Going to retire? Pay off your mortgage.
News 8's Finance Guy, John Henry McDonald, has been saying this bit of advice for years, but he'll continue reiterating its importance.
The choice is yours, McDonald said. For example, $500,000 is the amount of money you need to accumulate in order to offset the cost of a $20,000 per year mortgage payment.
A $300,000 mortgage is about $20,000 per year. You can pay off $300,000 and that will create $20,000 tax free, or you can accumulate $500,000 and give yourself $20,000 per year.
Either way, it works, McDonald said.
When people tell you you can be better off investing in the markets, you have to ask what kind of markets. Your mortgage payment is fixed. It’s a guaranteed payment to somebody else. So, you have to find a guaranteed investment, like a one-year C.D., or a 90-day treasury.
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Pay it Off
News 8's Paul Brown speaks to the Finance Guy regarding mortgage payments.
 
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Those rates of return are nowhere near 5.5 or 6 percent, and that’s what you’re paying on your mortgage.
If you want tax deductions, try your property tax. That's tax deductible.
If you're married, and if you have $11,400 of itemized deductions that goes on schedule, you can write that off. If you don’t have $11,400 in property tax, pay twice the property tax every other year, and you’ll be able to write that off.
If you want to get a 401(k) deduction, it's $1 for every dollar you put in, and sometimes those are matching.
In 1992, 18 percent of Americans age 65-72 had housing debt, and in 2007, 43 percent of that age group had housing debt.
In 1992, the average debt was $24,609, and in 2007 the average debt was $69,000.
