MORTGAGE FREE REAL ESTATE MATTHEW PILLMORE
The interest you save by prepaying your mortgage is
a “sure thing.” Many people are happy prepaying
and banking the extra money they save on interest,
even if it’s less than they may have earned by
investing their extra dollars instead.
A Balanced Approach
As someone who loves leverage but despises (ALL)
debt, I see both sides of the issue. And that’s why I
personally take (and teach) others to consider a
balanced approach.
My only debt includes what is used to advance the
That’s a nice perk, but there’s a caveat. Your home
assets and income growth of my plan, but is paid
mortgage interest deduction is only valid for the
back strategically to $0 as quickly and safely as
amount you deduct over and above the standard
possible. I don’t see the reason to choose between
deduction, which is available to taxpayers who don’t
investing extra money OR prepaying my mortgages,
itemize their returns. The standard deduction for
so I rely on Debt Weapons™ to do both faster.
married spouses filing jointly was $12,400 in 2014.
What About Debt Weapons™??
So what does that mean? Simply put, if you don’t
itemize your taxes, your home mortgage interest
Debt Weapons™ are tools that allow any consumer
deduction is worth nothing. And even if you do, it’s
to achieve 1 or more of 7 highly financially beneficial
only worth what it helps you save over the standard
purposes.
deduction that anyone can take. In many cases, this
drastically reduces the value of the home mortgage
1) Maximize Cash Flow
interest deduction to the point where it’s barely worth
2) Compress Amortization Schedules
considering.
3) Replace Inadequate Bank Accounts
4) Invest More Quickly & Safely
But what about those lost investing returns? When
5) Minimize Total Interest Costs
you ask people whether or not they prepay their
6) Enhance & Protect FICO® Credit Scores
mortgage and why, you’ll find plenty of skeptics who
7) Quickly Increase Financial Safety and Emergency
balk at the idea of carrying longterm debt in favor of
Reserves
investing their extra dollars in the stock market. And
when it comes to who is “wrong” or “right,” there are
To be clear, VIP Financial Education does not
several ways to look at it.
provide or offer Debt Weapons™.