This from the Fidelity site this morning. Not much new to add. Most here seem to have a degree of sophistication above average. One has to assess one's comfort level with debt or lack thereof. It seems as far as carrying low interest debt and investing the payoff $$ elsewhere, one needs some good investment savvy or needs to know someone with it.
Wow, I'm hearing a lot if number crunching around here. These responses make me feel like I shouldn't even think about coins until my house is paid for. I understand calculated risk, but I'm thinking we're not all bean counting every time we buy or sell a coin.
<< <i>Wow, I'm hearing a lot if number crunching around here. These responses make me feel like I shouldn't even think about coins until my house is paid for. I understand calculated risk, but I'm thinking we're not all bean counting every time we buy or sell a coin. >>
Then you probably shouldn't think about going out to eat or going to a movie or playing golf or other unnecessary stuff like that until your abode is paid for.
<< <i>Wow, I'm hearing a lot if number crunching around here. These responses make me feel like I shouldn't even think about coins until my house is paid for. I understand calculated risk, but I'm thinking we're not all bean counting every time we buy or sell a coin. >>
Then you probably shouldn't think about going out to eat or going to a movie or playing golf or other unnecessary stuff like that until your abode is paid for. >>
(I was born in Plano!) Nice story, congrats. That whole area is booming like crazy. Today I sign the contract to sell my house. Very exciting. The fiance had me do many projects she found on Pinterest, and the house looks night and day different. We're getting about 90% back what we put into it too. Can't wait to be saving another $1k/month.
<< <i>Wow, I'm hearing a lot if number crunching around here. These responses make me feel like I shouldn't even think about coins until my house is paid for. I understand calculated risk, but I'm thinking we're not all bean counting every time we buy or sell a coin. >>
Very good point. The way I look at it, my housing is not an investment, and my hobbies are part of my lifestyle. Unless my hobbies have become of such a magnitude that it could pay my mortgage, then either I need to reassess my lifestyle, or my mortgage has shrunk considerably (i.e. by longevity).
IF I had been close to mortgage free, and my collecting had presumably been going on a long time, THEN the scenario would have been more likely. Or, if life circumstances changed, and I had to change my lifestyle to adapt, then yep, coins could go.
Renting makes tons of sense at certain times, but it keeps you perpetually paying escalating costs, and FOR ME, that was a cost I never wanted to be on the hook for the rest of my life--particularly once income streams were based on owned assets and the ever more tenuous social security and pension. The rental value of my house is far higher than the annual carrying costs to own it--and yes those will rise, but I guarantee you the renter's payment rise too...it's the renter that cover's the landlord's costs after all AND pay the landlord's profits.
$735k loan @ 4%, 30y fixed used to buy an $885k house in California incurs about $28,800 in mortgage interest a year, and about $11,000 in property tax a year. Both of these work as federal tax deductions.
Now here's the part some seem to be missing. For someone earning $150k a year,. >>
Lol, this is a pipedream, and would never happen in any normal or unriigged loan docs... A 150k income may get you 350k home on high end...
When I purchased a new car in 1984 I took out a loan in the amount of $12377.12 at a rate of 13.50%. I lived at my parents house at the time and I'm a do nothing person so I would take my pay check from work and put 100% of it towards the loan and lived of my expense check for work miles driven. Paid it off in one year. Not to bad for someone making $14500 per year. Did not understand investing nor did I have any money to invest at the time. Two years ago I purchased a car for $53,000 and chose not to write a check for it. I instead took out a 3% car loan. My investment return on the 53K that I left in the stock market for the first year was around $13250 and the interest paid on the loan was $1590. Every year the investment return has been greater than 3%.
If I would have put that $12377.12 into a stock index found in 1984 I would now have $334,553. I still own that car and wish I would have waited one more year to purchase it.
If you have much equity, and plan on selling soon, you're better off with a mtg. that will help offset the capital gains.
If you use the $700k example and have let's say $1.2 mil in equity, you get the $500k exemption for a couple and the mtg. reduces your equity another $700k.
At the 20% tax level, you just saved $140k in CG taxes.
