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Forum
-> Household Management
amother
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Sun, Nov 06 2011, 4:26 pm
Dh and I have a 6 month old baby and where given money as an inheritance. We are pretty careful with money (not as frugal as some of the women on here) and have some money saved up.
Last night DH sprung this interesting idea on me- to spend the next 3-5 years living very frugally and then taking the money we saved, move to a more affordable community and buy a house free and clear. We might be able to do it but it would be quite a squeeze. His idea is to eliminate large housing expenses (mortgage or rent) before we have to pay tuition.
In theory it sounds good but is this a practical good idea? How much should we be willing to squeeze ourselves? We would have to use all our savings and this gift money- is that safe? How much would we be saving in the long run? The reason why we would do this rather than just have a mortage and use the money for the down payment is because my Dh has a better job where we live now but for chinuch we'd rather live in a more OOT community but he would have a much lower paying job there. So while we're here, we save up and stretch and then take the savings to buy a house in the OOT community that we're looking into.
I want to hear your thoughts, advice, critiques...
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33055
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Sun, Nov 06 2011, 7:55 pm
The real downside to your idea is when it comes to paying tuition. Those with a mortgage are likely to get a break. You who have scraped and saved will be penalized and subsidizing those who are spend thrifts. So you will likely resent it. It is not fair. Unfortunately, it its best if you can show a mortgage on your financial aid application.
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amother
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Sun, Nov 06 2011, 8:23 pm
What would be so terrible about paying tuition instead of mortgage? Do you know how many schools are months behind in meeting payroll?
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33055
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Sun, Nov 06 2011, 9:29 pm
It is back to the it its not fair thing. Those with big houses and big mortgages and bigger lifestyles pay les tuition than those that are fugal and have saved and either paid off their mortgages and/or live in a smaller house. Again, not fair; but that is the system as it exists now. BTW, my mortgage is fully paid and I pay full tuitions. I knew the effect on my obligations before I paid off my house. I could have placed the money in retirement savings. I respect what schools go through; but that was not op's question.
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Mimisinger
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Sun, Nov 06 2011, 10:12 pm
Not a good idea financially - it feels good to pay off your mortgage these days, but financially, it doesn't make sense. The mortgage rats are the lowest they've been in decades. It's better to have a low mortgage and put your money into other things that will acrue interest. Talk to a financial counselor at your bank.
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flowerpower
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Sun, Nov 06 2011, 10:22 pm
Mimisinger wrote: | Not a good idea financially - it feels good to pay off your mortgage these days, but financially, it doesn't make sense. The mortgage rats are the lowest they've been in decades. It's better to have a low mortgage and put your money into other things that will acrue interest. Talk to a financial counselor at your bank. |
I agree.
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Tova
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Sun, Nov 06 2011, 10:51 pm
But low mortgage rates correlate with low interest rates on any type of investment (you are just on different sides of the table in terms of paying versus receiving interest). Which is not to say that I would necessarily recommend buying your home free and clear - I would first ensure that you are leaving adequate savings accounts so you are as liquid as you need to be.
BTW, not all schools have such sympathy for someone who has a large home/mortgage when smaller/cheaper options are available.
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Yidishemomma1
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Wed, Nov 09 2011, 4:15 pm
Bsd
Though I would love to have my mortgage paid off when we were in a situation like yours have recieved an inheritance and having the oppurtunity of paying off bthis mortgage(we had no other savings to speak of) we were told by a financial advisor that this is generally not a good idea and even more so in our situation,I firmly belive that going to an independent fionancial advisor is very important before making any major decisions
Yidishemomma1
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Yidishemomma1
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Wed, Nov 09 2011, 4:15 pm
Bsd
Though I would love to have my mortgage paid off when we were in a situation like yours have recieved an inheritance and having the oppurtunity of paying off bthis mortgage(we had no other savings to speak of) we were told by a financial advisor that this is generally not a good idea and even more so in our situation,I firmly belive that going to an independent fionancial advisor is very important before making any major decisions
Yidishemomma1
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chocolate moose
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Wed, Nov 09 2011, 6:40 pm
I think you will have to pick and choose your frugalities. Some are easier than others.
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imala
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Wed, Nov 09 2011, 9:59 pm
My dh who is a financial professional would advise you not to do this. Mortgage rates are so low now. Put your down payment into something very safe like a CD, but the other money, you should invest in ETF's or mutual friends. The money will accrue over time in a way that you won't get from paying off your house. In the long run you'll be much better off eventhough it feels better to have 1 less monthly bill. Talk to an independent financial professional.
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blue eyes
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Wed, Nov 09 2011, 10:09 pm
The amount of interest paid on the house- vs the interest rcvd on investments is no equation at all. u get much less interest when investing so I dont really understand the advice given... again.. im not a financial advisor so I dont know..
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