Anonymous wrote:I'm a CPA and I am with your husband on this one. By paying off your mortgage, you are basically locking in a 3.5% - 4% guaranteed rate of return which isn't huge, but you can't get that anywhere else with 100% certainty. Secondly, most people overestimate the benefits of the mortgage interest deduction and itemizing in general - you already get a standard deduction without doing anything so the benefit is only the difference between the two. Thirdly, the vast majority of people in the U.S. do not have a college education. What will you do with the 529 if your kids don't go? Fourth, evaluate your savings rate and the pace at which your net worth is growing. We have similar incomes and increase our net worth about $100K each year so could easily pay off your mortgage in 3-5 years. If I were you, I would max out your 401K/Roth IRA, make sure you have an adequate emergency fund, and then allocate remaining funds to the mortgage. With the mortgage out of the way, you should be able to cash flow your kids education.

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Anonymous wrote:My family has been on earth thousands of years. My generation was first generation to go to college and all 4 of my widowed Moms kids paid themselves. Why do I owe paying for college to my kids?

LOL. I think you are supposed to tell your KIDS that. Let us know how it goes.

My old boss on Wall Street made his kids pay for own college. He had a five million a year salary. Tough love

That's not tuff love. That's a selfish jerk who has no interest in his kids nor probably even parented them.

Our kids have a trust fund that can pay for 100% of college and grad school. We're not telling them it exists until they're much older. We will be making them pay a portion of their college tuition and/or living expenses. We haven't decided yet, but maybe around 20%. If we think they didn't squander college, we'll have that "debt" erased.

I have found that kids that don't have skin in the game have a higher likelihood of squandering their opportunities.

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Anonymous wrote:My family has been on earth thousands of years. My generation was first generation to go to college and all 4 of my widowed Moms kids paid themselves. Why do I owe paying for college to my kids?

LOL. I think you are supposed to tell your KIDS that. Let us know how it goes.

My old boss on Wall Street made his kids pay for own college. He had a five million a year salary. Tough love

That's not tuff love. That's a selfish jerk who has no interest in his kids nor probably even parented them.

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Anonymous wrote:My family has been on earth thousands of years. My generation was first generation to go to college and all 4 of my widowed Moms kids paid themselves. Why do I owe paying for college to my kids?

LOL. I think you are supposed to tell your KIDS that. Let us know how it goes.

My old boss on Wall Street made his kids pay for own college. He had a five million a year salary. Tough love

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Anonymous wrote:My family has been on earth thousands of years. My generation was first generation to go to college and all 4 of my widowed Moms kids paid themselves. Why do I owe paying for college to my kids?

LOL. I think you are supposed to tell your KIDS that. Let us know how it goes.

Anonymous wrote:My family has been on earth thousands of years. My generation was first generation to go to college and all 4 of my widowed Moms kids paid themselves. Why do I owe paying for college to my kids?

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Anonymous wrote:Your husband sounds crazy.

Show him the actual dollars and cents on paper. I assume the $4k is for the state tax benefits? Show him that. Show him traditional growth of a home vs. growth of investment accounts over time.

The mortgage rates are SO LOW and housing can never be thought of as a sound investment. I can't imagine the logic behind that kind of strategy.

OP here. I have ran the numbers for him.

I've shown him my return on my Vanguard account and that we should budget a 7% increase, but he just talks about paying off the mortgage. He keeps saying nothing will get us 4% interest every year (even though I show him we can do better). If anything, it's better to invest and then when we have a lump sum to pay off the mortgage, do that. We get nothing for paying on our mortgage early right now.

Yes we're in VA and the 4k was for the state tax benefit. We paid off 80k of his student loans and he thinks it was easy and no big deal and that our kids should do the same.

He is selfish and ignorant.

I would have a major issue with this. Major. On a HHI of $180K at this (early) point in your parenting, there is NO reason not to be saving aggressively for college. None.

And your kids are going to be spoiled and entitled. Ever heard of the GI Bill? Didn't think so. The biggest losers I know had their parents pay for their college.

Students whose parents don't pay or at least help with most of the costs need to take out loans, and statistics make it clear that big loans hamper young adults in their efforts to create financial stability. They have difficulties buying houses, getting married and having kids, and saving for retirement. This is not my opinion. It is a documented fact.

But sure, make your kids get into debt up to their eyeballs by the time they are 22. Make it an object lesson (I guess?) for them.

Anonymous wrote:PPs who paid off in 3 years here--the mortgage deduction was meaningless to us, as it didn't offset the additional interest faced by keeping the mortgage.

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Anonymous wrote:Your husband sounds crazy.

Show him the actual dollars and cents on paper. I assume the $4k is for the state tax benefits? Show him that. Show him traditional growth of a home vs. growth of investment accounts over time.

The mortgage rates are SO LOW and housing can never be thought of as a sound investment. I can't imagine the logic behind that kind of strategy.

OP here. I have ran the numbers for him.

I've shown him my return on my Vanguard account and that we should budget a 7% increase, but he just talks about paying off the mortgage. He keeps saying nothing will get us 4% interest every year (even though I show him we can do better). If anything, it's better to invest and then when we have a lump sum to pay off the mortgage, do that. We get nothing for paying on our mortgage early right now.

Yes we're in VA and the 4k was for the state tax benefit. We paid off 80k of his student loans and he thinks it was easy and no big deal and that our kids should do the same.

He is selfish and ignorant.

I would have a major issue with this. Major. On a HHI of $180K at this (early) point in your parenting, there is NO reason not to be saving aggressively for college. None.

And your kids are going to be spoiled and entitled. Ever heard of the GI Bill? Didn't think so. The biggest losers I know had their parents pay for their college.

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Anonymous wrote:It's not even close

To help understand the economics of the mortgage decision, we test two scenarios: 1) a family uses $200,000 of savings for a home, and invests each month an amount that would otherwise be the mortgage payment (less the tax deduction), and 2) a family invests $200,000 in stocks and bonds while borrowing the same amount on a 30-year mortgage.

Over the course of 42 years, the family that borrows sees a positive outcome in 97% of the time, which is important for major matters like your retirement. The only period when paying cash would be better was between May and December 1981, when the mortgage rates ranged between 16.4% and 18.5%. If we allowed for refinancing, the mortgage-and-invest approach would be favorable at all time.

https://www.forbes.com/sites/lawrencelight/2015/11/14/whats-the-smartest-move-pay-off-mortgage-or-invest-the-money/#14f49e6bcde2

So, why don't you take out a loan and invest that money in the stock market if you are sure 97% of the time you will come out ahead?

Anonymous wrote:It's not even close

To help understand the economics of the mortgage decision, we test two scenarios: 1) a family uses $200,000 of savings for a home, and invests each month an amount that would otherwise be the mortgage payment (less the tax deduction), and 2) a family invests $200,000 in stocks and bonds while borrowing the same amount on a 30-year mortgage.

Over the course of 42 years, the family that borrows sees a positive outcome in 97% of the time, which is important for major matters like your retirement. The only period when paying cash would be better was between May and December 1981, when the mortgage rates ranged between 16.4% and 18.5%. If we allowed for refinancing, the mortgage-and-invest approach would be favorable at all time.

https://www.forbes.com/sites/lawrencelight/2015/11/14/whats-the-smartest-move-pay-off-mortgage-or-invest-the-money/#14f49e6bcde2

Anonymous wrote:PPs who paid off in 3 years here--the mortgage deduction was meaningless to us, as it didn't offset the additional interest faced by keeping the mortgage.