Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

How have you "found" this? How many kids have you put through college?

Anonymous wrote:

Anonymous wrote:

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.

+1

It is insane to forgo saving for college in order to pay off a mortgage.

I would add for your DH's info that paying for college is a completely different ballgame from what it was a few decades ago. It is virtually impossible for a student to "work her way through" as many people did back in the day. You should plan for doing more than "helping" her. IMO.

https://www.theatlantic.com/education/archive/2014/04/the-myth-of-working-your-way-through-college/359735/

No, it's not insane to forgo college savings to pay off your mortgage. Say you can't foot the bill for 4 years of college. Your kids can and will find other ways to pay for it, if that's their choice. Loans, joining the military Reserves for GI Bill benefits, etc. There are ways. If you need money to live in retirement, there aren't any alternatives for that. And if your kids can't even pay for college, how are they going to help you with a place to live? You fund college after your own retirement goals are being fully met.

No one said anything about retirement.

The above post is about saving for college and assumes that retirement savings were prioritized first.

I'm a CPA and I work in the finance industry.

Don't payoff the mortgage, but make 1-2 extra payments/year if it makes him feel better.

Keep investing in the 529. $4K/year won't even fully fund 1 kid's education, so it's not like you are oversaving.

After the itemized tax deduction, the mortgage payoff would only save you 3% annually. The long-term stock market returns are 7%.
Plus, with the 529, you get the instant state tax deduction and any earnings can be withdrawn TAX FREE for college.

Many very smart investors actually take out the biggest mortgage they can so they don't have to liquidate any investments.

Think of it this way- you're not suppose to have all of your assets in one investment. You are supposed to diversify. Therefore, if you have $500,000 of equity in your house and only $100,000 in your 401k plan in stocks- you are severely overloaded in real estate assets- which the housing crisis has shown, can go down.

I would not be paying off the mortgage given the low interest rate and tax deduction. My first savings would be into a 401k especially if there is any kind of matching. With matching and a modest return you can generate a lot of pre-tax gain. For college, create a 529 plan so that your investment can grow with the gains not taxed.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

Love this idea!

Anonymous wrote:

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.

+1

It is insane to forgo saving for college in order to pay off a mortgage.

I would add for your DH's info that paying for college is a completely different ballgame from what it was a few decades ago. It is virtually impossible for a student to "work her way through" as many people did back in the day. You should plan for doing more than "helping" her. IMO.

https://www.theatlantic.com/education/archive/2014/04/the-myth-of-working-your-way-through-college/359735/

No, it's not insane to forgo college savings to pay off your mortgage. Say you can't foot the bill for 4 years of college. Your kids can and will find other ways to pay for it, if that's their choice. Loans, joining the military Reserves for GI Bill benefits, etc. There are ways. If you need money to live in retirement, there aren't any alternatives for that. And if your kids can't even pay for college, how are they going to help you with a place to live? You fund college after your own retirement goals are being fully met.

Anonymous wrote:

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.

This is --- literally --- identical reasoning to saying that a 40% off sale is meaningless to you because you'd still have to pay 60% of the original price for the item.

No, this getting not it at all. Imagine you are buying a shirt on layaway (anyone remember that), so you are paying extra for the shirt. Price + layaway costs. With The mortgage interest deduction, you get 40% of the amount added for the layaway costs. PP, who paid early, is saying buy now - only pay principal (i.e., for the shirt)-- don't spend more to layaway (I.e., interest)

For what it's worth, I think real issue is whether money tied up in a house is "better" than money invested in the market. However, on the interest point, the PP who paid early is right on.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

17 and 18 year olds can't even comprehend the magnitude of large student loans. They have no idea what a burden they will be. I would be so angry if my parents tricked me and then rewarded me with my trust fund if I behaved a certain way. Talk about trying to control someone with money. If you treat your children this way in other areas of their lives they are going to need the trust fund to pay for their therapy bills. Wow.

+1. These warped adults dangling money bags above their kids' heads are a good reference for how *not* to mix family and finances.