If I'm wrong, I'm sure Oreville or another CPA will correct me.....
"My friends who see my collection sometimes ask what something costs. I tell them and they are in awe at my stupidity." (Baccaruda, 12/03).I find it hard to believe that he (Trump) rushed to some hotel to meet girls of loose morals, although ours are undoubtedly the best in the world. (Putin 1/17) Gone but not forgotten. IGWT, Speedy, Bear, BigE, HokieFore, John Burns, Russ, TahoeDale, Dahlonega, Astrorat, Stewart Blay, Oldhoopster, Broadstruck, Ricko, Big Moose, Cardinal.
<< <i>If you have much equity, and plan on selling soon, you're better off with a mtg. that will help offset the capital gains.
If you use the $700k example and have let's say $1.2 mil in equity, you get the $500k exemption for a couple and the mtg. reduces your equity another $700k.
At the 20% tax level, you just saved $140k in CG taxes.
If I'm wrong, I'm sure Oreville or another CPA will correct me..... >>
So if you have a $1.2 mil paid for home you can take out a HELOC for $700K, pocket the $$ and not pay CG on it? If you have $1.2 mil in equity and $700K mortgage, I think your selling price would be $1.9 mil, no? Would you like to clarify your example a bit more? Purchase price? Sale price?
Many of the discussions here focus upon homes for the very rich. At last glance, I believe a net worth of over $1 million put you in the top ten percent of the country. Now many here are WAY above that number and more than a few are above it as well. However, if you have that kind of net worth you are in a different category than the working folks who have a $200K home and someone in the family collects coins.
At the higher levels of income, the marginal tax rate is in the high 30s, depending upon how high we are talking. As Stork accurately pointed out, the "Answer" is VERY dependent upon age, and risk tolerance level, not to mention income level. Paying off an expensive home will not affect the owner's ability to itemize tax deductions as they have enough in other places. However, for the owner of a small inexpensive home, that may not be the case. The less expensive home has less taxes and the owner probably has less state tax withheld (zero in a number of states without state income tax).
Thus, the answer to this question cannot be quantified without specific parameters regarding total wealth, income, state of residence, real estate tax burden and value of the home in question. Adjust any of the parameters and you can make a case in either direction.
What it comes down to for many is the desire to be totally debt free, and they are not interested in the potential money left on the table (if the numbers work that way) as the peace of mind and risk avoidance is recompense for their choice. For many others, the tax situation as well as their investment strategy and risk profile makes paying off the house less attractive as they may not maximize their net worth with that choice.
Retired United States Mint guy, now working on an Everyman Type Set.
I have frequently used my coin collection to make important purchases, and having the coins rather than money in the bank has always paid off.
Please everybody try and remember that there are more coins out there. Even if you sold off your set to pay off a debt, it's not like you couldn't do it all again... and to think how well it would likely turn out given the lack of a mortgage payment and the benefit of experience.
I'd do it in a heartbeat as long as the numbers added up. Don't need to though.
Comments
<< <i>Wow, I'm hearing a lot if number crunching around here. These responses make me feel like I shouldn't even think about coins until my house is paid for. I understand calculated risk, but I'm thinking we're not all bean counting every time we buy or sell a coin. >>
Then you probably shouldn't think about going out to eat or going to a movie or playing golf or other unnecessary stuff like that until your abode is paid for.
<< <i>
<< <i>Wow, I'm hearing a lot if number crunching around here. These responses make me feel like I shouldn't even think about coins until my house is paid for. I understand calculated risk, but I'm thinking we're not all bean counting every time we buy or sell a coin. >>
Then you probably shouldn't think about going out to eat or going to a movie or playing golf or other unnecessary stuff like that until your abode is paid for.
Right!
<< <i>Ironically, Yesterday, sold the house.
>>
(I was born in Plano!) Nice story, congrats. That whole area is booming like crazy. Today I sign the contract to sell my house. Very exciting. The fiance had me do many projects she found on Pinterest, and the house looks night and day different. We're getting about 90% back what we put into it too. Can't wait to be saving another $1k/month.
Check out my iPhone app SlabReader!
