Kill your Mortgage tax deduction and become rich!

Hello everyone,

This is an exciting time! It’s my honor to be able to share this with you here today, the post below is a small excerpt from my upcoming book.

I have a short one today. But this is a good post to read, sit and think about. For those of you who don’t know, I am a debt free advocate. I saved for six years and paid cash for my home and I have no other debts of any kind.

I subscribe to many financial blogs and Facebook groups that talk about money. And there doesn’t seem to be a common consensus about whether one should pay off their home or keep the mortgage for the tax credit at the end of the year.

 A common question I hear is, “If I don’t have a home loan won’t I be missing out on an awesome tax deduction?”

Here is my response,
Let’s assume that you make $60,000 a year and you have a $10,000 tax write-off from your mortgage interest home loan, that means you pay taxes on $50,000. If you don’t have a mortgage, you would have to pay taxes on your full income of $60,000. Since you’re in a 25% tax bracket. Twenty-five percent of $10,000 is $2,500. Your tax bill just went up by $2,500 because you don’t have a mortgage. However, you are no longer wasting $10,000 on mortgage interest! Your tax bill went up by $2,500, but you saved $10,000. Which means you have a net savings of $7,500. That is, a savings of $7,500 every year. As demonstrated in my book, If you were to just invest those savings alone, it would accumulate into a nice retirement nest egg. So let’s add a visual just to help put this into perspective. Looking at the picture, the mortgage deduction tax savings alone in the blue, is how much money you would save by having a mortgage deduction. The total amount saved is $75,000. Not bad. However, by not having a mortgage and not paying mortgage interest, you are able to save $7500 per year in my previous example. Simply by saving this $7500 per year in a savings account, you will triple you’re earning putting you at $225,000 shown in the orange. But it gets better! Shown in the Green, If you take these savings each year and invest it in a conservative mutual fund earning 8% ROI, you are able to get a return of $925,094. 
Here is the annual table schedule showing you growth per year.

Questions:

  • Will my formula below work for your situation? 
  • What am I missing here?
  • Do you think this money can be better held somewhere else?   
  • Are the numbers I used realistic? 


If you would like to see more of these examples and get notified of my official book release, please subscribe via email. I will be posting more freebies in the coming weeks. You don’t want to miss out. Thanks for reading!

 

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