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Old 09-12-2012, 12:00 PM   #21
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I faced this situation about a year ago, and we paid ours off...even at 3.85%. I cannot earn that amount safely anywhere today, so it seemed like the right choice.

In the interest of full disclosure, we do have a HELOC on our house, with a small balance, which was used to buy a rental property about 2 years ago. Wife and I made a pact that if we are going to use the HELOC to buy rentals, we'd commit to paying off any amount borrowed in 3 years to avoid a "surprise" when interest rates go up. We owe about $22k still on this one, which will be paid off in about a year.

Fortunately we have sufficient incomes where we can do this. You might ask why we don't just pay off the $22k with savings. We could, but there are the following reasons we did not:

1) I'm in the midst of a career change, and we want to maintain liquidity.
2) When we opened the HELOC, we agreed to keep it "active" (keep a balance) for 3 years minimum (it was a no-fee HELOC, so they wanted a guarantee to earn something)
3) Most of our investments are in accounts that we cannot get to easily until age 59 1/2...and we're a few years away from that.

We are happy with where we're at. No "first" mortgage, a small HELOC that's backed by income on two rentals that are worth significantly more than the HELOC balance, two high-paying jobs, and significant savings ready for a semi-FIRE in the near future (more on that in a thread I'll start shortly).
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Old 09-12-2012, 01:44 PM   #22
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Originally Posted by ducky911 View Post
it like buying a risk free 4.8% taxable investment...if tthat was available to me I be jumping on it with both feet.
Actually, no. If you want to think of not having as mortgage as is it were an investment (which is common, even though faulty), then it's like 3.25%.

The amount of saving equivalent is not the current mortgage rate but the rate you could get on a refi.
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Old 09-12-2012, 10:10 PM   #23
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When I retired from my first career, I paid off my mortgage. Was it the absolute best financial decision to make? Maybe, maybe not.

Did I sleep really well at night knowing that no matter what happened, I would always own my home? Absolutely!
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Old 09-13-2012, 03:04 AM   #24
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i have always been a believer in setting goals.

if one of my goals has been to have a paid off house then when i can achieve that i dont take the money and throw it back in the risk pool again.

the other money is left on the table to grow but as each goal is met i pull that off the table.
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Old 10-19-2012, 02:05 PM   #25
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Just to let everyone know that we paid off our mortgage and our equity loan...we have no debt not even credit cards at the age of 58 and three years to retire, it feels good. Thanks for all your response.
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Old 10-19-2012, 02:09 PM   #26
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Good wrichards58 another way you can look at it is a CD that pays 4.87%. Now where can you find that nowadays?
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Old 10-19-2012, 02:13 PM   #27
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Just to let everyone know that we paid off our mortgage and our equity loan...we have no debt not even credit cards at the age of 58 and three years to retire, it feels good. Thanks for all your response.
Congratulations
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Old 10-19-2012, 02:14 PM   #28
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besides paying off our house we sold our 44 foot sailboat yesterday. I have maxed out our 403b and roth.... where should I put the extra $100,000. Just in a reg. account ? we have our roth with vanguard should I go with vanguard or another brother? thanks
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Old 10-19-2012, 02:34 PM   #29
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besides paying off our house we sold our 44 foot sailboat yesterday. I have maxed out our 403b and roth.... where should I put the extra $100,000. Just in a reg. account ? we have our roth with vanguard should I go with vanguard or another brother? thanks
Congratulations again.

I expect there will be plenty of advice coming as to where to put that $100k.

If you already have a VG account and relationship with them then that is as good a place as any.

Since you are retiring in 3 years, do you need access to that money to begin funding your retirement?

If so, here is one idea.

You could put $20k in I-Bonds now and another $20k in January. (Limit is $10k/person/year). You could park the rest in a short-term bond fund and/or CD's, then put another $20k in I-Bonds in Jan, 2014 and Jan 2015. In 2016 after retiring you can use the remainder towards your expenses and by October 2017 you can start drawing down the I-Bonds without loss of interest.
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Old 10-19-2012, 02:58 PM   #30
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I come from the pay it off and retire with no debt camp. However you do need a cash cushion as well. I would probably accelerate my payments with additional principle to meet my target retirement date.
As far refi goes that's not always as easy as you would think. As loose as the banks were several years ago they've now swung to a much more conservative position. I know several people who have been trying to refi but are getting rediculous appraisals even with comp sales in the neighborhood to support their valuation. But don't get me started on the whole fed interest rate/ bank rate scam.
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Old 10-19-2012, 04:11 PM   #31
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where do I learn about I- Bonds
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Old 10-19-2012, 04:15 PM   #32
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where do I learn about I- Bonds
From the horse's (Treasury Direct) mouth:

Individual - I Savings Bonds In Depth

Just be sure to look on the left for a list of topics you can dig into. Their web design is, uh, a bit lacking IMHO.
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Old 10-19-2012, 05:17 PM   #33
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Once set up with your bank details, buying & selling is very easy.

If you do buy bonds you can enter the details in a Savings Bond Wizard that you can download. With the wizard you don't need to log on to see the value of your bonds as it runs on your PC. Every 6 months you update it with the current rates.

Individual - Savings Bond Wizard
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