal as an expense?
Old 04-28-2007, 02:14 PM   #23
Recycles dryer sheets
aenlighten's Avatar
Join Date: Apr 2007
Posts: 275
Re: Are you counting mortgage principal as an expense?

I account for it everywhere, balance, income, and cashflow. Principal and interest as an expense, Principal as an offsetting revenue gain. Principal as liability debt reduction and as an offsetting equity increase. (I use book value until sold.) Interest as an operating expense and principal as financing cash payment.

aenlighten is offline   Reply With Quote


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Equity Is Altering Spending Habits and View of Debt Craig FIRE and Money 6 02-21-2009 12:25 PM
Mortgage payments after Early Retirement walkinwood FIRE and Money 19 04-28-2007 06:45 PM
Pay off the Mortgage at Retirement??? bbuzzard FIRE and Money 89 04-16-2007 07:01 AM
Paying off mortgage with an SPIA donheff Life after FIRE 5 12-19-2006 10:56 AM
Advice Needed - Taxable Invest vs Pre-Pay mortgage Trace Young Dreamers 5 09-14-2004 06:16 PM


All times are GMT -6. The time now is 09:58 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.