<< <i>Wow, I'm hearing a lot if number crunching around here. These responses make me feel like I shouldn't even think about coins until my house is paid for. I understand calculated risk, but I'm thinking we're not all bean counting every time we buy or sell a coin. >>
Very good point. The way I look at it, my housing is not an investment, and my hobbies are part of my lifestyle. Unless my hobbies have become of such a magnitude that it could pay my mortgage, then either I need to reassess my lifestyle, or my mortgage has shrunk considerably (i.e. by longevity).
IF I had been close to mortgage free, and my collecting had presumably been going on a long time, THEN the scenario would have been more likely. Or, if life circumstances changed, and I had to change my lifestyle to adapt, then yep, coins could go.
Renting makes tons of sense at certain times, but it keeps you perpetually paying escalating costs, and FOR ME, that was a cost I never wanted to be on the hook for the rest of my life--particularly once income streams were based on owned assets and the ever more tenuous social security and pension. The rental value of my house is far higher than the annual carrying costs to own it--and yes those will rise, but I guarantee you the renter's payment rise too...it's the renter that cover's the landlord's costs after all AND pay the landlord's profits.
<< <i>Here's a worked example.
$735k loan @ 4%, 30y fixed used to buy an $885k house in California incurs about $28,800 in mortgage interest a year, and about $11,000 in property tax a year. Both of these work as federal tax deductions.
Now here's the part some seem to be missing. For someone earning $150k a year,. >>
Lol, this is a pipedream, and would never happen in any normal or unriigged loan docs...
A 150k income may get you 350k home on high end...
If I would have put that $12377.12 into a stock index found in 1984 I would now have $334,553. I still own that car and wish I would have waited one more year to purchase it.
If you use the $700k example and have let's say $1.2 mil in equity, you get the $500k exemption for a couple and the mtg. reduces your equity another $700k.
At the 20% tax level, you just saved $140k in CG taxes.
If I'm wrong, I'm sure Oreville or another CPA will correct me.....
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>If you have much equity, and plan on selling soon, you're better off with a mtg. that will help offset the capital gains.
If you use the $700k example and have let's say $1.2 mil in equity, you get the $500k exemption for a couple and the mtg. reduces your equity another $700k.
At the 20% tax level, you just saved $140k in CG taxes.
If I'm wrong, I'm sure Oreville or another CPA will correct me.....
So if you have a $1.2 mil paid for home you can take out a HELOC for $700K, pocket the $$ and not pay CG on it? If you have $1.2 mil in equity and $700K mortgage, I think your selling price would be $1.9 mil, no? Would you like to clarify your example a bit more? Purchase price? Sale price?
DEBT FREE and LOVING IT
Menomonee Falls Wisconsin USA
http://www.pcgs.com/SetRegistr...dset.aspx?s=68269&ac=1">Musky 1861 Mint Set
'dude
At the higher levels of income, the marginal tax rate is in the high 30s, depending upon how high we are talking. As Stork accurately pointed out, the "Answer" is VERY dependent upon age, and risk tolerance level, not to mention income level. Paying off an expensive home will not affect the owner's ability to itemize tax deductions as they have enough in other places. However, for the owner of a small inexpensive home, that may not be the case. The less expensive home has less taxes and the owner probably has less state tax withheld (zero in a number of states without state income tax).
Thus, the answer to this question cannot be quantified without specific parameters regarding total wealth, income, state of residence, real estate tax burden and value of the home in question. Adjust any of the parameters and you can make a case in either direction.
What it comes down to for many is the desire to be totally debt free, and they are not interested in the potential money left on the table (if the numbers work that way) as the peace of mind and risk avoidance is recompense for their choice. For many others, the tax situation as well as their investment strategy and risk profile makes paying off the house less attractive as they may not maximize their net worth with that choice.
Please everybody try and remember that there are more coins out there. Even if you sold off your set to pay off a debt, it's not like you couldn't do it all again... and to think how well it would likely turn out given the lack of a mortgage payment and the benefit of experience.
I'd do it in a heartbeat as long as the numbers added up. Don't need to though.
Empty Nest Collection