Tax & Money Tip of the Week:
Throwing Out The Old Rules of Money
May 4, 2011 | No. 41
This week we will start a series regarding throwing out the old rules of money.
Old School Rule #1
Conventional mortgage wisdom is to pay your home mortgage as soon as possible using extra payments. Here’s what you should do instead: Keep a long-term mortgage typically 30 years, regardless of your age or income, even if you can pay it off sooner.
Why It’s Smarter
Owning your home outright saddles you with some pretty significant disadvantages now days, such as lack of liquidity. Every dollar you give to the bank is one you will never get back until you sell your home. You may need that money if you lose your job unexpectedly or have a large medical expense. Instead, put that money to work in a diversified investment portfolio possibly one composed of a mix of passively managed index funds to keep expenses low.
If you should have any questions, please don’t hesitate to give us a call.
Questions or Comments?
Mark Vitek, CPA/PFS, CFP®
…until next week.